Euro Area Net Saving Declines as Investment Rises, ECB Data Shows

Euro area net saving declined to €863 billion in the four quarters to the third quarter of 2025, down from €877 billion recorded in the four quarters to the previous quarter, according to data published by the European Central Bank. The latest figure represented 6.9 per cent of euro area net disposable income. Over the same period, net non-financial investment across the euro area rose to €590 billion, equivalent to 4.7 per cent of net disposable income, with the ECB noting that the increase was driven largely by stronger investment activity among non-financial corporations.

The combination of lower net saving and higher net non-financial investment resulted in a decline in euro area net lending to the rest of the world, which fell to €304 billion from €347 billion in the four quarters to the previous quarter. The ECB attributed this reduction directly to the simultaneous easing in saving and expansion in investment. Within the domestic sectors, households’ net lending was broadly stable at €596 billion, corresponding to 4.8 per cent of net disposable income. Net lending by non-financial corporations declined to €77 billion, or 0.6 per cent of net disposable income, compared with €88 billion previously, while net lending by financial corporations fell to €100 billion, equivalent to 0.8 per cent of net disposable income, down from €110 billion. At the same time, general government net borrowing increased, contributing more negatively to overall euro area net lending at -€469 billion, or -3.8 per cent of net disposable income.

Household financial investment continued to expand at an unchanged annual rate of 2.6 per cent in the third quarter of 2025. Within this total, growth in currency and deposits accelerated to 3.2 per cent from 3.0 per cent in the previous quarter. Investment in life insurance products increased at a faster pace of 2.3 per cent, up from 2.1 per cent, while net purchases of shares and other equity slowed to 2.4 per cent from 2.6 per cent. Investment in pension schemes remained steady at 2.6 per cent. Investment in debt securities continued to contract, but at a slower rate of -0.5 per cent compared with -1.5 per cent previously.

The ECB reported that households were net sellers of debt securities issued by monetary financial institutions and non-financial corporations, while at the same time acting as net buyers of debt securities issued by the rest of the world, other financial institutions and general government. Overall, households were net sellers of listed shares. By issuing sector, they sold listed shares of monetary financial institutions and non-financial corporations, while purchasing shares issued by the rest of the world, insurance corporations and other financial institutions. Households also increased their net purchases of non-money market investment fund shares further, even as net purchases of money market fund shares declined.

Household balance sheet indicators continued to improve, with the household debt-to-income ratio falling to 81.4 per cent in the third quarter of 2025 from 82.1 per cent a year earlier. The household debt-to-GDP ratio also declined, easing to 50.7 per cent compared with 51.3 per cent in the third quarter of 2024.

Financing conditions for non-financial corporations showed modest changes. Total financing increased at a broadly unchanged annual rate of 1.5 per cent. Equity financing grew at a stable rate of 0.7 per cent, while financing through debt securities accelerated to 2.4 per cent from 1.9 per cent in the previous quarter. Growth in trade credits strengthened to 5.1 per cent from 4.8 per cent, and loan financing continued to rise at an unchanged rate of 2.2 per cent. Stronger growth in loans granted by monetary financial institutions and other financial institutions was offset by weaker growth in loans granted by non-financial corporations. Loans from the rest of the world declined at a faster pace of -2.0 per cent, compared with -1.2 per cent previously.

Debt ratios for non-financial corporations continued to trend lower. The consolidated debt-to-GDP ratio fell to 65.9 per cent in the third quarter of 2025 from 67.3 per cent a year earlier. Using the broader, non-consolidated measure, non-financial corporate debt declined to 136.4 per cent of GDP, down from 138.0 per cent in the third quarter of 2024.

By fLEXI tEAM