Europe's Idle Savings: A €422 Billion Opportunity Cost
The European continent is facing a significant economic issue - idle savings that are costing households dearly. According to Revolut's European Wealth Drain Index, which combines survey data with official deposit and inflation figures, Europeans are losing ground in real terms even when their money is locked away in deposits.
The study found that average one-year deposit rates fail to keep pace with inflation in 12 of the 20 markets included. With an average deposit rate of 2.76% against an inflation rate of 2.94%, households are forgoing a significant amount of growth capital by staying in cash.
The opportunity cost is substantial, with Revolut calculating that households give up an average of €638 per €10,000 each year by not investing their savings. This translates to approximately €422 billion in lost growth capital across the continent.
Rolandas Juteika, head of wealth and trading at Revolut, suggests that better products may not be enough to overcome the issue of inertia among savers. He notes that perceived risk and a lack of knowledge are major barriers to investing, particularly for those with smaller sums to invest.