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More Brits are considering leaving the country after Brexit.
More Brits are considering leaving the country after Brexit.

Europeans Prefer to Put Savings in Banks

Europeans Prefer to Put Savings in Banks

After years of turbo-driven central bank stimulus, most Europeans still want to leave their spare cash in savings accounts, even if those accounts pay zero interest.
That’s the finding of a survey by Europe’s biggest debt collector, Stockholm-based Intrum Justitia AB, Bloomberg reported.
“After the financial crisis, people have felt a need—even if they have small means—to create some kind of security,” Chief Executive Officer Mikael Ericson said in an interview in Stockholm on Nov. 16. “It can’t be that people save in a bank account because of the fantastic returns, so it must be about a sense of security, having money in the bank.”
Some 69% of Europeans put their savings into bank accounts, according to Intrum Justitia’s European Consumer Payment Report. The survey is based on feedback gathered in September and covers about 21,000 people in 21 countries.
The survey also shows that 26% of Europeans prefer keeping their surplus funds in cash, while 16% hold stocks. Only 14% turn to investment funds, 8% invest in real estate and 8% in bonds.
In Denmark and Sweden, where central bank benchmark rates are negative, almost 80% of people put their surplus cash in bank accounts. In France, the UK and the Netherlands, the figure is above 80%.
But worryingly, Intrum Justitia’s survey shows that even after years of extreme monetary support, many Europeans are wondering whether they’d be better off if they lived somewhere else.

 Looking for Escape
Across Europe, 245 people said they want to move to escape their country’s financial plight. About 27% of respondents said they sometimes can’t pay their debts. Of those, 58% feel they don’t have enough money “for a dignified existence”.
In Britain, 29% of people aged 18 to 24 said they’d consider leaving the country, possibly in response to the UK’s decision to quit the European Union, Intrum Justitia said. A year earlier, only 13% of young Britons said they wanted to leave.
The survey also revealed how financially fragile many Europeans continue to be almost half a decade after the region’s debt crisis. About 44% of all Europeans were unable to pay at least one bill on time during the last 12 months, mainly because of a lack of money, the survey found. Greece was worst, with 76% of households failing to pay on time.
The report comes as central banks run out of tools to provide further stimulus and after years of austerity policies in Europe produced questionable results. Now, with US President-elect Donald Trump promising an investment boom driven by fiscal stimulus, the outlook for interest rates is unclear. An inflationary spending cycle would drive rates higher, but an economic downturn triggered by an international trade war might have the opposite effect.
Asked whether households would be wise to take on a bit more risk in an effort to get higher returns, Ericson struck a cautious note.
“Personally, I think you should be conservative with your savings and ensure that you always get your capital back,” he said. “The basic savings should be placed so that you don’t risk your capital, and in today’s low-rate environment, you shouldn’t be too worried if you don’t have any high interest rate on your account as such.”

 

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