Has Covid-19 made us richer?

Shops and restaurants had to close due to the coronavirus which contributed to household savings. Keystone / Gian Ehrenzeller

Swiss households managed to save an additional CHF30 billion to CHF40 billion during the Covid-19 pandemic.

Why people saved more

During the lockdown, life came to a standstill. Offices were closed, restaurants and bars shuttered, and international travel became almost impossible. Tourism, hospitality, and other industries required government support to stay afloat.

The ‘new normal’ shaped Swiss lives for months starting in 2020. With consumption opportunities significantly reduced, people saved more than ever before. By mid-2022, personal bank accounts in Switzerland held an additional CHF30 billion to CHF40 billion ($33.9 billion to $43.8 billion), according to an analysis by the Swiss National Bank (SNB). This figure represents around 5% of Switzerland’s total annual economic output.

What happened to the money?

The SNB collects extensive data on savings, assets, and economic trends. Its analysis shows that households in Switzerland held on to much of this money instead of spending it on travel, shopping, or other activities.

While there was some pent-up spending immediately after the first lockdown in 2020, a significant portion of these ‘Covid savings’ remained untouched. Instead, much of the money was channelled into financial investments such as shares and bonds.

>>> SNB Report: Lifting the veil on the pandemic savings of Swiss householdsExternal link

Why didn’t we spend it all?

Rather than keeping their money in current accounts, many individuals invested in the stock market or paid into their second and third pension pillars. These funds, once invested, are less accessible for everyday expenses.

This trend, according to the SNB, contributed to wealthier households boosting their long-term savings. The overall financial assets of Swiss households grew by an estimated CHF75 billion during the pandemic, in addition to the regular increase in wealth that would have occurred regardless.

How does Switzerland compare?

The SNB found similar patterns of increased saving during the pandemic in other countries. In Switzerland, as well as its neighbours and the United States, people curbed consumption and saved more.

However, behaviour diverged post-lockdown. In the US, many people eventually spent their savings, which fuelled an economic boom. In contrast, Swiss households largely retained their savings or invested them, leading to greater long-term wealth accumulation.

Wealth distribution

The data does not reveal how this additional wealth was distributed across households. It is likely that low-income families had to spend their savings soon after (if they managed to save anything during the crisis). In contrast, wealthier households were better positioned to retain and grow their savings through investments.

To put it bluntly, if the Covid pandemic has led to more wealth, it is for those who already had a relatively large amount of wealth.

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Translated from German with DeepL/amva