Households are allocating an increasing portion of their income towards savings, according to the latest stability report from the Swedish Financial Supervisory Authority (Finansinspektionen) released on Wednesday.
The higher savings rate, coupled with rising stock prices and interest income, has boosted households’ overall financial assets over the year. However, savings in bank accounts have remained unchanged for the past two years.
As a result, the overall financial vulnerability of Swedish households has decreased, as stated by the FI.
The decision of households to save rather than consume is leading to a slow economic recovery. However, there is a clear expectation of lower interest rates in the future, and consumption is likely to pick up again towards the middle of next year, according to the FI.
“We see a slow recovery, but there is a risk of setbacks,” said FI’s Director General Daniel Barr in a press release, cautioning about the uncertain economic and security policy environment.
Nevertheless, little is known about the distribution of assets and debts among different types of households. The FI notes that a stock market upswing primarily benefits high-income earners, as this group owns the most shares.
Many households continue to face financial difficulties, as revealed by a survey showing that many struggle to make ends meet and more are dipping into their savings. The survey also indicated that households renting their homes have significantly lower savings. Additionally, the number of payment orders issued by the Swedish Enforcement Authority (Kronofogden) has increased in recent years.
Overall, while households are building their financial resilience through increased savings and asset growth, there are still challenges ahead for many families in Sweden. As the economy navigates through uncertain times, the importance of understanding and addressing the financial vulnerabilities of different household segments becomes increasingly crucial for sustainable economic development.