According to a study published yesterday by the Economic Analysis Council (CAE), two-thirds of savings accumulated by the French since confinement are held by the wealthiest 20%.
Researching the dynamics of both aggregate transactions and financial wealth and savings behavior during the Covid pandemic, the report concludes that while the wealthiest 20% of French households have “hoarded” 70% of the growth in financial wealth accumulated between March and August 2020, the bottom decile “experienced a severe decrease in consumption, a decrease in savings and an increase in debt.”
Data also shows that “more than 70% of the €45 billion in excess wealth have accrued to the top two deciles. And 55% alone of this excess wealth went to the top decile. Given these top two deciles accounted for a little less than 45% of total net financial wealth before the pandemic, this suggests that the crisis has generated an increase in wealth inequality.”
CAE deputy chairman Philippe Martin commented, “Income inequalities can be seen directly from the fact that the first two deciles have spared nothing, and have no mattress in the event of a shock.”
The report “Consumption Dynamics in the COVID Crisis: Real Time Insights from French Transaction & Bank Data” prefaces that coronavirus has created an unprecedented need for “extreme nowcasting” to monitor the impact of the shock on the economy in real time. Economists analyzed banking data of some 300,000 customers, while respecting absolute anonymity, and worked in partnership with the Groupement des Cartes Bancaires CB and Crédit Mutuel-Alliance Fédérale, the only bank that agreed to participate in the study.
From France’s lockdown in mid-March until mid-May, card transaction expenditures saw a severe decline of some 50% but “expenditures bounced back almost immediately to their 2019 levels, and remained steady throughout the summer. In that sense, the French recovery in terms of consumption has been much stronger than in other countries such as the U.S. or the U.K.” However, the reports adds that consumer spending in France has been falling since the last weeks of September as a second Covid wave spreads across the country.
Other study findings state that “aggregate financial wealth has increased by about €50 billion since the onset of the crisis, compared to the counterfactual of a prolongation of the 2019 trend. Interestingly, most of this excess financial wealth is accounted for by an increase in liquid savings.”
The CAE (Conseil d'Analyse Economique) is an independent, non-partisan think tank that reports to French prime minister Jean Castex.