Savings penalised. Italians’ savings over the last five years (2006)

Over the last five years, Italian households have reduced their annual savings by 40%, from 106 billion set aside in 2001 to 64 billion in 2005. In the same years, the savings quota fell from 8.9% to 4.8% of the gross domestic product.
The decline in Italian households’ propensity to save was caused, on the one hand, by the growing difficulty due to rising prices and, on the other, by the many strong discouraging factors that hindered savings and made them less attractive. In particular, the fall in income (due to inflation not sufficiently compensated by wage increases) forced many middle-class families to devote most or all of their income to consumption in order to maintain or try not to lower their standard of living too much. But there were also strictly financial causes: among these were the losses incurred by savers as a result of the defaults on Argentine, Cirio and Parmalat bonds and the fall in yields on Treasury bonds following the reduction in interest rates.
Savings are not of the same scale throughout the Country: there are big differences in the different geographical areas, with a strong prevalence of the North and the Centre over the South and a prevalence in the big cities. The difference between the South and the North is due both to lower disposable income and to a lower propensity to deposit money in banks in the Southern regions and the Islands (26.2% against 28.6% in the North).

Summary Document

Rising prices and numerous strong disincentives hinder saving, causing Italian households’ propensity to save to drop

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