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“In 2020, the incomes of the euro area private non-financial sectors recorded the strongest contraction in the last twenty years, only partially countered by the support measures introduced by the general government”. This is what we read in the new Covid 19 note from Bankitalia on “Economic and financial flows between institutional sectors in the euro area countries during the pandemic”.
Bank deposits in Italy increased by 1,700 euros per capita, +2,500 in Germany
In per capita terms, euro area household deposits increased by € 2,000, with amounts above average in Germany and France (€ 2,500 and € 2,400 respectively) and lower in Italy and Spain (€ 1,700 and € 1,500 respectively) . At the end of 2020, the weight of deposits on households’ financial wealth (gross of liabilities) stood at 34.2 per cent in the area as a whole. In Spain, deposits reached 42.2 per cent of household financial assets, exceeding the share of Germany (40.2 per cent); the weight for Italy is instead similar to that of the average for the area and that for France slightly lower (29.2 per cent).
Primary income fell by 3.1%
In 2020, euro area households’ primary income (from work and property) fell by 3.1% at current prices, the strongest decline since the launch of the monetary union. However, the sector’s gross disposable income increased slightly compared to 2019 (0.2 per cent) thanks to the exceptional expansion of net social transfers to households. Despite the fact that public interventions supported incomes, consumption fell by 7. , 6 percent. Household consumption expenditure had always grown in the last twenty years, with the exception of 2009, when the decline was however much more contained than the recent one.
Savings / income ratio increased from 13.1 to 20 per cent in 2020
The joint dynamics of gross disposable income and consumption therefore led to an increase, in the area as a whole, in the ratio of gross savings to gross disposable income, from 13.1 to 20 per cent between 2019 and 2020. Savings were not channeled towards gross investments in housing and fixed assets, which on the contrary fell, but resulted in an increase in the financial balance in relation to gross disposable income (from 3.9 to 11.3 per cent). In per capita terms, the financial balance went from just over € 800 in 2019 to almost € 2,400 in 2020.