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.
| 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 |
Footnotes
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.