No. 1047 - Consumption and saving in the euro area after COVID: a scenario analysis
The paper examines the unusually weak dynamics of household consumption in the euro area following the crisis caused by the COVID-19 pandemic. The saving rate increased and remained at high levels through 2025, despite the recovery in disposable income from 2022 onwards and the government measures that mitigated the effects of the energy shock resulting from Russia's invasion of Ukraine.
A scenario analysis suggests that household spending was affected by higher interest rates and inflation, as well as by the persistent weakness in consumer confidence. However, even after taking account of these factors, the increase in savings appears exceptionally large relative to historical patterns. Additional factors that may have contributed to limiting consumption include considerable pessimism about future income prospects, driven by high inflation, and the marked heterogeneity in saving behaviour across households belonging to different income groups.
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28 July 2026
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