Savings & Investments: propensity to save revived by inflation

[April 2022] It seemed that the provision of state support and the rebound in economic activity coming on the heels of the health crisis were leading households to adopt more typical savings and consumption patterns and to take a more traditional approach when choosing between their financial assets. This situation, however, has been largely upset by the rise in inflation and the outbreak of war in Ukraine.

Savings and inflation: three strategies adopted by the French 

The French have been deeply affected by the surge in inflation (and the subsequent acceleration of the inflation rate in recent months) that had the immediate effect of depressing their purchasing power and leading them to reappraise their expectations for future living standards. This new situation has encouraged French people to start saving again… to the effect that the number of people prepared to build up precautionary savings against a future deterioration in their economic situation has remained at the historically high level of 88%. A large proportion of the population (16%) claim, however, that they are unable to save any money at all! For a minority of French people, the frustration of this inability to save is compounded by their being obliged to give up the few cases of ‘consumption for pleasure’ they had managed to cling on to until recently. 

The second strategy consists in building up as far as possible a nest egg capable of cushioning them against unforeseen events, with most people choosing sight deposit accounts and regulated savings products. The Livret A passbook savings account is still the most popular investment vehicle not because of the rate of interest it pays but because of its intrinsic qualities: ease of use, simplicity, and zero-risk savings. Real estate also continues to find favor in the eyes of the French as a good long-term investment; land and buildings remain the favorite assets of the French. 

64 % of French people believe that it’s better to invest in real estate than in financial products.

Finally, a third strategy is emerging in this new, more inflationary context: investors’ search for growth in value and higher rates of return to avoid suffering a decline in the purchasing power of their financial assets. This is expressed, firstly, by a lower aversion to risk… even if the stock market situation is considered less favorable than it was last year. This strategy also finds expression in French people’s growing interest in atypical assets such as crypto-currencies, gold, forests, and participative financing, with growth in the rate of investment in such assets, notably among young people and high-net-worth individuals.   

Review of 2021 and early 2022

In 2021, the financial investments of French households remained at the very high level of approximately €101.8bn after reaching a total of €141bn in 2020. In their investment behavior, households preferred liquidity and security, allocating virtually all of their investment flows to sight deposit accounts (€49.1bn) and passbook savings accounts (€46.2bn). Some of these precautionary savings were also redirected towards life insurance (€23.7bn) thanks to exceptional inflows into unit-linked products (€34.7bn) and a smaller outflow from euro-denominated products (€11bn).

18.1 billion euros extremely high inflows (excluding securities) in January and February 2022

With regard to 2022, the Russian-Ukrainian conflict will give a further impetus to inflation in the form of rapidly increasing commodity prices. This will have a highly adverse impact on the French economy that was already losing steam after the post-Covid catch-up phase. The current baseline scenario gives France a GDP growth rate of approximately 3% in 2022 (representing a negative impact of nearly one GDP percentage point compared with a previous forecast of 4%), with an average rate of inflation above 4% and a modest rise in interest rates. In this context, the savings rate is expected to run close to 16.6% in 2022, after 19.5% in 2021 and 21.4% in 2020. 

In 2022, an increase in precautionary savings is expected to be the principal feature, once again, of the financial investments flows of French households. However, the foreseeable decline in purchasing power depressed by rapidly increasing prices and the expected slowdown in the distribution of home loans are expected to reduce the resources available for financial investments. Excess inflows could amount to €86.3bn in 2022, down slightly from the record-breaking levels of €141bn achieved in 2020 and €101.8 billion in 2021. 

This pause in activities is expected to lead to investment decisions still influenced by a wait-and-see attitude, with investors looking for security and ready access to their funds at the expense of more risky investment decisions owing to interest rates still seen as abnormally low and increased stock market volatility. In view of the impact of the 1% increase in the interest rate paid on Livret A passbook savings accounts, there is expected to be a relative shift from sight deposit accounts (€34.4bn), life insurance (€17.7bn) and term accounts (€3.5bn) to Livret A passbook savings accounts (€53.4bn). Unit-linked life insurance (€33.9bn, compared with €34.7bn in 2021 and €23bn in 2020) is expected to continue to grow, again at the expense of euro-denominated products. 

For further details

For further details

Presse release dated April 7, 2022 (In French only)


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Presentation – press conference, April 2022 (in French only)


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Savings market outlook: key charts & figures, March 2022 (in French only)


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Savings market outlook: key charts & figures, April 2022 (in French only)


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