Why has the saving ratio remained historically high in France since the end of the pandemic?
Bulletin No. 262, article 3. The sudden rise in France’s saving ratio during the pandemic can be explained by shop closures and the fact that income levels remained largely stable thanks to public support. At the end of the pandemic, a portion of these forced savings was reabsorbed, yet the saving ratio remained higher than in 2019 and even rose in 2023-24. We identify four explanatory factors: consumption smoothing, income composition effects (strong growth in financial income with the rise in interest rates), inflation-linked losses and the impact of uncertainty. Disinflation and monetary policy normalisation should mitigate composition and inflation effects. However, domestic and global uncertainty could continue to support France’s saving ratio.
France’s household saving ratio reached historical highs during the Covid crisis. While “forced savings” declined once public health restrictions were lifted, the saving ratio has still not returned to its pre-crisis level. At the end of 2024, it remained 3.5 percentage points higher than at the end of 2019.
We study several possible causes for France’s persistently high saving ratio. First, we look at “fundamental” factors linked to consumer behaviour – specifically, consumption smoothing by households in response to income fluctuations and intertemporal substitution between savings and consumption. Second, we assess the impact of the structure of household disposable income, which was strongly influenced by rapid growth in investment income between 2022 and 2024. We then examine the inflation-related losses incurred on household wealth in 2022 and 2023, which can also affect saving behaviour. Lastly, we analyse how uncertainty may have increased precautionary savings.
We quantify these factors separately, but they may share common determinants (inflation, monetary policy response, etc.) and are not necessarily cumulative. Taken together, however, they help to form a comprehensive macroeconomic view of household consumption, which has implications for the Banque de France’s medium term projections.
1 The recent divergence between permanent income and current income may have prompted households to increase their saving ratio
The smoothing of income fluctuations and intertemporal substitution between present and future consumption may have contributed to the rise in the saving ratio. We estimate this effect with the FR-BDF model (Lemoine et al., 2019), which the Banque de France uses for its medium-term projections and to simulate macroeconomic policies or shocks.
In this model, households seek to optimise their consumption over time according to their expectations of future income – or permanent income – and the real interest rate gap (versus a long-term target). In the short run, the path of consumption also depends on changes in the output gap and in the real interest rate gap (see Appendix 1).
The modelling reveals two phenomena. The first is that households respond to income fluctuations by smoothing their consumption over time. When current income rises unexpectedly, or when households regard current rises in purchasing power to be temporary, their consumption remains stable and their savings rise. The second effect is the intertemporal substitution between present and future consumption through savings, which depends on the real interest rate. …
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Updated on the 18th of March 2026