“In any case, we are not getting richer,” Johannes Turner, director of the OeNB’s statistics department, told reporters on Wednesday. It is also evident that in Austria, compared to the euro area, very large amounts of money flow into investments, but very little into retirement provision. In this country, only 15 percent of financial assets are in pension products, but in the euro area it is 29 percent. Retirement provision products – as well as company pension provision – have also lost some of their importance in recent years. This also has to do with the different pension systems, says Turner.
While Austria’s consumption rose at the same rate as its nominal income last year (7.8 percent each), it rose only 3.4 percent in the first half of 2024, even though income was 6.5 percent higher. Adjusted for inflation, this means that consumption remained almost unchanged, although real income rose by 3.2 per cent. This appears to be reflected in a significantly higher savings rate of 11.4 percent this year. “We’re seeing people saving more,” Turner said. In 2023, 8.7 percent of the income was set aside. It is doubtful whether the spending will catch up in the future, as the current high savings rate is still within the normal range in Austria, Turner said.
An average of 23.4 percent of consumer spending now goes to housing; before Corona it was 21.8 percent. As a result, much less is spent on transport, and expenditure on food and leisure, measured as a proportion of income, is back at the 2019 level.
The increased interest rates have also changed the use of available financial resources, Turner explained. Domestic households have significantly reduced their borrowing; most debts, including home loans, now carry interest at a fixed rate. From Turner’s perspective, it is not so surprising that more fixed interest rates are now in demand. Instead, one must ask oneself why variable interest rates were so popular in Austria. This does not necessarily indicate that they are willing to take risks; it could also be that many people were not aware of the risk of variable interest rates.
As a result, more savings were made and money was transferred from daily investments to long-term investments. “Only” 61 percent of savings were available daily in June; at the beginning of 2022, before the European Central Bank (ECB) raised interest rates, it was still at 70 percent.
It is clear that Austrians are still particularly happy to trust the state with their money: the revived ability to deposit money in federal treasury notes at fixed interest rates is very welcome and with very little effort. Two billion euros have flowed into federal finances since the instrument was restarted at the end of April. This formally turns people into securities buyers, sometimes without knowing it, as the instrument is often seen as a “savings book”.
In the second quarter of 2024, more than half of the money for domestic security went into federal finances because Austrian households have more than 300 billion euros in banks, “I don’t think that will cause much panic among banks,” says Turner.
In total, domestic households have already invested 11.7 billion euros in financial products in the first half of 2024 – more than in all of 2023 (10.2 billion euros). Financial assets of 872.1 billion euros were balanced by liabilities of 214.2 billion euros. The debt ratio is just under 25 percent lower than the average for the euro countries (around 29 percent).
2024-10-23 12:29:00
#Austrians #saving #borrowing
