According to the consulting firm Boston Consulting Group (BCG), European households currently hold approximately 12 trillion euros in savings, comprising bank deposits and cash, which represents an average of 15 percent of their net income. This level of saving is notably higher than in the United States, where the average savings rate falls below five percent. Furthermore, while 58 percent of US households own stocks, bonds, or funds, this percentage is only 27 percent in the Eurozone.
BCG attributes this conservative behavior to “deeply rooted” cultural norms. A survey involving over 5,000 people across Germany, France, Italy, and Spain found that roughly two-thirds of respondents indicated they preferred not to take risks with their savings. Similarly, when asked what type of investment they would advise a young person planning for retirement, the majority recommended low-risk options, even though the consulting firm points out that history shows stocks and equity funds typically yield higher returns over the long term than savings accounts or daily interest accounts.
This pervasive risk aversion has led to weaker capital markets in Europe. Many companies relied on bank loans to fund their growth, yet the continent struggles to provide capital for innovative business models. Consequently, many large start-ups seeking capital often choose to go public in the US rather than in Europe.
Mario Draghi, former head of the European Central Bank, noted in a 2024 report on EU competitiveness that Europe needed to invest an additional 800 billion euros annually into growth and innovation. However, BCG indicates that, nearly two years later, this goal remains significantly out of reach. Meanwhile, companies in the US and China have substantially increased their research and development expenditures in recent years, particularly in the technology sector.
Sweden is cited as a model for shifting capital from retirement savings into equity investments and bonds. In Sweden, many workers automatically allocate around 13 percent of their pension contributions to the capital market, a system that has successfully fostered new companies like Klarna and Spotify. In contrast, Germany has historically faced political difficulty in gaining a majority to allocate a portion of the public pension fund to the stock market.
