Greece has the bottom financial savings of all nations in Europe and the developed world!
Greek households have stopped saving and are the truth is lagging behind the eurozone and the EU27 in saving, dwelling off financial savings from earlier eras or build up debt; it is a main drawback for the nationwide economic system as it’s not possible for a rustic to develop for a very long time with overseas funds, it’s emphasised in a particular Eurobank research on financial savings introduced final week in Athens.
The presentation happened at a particular occasion attended by the … heavy artillery of the system, i.e. not solely the highest executives of the financial institution Fokion Karavias and Petros Zanias but in addition the president of the Financial institution of Greece Giannis Stournaras and the Minister of Finance Kostis Hatzidakis. The occasion even brought on a sensation. Not as a result of it shocked anybody that Greek households with low wages in an atmosphere of galloping precision don’t save, however as a result of Hatzidakis and Stournaras made black and white to be able to promote capitalization techniques, non-public insurance coverage and the presumptive taxation of the self-employed.
X-ray economic system
What are the details of the Eurobank report?
Greece has the bottom nationwide financial savings as a share of GDP of all eurozone and developed nations. Particularly, it entered the euro with a nationwide financial savings price of 16.3% of GDP in comparison with 22.7% of the eurozone common, however then this price decreased to 10.5% of GDP within the interval 2005-09. Subsequently, with the nice debt disaster, nationwide financial savings in Greece sank and within the interval 2018-22 was at 9.2% of GDP, 16 share factors decrease than the eurozone common (25.6%).
Nationwide saving consists of the sum of presidency, family and enterprise saving. Till 2010, public saving was significantly adverse, however since 2011 it has improved attributable to restrictive insurance policies. Nevertheless, from that yr onwards, the financial savings of the non-public sector decreased, however solely of households and never of companies, which throughout the first years of the memoranda elevated and certainly skyrocketed.
The family financial savings price in Greece is considerably decrease than that of Spain, Portugal and Italy, in addition to the eurozone – this was additionally the case earlier than 2010. Particularly, throughout the five-year interval 2002-06 the typical family financial savings price in Greece was 7% in comparison with 9% in Spain, 15% in Italy, 11% in Portugal and 13% general within the Eurozone. From 2012 onwards, nonetheless, family financial savings in Greece have at all times had a adverse signal, with the only exception of the pandemic interval when there have been restrictive measures. In 2019, nonetheless, the saving of Greek households was at -2.3% of GDP and in 2022 it fell to -4%. On the identical time, Portugal has a financial savings of 8% and Italy, which is taken into account to have an analogous share of the shadow economic system, 10%.
They eat from the prepared
From the evaluation of the ELSTAT Household Price range Survey information, with a pattern of 6,180 households, it additionally emerges that:
Solely 5.3% or one in twenty Greek households save and just one.6% of households with staff – that’s one or two in 100 staff. Pensioners save greater than all age {and professional} teams and the self-employed the least.
The typical annual financial savings for all the pattern amounted to 1,076 euros, whereas it was adverse for households with two adults and kids (-2,159 euros). The typical annual financial savings of pensioners amounted to 2,248 euros, of workers to 410 euros, of workers to 542 euros and of the self-employed to 63 euros. Financial savings charges differ considerably by earnings scale. 40% of whole saving comes from the highest 1% of households with the best incomes. Quite the opposite, 42% or 4 out of ten households have adverse financial savings, i.e. they not solely don’t save however draw cash from earlier financial savings or create money owed.
They wish to, however they can not
In response to the Eurobank research, which is signed by Athens College of Economics professors Sarantis Kalyvitis, Margarita Katsimi and Thomas Moutos, the principle the reason why Greek households don’t save is that they’re unable to take action as a result of they’re burdened with giant bills for well being and schooling – usually the state ought to supply them actually free – however they’re additionally closely burdened by housing prices, particularly by elevated rents, that are disproportionately excessive in Greece in comparison with different EU nations.
Logical, somebody will say. Nevertheless, the professors proceed by including another causes, equally vital of their evaluation:
The widespread tax evasion of the self-employed who’ve the bottom financial savings price – nonetheless, contradicts the instance of Italy, which has simply as excessive tax evasion as Greece however excessive financial savings charges.
The excessive alternative charges that got to pensions up to now and which supposedly gave Greek households the sensation that they didn’t want to avoid wasting.
The parental advantages, that are way more widespread in Greece in comparison with different nations, which consequence within the youthful generations not saving as a result of they anticipate to take belongings from their mother and father’ era.
Funding block
The nationwide saving of a rustic is of main significance for the course of a nationwide economic system. With out financial savings there is no such thing as a funding, that’s, there is no such thing as a development. And the investments are vital to be financed with home cash and never by borrowing from overseas – and in order that the curiosity stays inside a rustic and will increase the nationwide wealth as an alternative of decreasing it, as is completed in the present day in Greece the place all of the curiosity for the service of the Greek public debt they go overseas, but in addition as a result of foreigners can at any time in disaster circumstances cease lending to you.
This was identified, so within the interval 1980-95, throughout the years of the “populist” Andreas Papandreou, as Kyriakos Mitsotakis mentioned, the nationwide financial savings reached 18% of the GDP and the general public borrowed primarily from the inside, the and the nation’s annual borrowing from overseas was in 1995 at 2% of GDP.
The faux bliss
After which got here the euro, accompanied by the false promise from Brussels and Frankfurt that every nation’s nationwide financial savings ranges not mattered, and that as capital moved freely seeking the very best alternatives, all nations would develop and we’d all develop into Germans. However as an alternative of rising, Greece elevated its exterior debt yr after yr to an unthinkable 14% of GDP in 2008, over-indebted itself overseas and crammed “bubbles”. After which got here the chapter.
At this time when essentially the most troublesome days of the disaster are behind us – or at the least we hope so – and the ND authorities along with Brussels and the Financial institution of Greece are selling a development recipe with lowered incomes for the world, solely by investments, the rise of nationwide financial savings acquires the traits of a nationwide aim because the nation has a excessive exterior deficit of 5-6% and which means that it runs the chance of being led to a brand new disaster at any time.
Because of this, Eurobank, because the successor of the Postal Financial savings Financial institution, undertook to organize a research on nationwide financial savings to be able to open a nationwide dialogue on growing family financial savings.
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