German private wealth at record high

German private wealth at record high

The economy is collapsing, millions of people are on short-time work – nevertheless, Germans have gotten richer in the corona crisis. Why is that?

Always more. The Germans are expanding their private wealth despite the corona crisis.

© Photo: Christin Klose / dpa
Always more. The Germans are expanding their private wealth despite the corona crisis.

In the second quarter of the Corona crisis, people in Germany put more on the high edge and benefited from the recovery on the stock markets. All in all, at the end of June they were wealthier than ever.

According to the Deutsche Bundesbank, the financial assets of private households in the form of cash, securities, bank deposits and claims against insurance companies rose to a record value of around 6,630 billion euros. That was 253 billion euros or 4.0 percent more than in the first quarter.

In addition to the economy, the recovery on the stock markets after the price plunge at the beginning of the crisis also drove development. “The valuation losses for shares in the previous quarter triggered by the pandemic and the uncertainty about its economic consequences were largely offset,” the Bundesbank explained on Friday.

Among other things, savers continue to rely on cash and bank deposits, which, although hardly any more due to the low interest rates, can be accessed quickly. At the end of the second quarter, the volume totaled around 2,694 billion euros. That was about 72 billion euros more than in the first quarter. In 1882 billion alone were in current accounts or in cash.

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According to the DZ Bank, the Corona crisis is likely to push the savings rate to a record this year. “On the one hand, many private households have saved more as a precautionary measure out of fear of income losses due to short-time work or unemployment,” said DZ Bank economist Michael Stappel recently. “On the other hand, lockdown measures and travel restrictions massively hindered private consumption, especially in the first half of the second quarter.”

According to the top cooperative institute, the savings rate is likely to rise to around 16 percent this year, compared to 10.9 percent in 2019. This would save private households around EUR 16 for every EUR 100 of disposable income. According to data from the Federal Statistical Office, this would be the highest value since reunification.

Germans use low interest rates to borrow money cheaply

According to the leading economic research institutes, the disposable income of private households has remained relatively stable overall during the acute crisis phase. Economic stimulus programs have also contributed to this. So, in total, people have money to put on the high edge.

Insurance and other products for private old-age provision are also popular. At the end of June it was around 2,423 billion euros, around 20 billion euros more than in the first quarter. According to the Bundesbank, net purchases of shares and other equity interests were also an important factor, at 16 billion euros.

As in the past, people are using low interest rates to borrow money cheaply, especially for home loans. Real estate is considered to be relatively crisis-proof.

After deducting the debts, the financial assets also increased significantly by 236 billion to around 4722 billion euros net. When calculating, the Bundesbank takes into account cash, bank deposits, securities and insurance claims – but not real estate. How wealth is distributed, does not appear from the data. In July it was already known that the number of dollar millionaires has increased. (dpa)


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