Posted on Dec. 2020 at 6:00
The health and financial crisis has substantially altered the attitude of households who could arbitrate between consumption and savings. These households have indeed reduced their consumption and saved substantially. In total, in France, the household savings rate will reach 20.3% in 2020. This has been unheard of for more than forty years!
According to the latest figures from INSEE, household financial savings now exceed 5.400 billion euros. This is an exceptional precautionary effort that most public discourse does not understand by calling for a revival of consumption. Everything is happening as if savers should be made to blame, on the grounds that they would stifle growth.
On the contrary, we believe that the saver is rational and that savings can be very useful for national recovery. Instead of preparing to further overtax savers, it is better to understand them to make French savings a real national force in order to support the rebound in growth in 2021 and beyond.
Rational and reasonable anticipation
Under the effect of confinements, our fellow citizens are brought this year – and perhaps in 2021 – to “forced savings” by the impossibility of consuming, especially leisure. They are also encouraged to “precautionary savings” to face the public difficulties announced and publicized (sustainability of pension systems, rise in unemployment or tax increases necessary to finance public over-indebtedness). There is therefore a rational and reasonable anticipation which justifies the rise in the savings rate.
This movement can even have beneficial effects such as restoring the external balance. But we must be clear about its origin. The saver only anticipates his own difficulties, which makes any fiscal stimulus ineffective if it is not accompanied by increased confidence in the future. The saver makes his arbitrations taking into account the information available and not of injunctions which are often contradictory over time.
Households that can make a trade-off between consumption and savings rightly take this public lack of foresight into account. It is therefore time for the State to rely on this savings rather than criticize it.
The virtues of the saver
We must recognize at least three virtues to savers. The French saver is a stabilizing element for the economy, because he has a constant preference for security, including tax. It is therefore reliable long-term support, particularly for public accounts and national priorities. The multiannual recovery of public accounts, on which a new commission of experts will work again, would therefore benefit from offering positive real interest rates for popular savings and integrating a profound reorientation of administrative rules in favor of innovation. and employment rather than stone and public debt.
The State, when it is itself innovative, can also rely on savers to set up major projects for the future (Balladur loan in 1993, large loan for future investments from 2007) ; this is also how Europe was able to put in place the Juncker plan yesterday and the recovery plan today.
French savings not only contribute to national independence, but it also contributes to France’s attractiveness to international investors, who are inclined to invest in the safest countries and with a deep market.
There is room today to repatriate to France capital exported sometimes at our borders by legal or fiscal heaviness. The accumulation of savings in France should therefore no longer be opposed to the resumption of economic growth but on the contrary experienced and perceived as a national asset to be put at the service of productive and sustainable investments.
Philippe de Fontaine Vive is Managing Director of Compagnie Financière Richelieu.