Stable savings and pressure on business: how 2024 ended for the eurozone economy

According to the latest Eurostat report, the household savings rate in the euro area stood at 15.3 per cent in the fourth quarter of 2024, unchanged from the previous quarter. This reflects a balanced dynamic: gross disposable income and consumer spending grew by the same amount - 1 per cent each.

The level of household investments also remained stable at 9.1 per cent of income. Such values indicate stable consumer behaviour despite the general economic background.

At the same time, the profitability of non-credit enterprises went down. The share of gross value added attributable to capital fell from 38.8 per cent to 38.5 per cent. This is the result of the fact that labour costs and taxes increased by 1.3%, while the volume of created value added increased only by 0.8%.

Business investment also declined, with the investment rate falling from 21.8 per cent to 21.3 per cent and gross investment down 1.2 per cent quarter-on-quarter. Such data indicate that companies are being cautious, including in response to rising costs and an uncertain economic environment.

The high level of household savings combined with moderate income growth indicates cautious but confident consumer behaviour. At the same time, the decline in investment activity on the part of businesses reflects worrying signals: rising production costs and weak value added growth are restraining economic expansion.

The indicators are particularly relevant against the backdrop of persistent inflation and discussions on monetary policy adjustment. The next data for the first quarter of 2025, which will be published in July, is expected to show how sustainable this trend remains.