Households accumulate €1.2bn in pandemic savings


Households have accumulated an additional €1.2bn in savings but whether they're going to spend them is less certain (Photo: Shutterstock) 

Luxembourg households accumulated an additional €1.2bn in savings in 2020 because the pandemic limited spending options, Statec said on Monday, but it could take some convincing to get them to spend. 

Consumer spending fel by 9% in 2020 compared to a “normal situation - a non-crisis scenario”, national statistics office Statec said in a report. Compared to 2019, spending fell 5% in value and 6% in volume.

Spending on hotels, restaurants and bars saw the biggest drop at 33% with the hospitality sector closed for business for much of 2020 as part of lockdown measures. Leisure and cultural activities spending dropped 22%, followed by transport as well as clothes and shoes (each -19%).

The only category that saw an increase in spending last year was food and non-alcoholic beverages, Statec said, as prices for many food items rose but people also spent more on home cooking.

Spending by cross-border commuters or petrol tourists fell 16% because of remote working and closed borders, Statec said.

But despite accumulating €1.2bn in additional savings in 2020 compared to the year before, Statec said consumer spending might not bounce back that quickly. Low-income households weren’t able to save as much as middle or upper-class families. But for the wealthy there is also less urgency to spend.

In addition, Statec said it would be hard for some sectors to recoup the losses of 2020 as people, for example, would not go the restaurant twice as often when they reopen.

While the forecaster predicts an 8% rebound of consumer spending in 2021, it said this depended heavily on consumer confidence. An uncertain economy could incentivise people to accumulate savings for a rainy day rather than making any big purchases.

A worst-case scenario would see 2021 consumer spending fail to return to 2019 levels.