Europeans prefer to keep money in bank accounts rather than stocks

According to the UK Center for Policy Studies (CPS), most Europeans are reluctant to invest their personal funds in stocks, preferring to keep them in savings accounts and receive a smaller but more guaranteed income from interest. Some of the most conservative investors are the British, while the most active are Hungarians, Poles and Spaniards.

CPS Study is devoted to the behavior of British retail investors and its comparison with the behavior of investors in other European countries.

After analyzing the data of European and British statistical organizations, the experts came to the conclusion that in most European countries, people are in no hurry to invest in stocks, preferring savings and savings accounts.

The British were the most conservative investors: the share of funds in assets managed by investment companies in Britain is only 21% – this is the lowest percentage in Europe. On average in Europe, the share of retail investors’ funds in management companies is 29%, approximately the same figures in Germany (30%), France (28%), Portugal (28%) and Italy (33%). The highest rates are in Spain (84%), Hungary (65%) and Poland (61%).

The share of shares in the financial assets of European households remains relatively small – the maximum (12%) was recorded in Finland. Sweden is in second place with 6.5%, Germany is in third with 5.5%. The minimum share of shares in the financial assets of European households is in Italy (2.1%).

The report notes that the British love to keep cash in savings / savings accounts – there is a total of £ 1.8 trillion, and this is almost the entire capitalization of companies included in the FTSE 100. Residents of other European countries have long adhered to a similar strategy for a long time.

During the pandemic, the volume of savings among Europeans increased by almost €1 trillion. According to IMFin 2020-2021, the total savings in European households increased by € 970 billion. This happened due to the closure of air traffic, a sharp reduction in tourism, entertainment services, the closure of many shops, restaurants and cafes, etc.

However, in recent months, as covid restrictions are lifted, Europeans have begun to gradually withdraw their money from bank deposits and savings accounts.

Investors are clearly tired of the ECB’s low interest rates. According to Refinitiv Lipper cited by Reutersin March, a record inflow of funds into European short-term investment funds was recorded – € 34 billion. The outflow of funds from deposits was partly caused by the situation around the Swiss bank Credit Suisse, almost bankrupt in March.

But for now, as noted by the Center for Policy Studies, the big problem is the “massive amount of cash” that citizens – in this case in the UK – keep in savings accounts. CPS believes that such funds, although they bring a guaranteed income to people, do not work for the good of the economy. The center’s analysts partly blame this on the country’s authorities, who need to “more actively encourage retail investment and develop shareholder democracy.”

“By encouraging more active retail investment, the government will not only be able to free up large funds to stimulate the economy, but will also help people earn more income,” the researchers believe, urging the authorities to develop a clear and accessible retail investment strategy for citizens.

Evgeniy Khvostik