Savings may not be Europe’s super weapon in economic war

Europe seeks to tap into citizens' savings to boost economy, but critics doubt effectiveness amid deep-rooted issues.

As Europe seeks to hold its ground against economic rivals, politicians think they have a secret weapon: the untapped savings of its citizens.

From Italy selling government bonds to households, to French talk of a pan-European savings product or Britain offering tax breaks for investment in U.K. shares, governments across Europe are seeking ways to mobilise household wealth.

All these plans share an underlying thinking: Europe is sitting on plenty of cash that could be channelled towards its goals, from the green transition to beefing up militaries.

Politicians hope private money, invested in local stocks or government debt, can help close a growth and productivity gap between the U.S. and China, which have been doling out massive subsidies to industries. But critics say such schemes risk disappointing savers while failing to address deep-rooted shortcomings in the European economic model that they see as dissuading investment.

“It’s a way of inventing an easy solution to problems that are very complicated,” said Daniela Gabor, a professor at the University of the West of England.

Europeans have long saved more than their U.S. counterparts and the gap has widened recently, possibly due to uncertainties such as the war in Ukraine.

Politicians like French Finance Minister Bruno Le Maire are now eyeing this nest egg, which includes €8.4 trillion of euro zone bank deposits.