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Managing my investments
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1.2.4 Savings in an international context

The UK has a relatively low household savings ratio compared with other countries, as shown in Table 1.3.

Table 1.3 International Household Saving Ratios 2021 (%) (Savings as a % of household disposable income)
Switzerland 21.9
Ireland 20.2
Netherlands 17.0
Sweden 15.5
Germany 15.1
France 12.8
United States 12.4
European Union average 10.1
Japan 7.8
Italy 7.6
United Kingdom 6.9
New Zealand 3.6
South Africa 1.1
Portugal -0.6
Greece -3.1
(OECD, 2023)


Notes: The ratio for the UK is measured differently to the measure used in previous sections of the course (largely due to the treatment of savings in pension schemes). Negative ratios indicate ‘dissaving’ (a reduction in savings).

The data shows the household savings ratio varying significantly between countries. The data is cross-sectional – a snapshot of a moment in time. As a result, we cannot draw too many conclusions – for example, Portugal had a ratio of 2.1% in 2020 whilst in 2022 it had fallen to minus 4.9%.

Of particular interest, though, is that the UK’s ratio is lower than in those Western European countries that we would consider as economic peers: France, Germany, the Netherlands and Italy.

The reasons for these differentials are various. Cultural reasons are a key factor with some societies having a stronger tradition of saving and investing – sometimes due to the greater incidence of natural catastrophies. The financial strength of economies is also vital since households with growing affluence are better placed to have surplus income to save for the future. Access to finance is also critical: if you are confident of the ability to be able to borrow money to finance life’s major expenditures or to cover unexpected events, you may be less inclined to save to provide the funds needed to cover these.