Dutch People are Fanatical Savers. That’s a common belief that, except for a short period, proves to be true in practice. Together, we own over 500 Billion euros in Savings. But you can also save too much, experts say.
“Idally, you start with nothing and end with nothing,” Says Marten van Garderen or ING. Accordance to the economist, we tend to save too much. “If you have money left at the end of the day, you should have spent it early.” That’s good for the economy and for yourself.
When Economists Talk About Saving, They Mainly Look At The So Called Savings Rate. That is the portion of your income that you don’t spend on consumption and therefore a broad concept. “That can simply be saving, but also paying off your mortgage, setting aside money for your guesthouse, or investing,” van Garderen Explains.
That savings rate has actual leg QUITE High in the Netherlands for Decades, with the exception of about the first ten after the turn of the century. “That was a period when we were dissaving,” Says Researcher Yvonne Adema of the Netherlands Bureau for Economic Policy Analysis (CPB). While in 1990, there was a peak. “Almost as High as core corona.”
How much money we spend and save from our income mainly depends on sentiment. With the exception of the corona period, because we simply couldn’t spend our money because everything was closed. “Duration Uncertain Periods, People Save More,” Says Adema.
After Corona, The Money Didn’t Start Flowing
If you only look at the balance on our savings accounts, it has increased sharply since corona, and the total sum remains dizzyingly high at over 500 Billion euros. Both the cpb and other economists thought that we would let the money flow again after corona. But that Didn’t Happen. “It’s going slower than we thought anyway.”
And also the savings rate, which had risen to almost 10 percent false corona and then fell back to 1 to 2 percent, is rising again. The fact that we don’t spend a larger part of our income has mainly to do with the Dutch housing market. And, More Specifically: The MortGage Rules.
“Since Those Have Become Stricter, You See the Savings Rate Increasing,” Says van Garderen. Adema also confirms this: “Due to the Tighting of the Rules, HomeWers Increasingly Have an Annuity Mortgage. That is a MortGage Where You Pay the Same Gross Monthly Amount, Made Up Of Interest And Repayers. Result, more is being repaid and therefore saved. “
That was also Exactly the Intention of Tighting the Rules After the Financial Crisis of 2009. As A Result, The Choice Today More Often Falls On Saving – In The Broad Definition of It – Than Consuming. People with a MortGage Debt also Increasingly Choose to use a Windfall to pay off the MortGage Instead of Consuming, even if they are not forced to do so by stricter rules.
‘People are not in the right mood to spend’
Then the Question Arises What Is Better For The Economy: Saving or Consuming? “In Theory, you can save too much as a country,” Says CPB Researcher Adema. “Japan is of Mentioned as an Example. In the Extreme Case That You As A Country Consume Nothing and Save Everything, The Economy Comes to A Standstill.”
There is no ‘iDeal’ Figure for the Savings Rate, Such as the 2 percent target for inflation from the European Central Bank (ECB) that is. The Idea Behind This is that a Little Inflation is Lubrication for the Economy. Consuming is good for the economy in the short term anyway, but saving is good for the long term.
Savings are invested in investments. “And if the economy grows, both consumption and savings can grow, and that is happening now,” Says Adema.
Both economists do not think it is likely that the savings rate will ever Become negative again, as it was at the beginning of this century. “The consumer now has more buyhasing power and there is more in savings accounts,” Says van Garderen. There has actual leg too much since corona. “People are not in the right mood to spend it. After Corona came the energy crisis, high inflation, geopolitical tensions, and the trade war.” As a result, we will save an increasingly larger portion of our income for the time being.
ING Economist van Garderen: “The savings rate will at most fall somewhat when things get better and people let the money flow again. Saving too much is not good for the economy, because there is consumed and that is not good for economic dynamics.” The CPB Expects The Savings Rate to Be 5.6 percent this year, to rise to 6.5 percent by 2030. “We are not spending the money and masse yet. The situation in the world is not right for that.”