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The Viavoice - BPCE barometer survey of French consumer plans - September 2012

Spectacular increase in pessimism over purchasing power

Consumer fears linked to purchasing power continue to escalate: at present, the majority of France’s population (53%) expects their purchasing power to deteriorate over the next three months, i.e. a major increase of 7 points in the space of one month and 17 points since May. This stark trend is explained by the current climate of austerity and the fact that it is expected to last: after two austerity plans in 2011, and given that today’s extremely harsh economic backdrop makes an increase in income highly unlikely, households anticipate a new hike in their fixed costs in the short term.

Strong increase in fears linked to taxation and the price of gas

Today, there are two items of expenditure that are a growing source of concern for households: taxation which was cited by 37% of people surveyed (+6), and the price of gas which was cited by 25% (+6) - both of which appear to be fuelled by two recent announcements. The first is the 20 billion euro increase in mandatory tax contributions for 2013, and the second is the 2% increase in the price of gas from October 1st (which may even increase further at the start of 2013).

  • What is more, these growing constraints on household income come at a time when key costs are still high:
    the price of petrol is still high despite the 3-cent cut in the tax per litre passed at the end of August, and is still a major worry for 41% of the French population (+1);
  • Food prices are still the biggest cause for concern (cited by 45% of consumers surveyed, +4).

Rising fears as to their purchasing power are the consequence of three key concrete concerns amongst households, particularly low-income households, which have been accumulating for several months now: new increases in spending (tax, gas), spending that remains wedged at a high level (energy, housing), and stagnating wages as a result of the slowdown in economic activity.

Shrinking purchasing intentions and savings

The new downturn in the outlook for purchasing power will most likely trigger a contraction in consumption and savings: over the next three months, less than 38% of French people expect to “spend less than in recent months” (+4), including 42% of those currently in employment and 45% of blue collar workers. As a result, and despite the fact that consumption has held up relatively well in France since the start of the crisis, it may shrink again in the second half of 2012 because of the anticipated loss in purchasing power:

  • 33% of people surveyed expect that they will have to “reduce the amount of savings they are able to put aside” (+4);
  • Real-estate acquisition plans have also fallen, with only 3% planning to buy a house or flat in the coming months (-1).

The overall climate for households after the summer holidays looks particularly bleak, and is a challenge for the government at a time when it is putting the finishing touches to its budget for 2013.

The increases in the ceilings for “Livret A” and “Livret développement durable (LDD)” regulated savings accounts are a welcome initiative

Given today’s difficult economic climate, the increases in the ceilings on “Livret A” and “Livret développement durable” (LDD, former “codevi”) regulated savings accounts from October 1st are an opportunity - even if it is only by 25% (from 15,300 to 19,125 euros) and even if it is far from the two-fold increase initially announced. Generally-speaking, these forms of regulated, tax-exempt and risk-free savings are still popular with the French. In concrete terms, 28% of those asked whether or not the higher ceilings would incite them to put more savings aside in a “Livret A” or “Livret développement durable account” replied “Yes, probably”, and 9% replied “Yes, definitely". Those population categories that expressed the most interest notably include young adults (51% of those surveyed between the ages of 18 and 24) and those in intermediate professions (33%).