The impact of the COVID-19 pandemic has felt over the Europeans’ financial conduct, too, in terms of managing their expenses and saving customs, reads the latest international ING survey conducted in May.
At European level, Europeans are managing money differently during coronavirus: a third (30%) feel they are now saving more, while almost half (44%) are spending less. But the portion of households without savings remains steady. Financial effects are skewed. For some, decreased spending will reflect necessity, for others, simply a change in routine.
Half (52%) of Europeans say they are paying with card more often due to coronavirus and 44% are spending more online. Spending practices have adjusted. In addition, many say the amount they spend and save has changed. Just under half (44%) are spending less overall. Thirty percent say they are now saving more. These changes will have been driven by both necessity and choice. While some are no longer working and so actively limiting their daily spending due to reduced earnings, others are finding they have more left over at the end of each week simply because they don’t have the opportunity to go out and spend.
Despite views of changing spending and saving activity, confidence in saving comfort has not shifted dramatically. There has been a slight increase, indicated by a reduction in the number of Europeans who say they would need more savings to feel financially comfortable (73% to 68%). It was those aged 45-54, and those who were working, so therefore also earning, who were most likely to experience this shift in financial comfort.
What about Romanians?
Around 46% of Romanians say they have spent less money during lockdown, above the European average of 44%, with residents of Luxembourg and Italy ranking first (55% on par) and UK third (51%).
At the same time, 31% of Romanians have saved more, less over the European average of 30%. Luxembourg also ranks first on saving (41%), followed by Turkey (35%), with those spending less being Czechs (18%) and Austrians (23%).
In May, where the study was conducted, 35% of Romanians stated they have no savings at all, but the share is on decline by 4pc as against December 2019, when it was 39%. Still, Romanians are in last place on saving.
Almost 76% of Romanians confess that they would feel more comfortable if they had more savings (up by 5pc as against December last year), compared to the European average of 68%. Romanians are outranked only by Poles (82%) and Czechs (78%).
The shift was largest among the middle aged and those currently working, and therefore also earning. The portion of those aged 4554 who said they would need much more in savings to feel comfortable decreased by 11% between Dec’19 and May’20. Similar trends were seen among the self-employed (-10%), and those working part-time (-11%) and full-time (-7%). This small shift in savings comfort may be temporary. Lockdown seems to have reduced the ability of people to spend. Those who have been able to remain employed may feel they are saving more. However, it’s worth noting that we ask about perceptions rather than actual saving values.
“The economic crisis of the coronavirus is of exceptional magnitude, far more so than the financial crisis of 2008. We estimate, for example, that the contraction of GDP in the euro zone will be around 8% in 2020, and that the recovery will last for years. In this context, it is likely that the response of Europeans to this question will evolve in the coming months. As the economic crisis makes itself felt among households, they are likely to feel they need more savings, whether because of a drop in income or an increase in mistrust for the future that would lead them to plan for a larger savings mattress,” said Charlotte de Montpellier, ING Economist.
“The exceptional impact of the crisis prompted by the COVID-19 pandemic will have complex effects in the economy, both on short-term-through the economic contraction estimated at -5.5% in 2020, but also in the long run, through the change of the consumers’ behaviour under the impact of the epidemiological evolution, and of the measures to combat it. In this respect, we expect an increasing trend to saving, in line with the last figures on the evolution of the population’s deposits that reached record highs in May (15.2% more than in the same period in 2019). Considering the lower general capacity of the Romanians to save (35% of the households saying they have no savings), but also the immediate perspective of disrupting the growth rate of incomes, it’s probable that a great part of the additional saving are the result of a more cautious consumption behaviour”, said Valentin Tătaru, economist ING Bank Romania.