Revolut report shows European savers losing wealth to inflation

A new report by Revolut, the European Wealth Drain Index, reveals that European households are losing purchasing power by keeping savings in stagnant cash accounts. Based on a survey of 20,007 adults across 20 EU member states combined with official inflation and deposit data, the study shows that in 12 of the 20 markets, average one-year deposit rates fail to keep pace with inflation.

Across the entire sample, deposits yielded an average of 2.76% compared to an inflation rate of 2.94%, resulting in real-term losses for savers. The opportunity cost of remaining in cash is even more significant; compared to the 9.06% ten-year annualized return of the MSCI Europe ETF, households lose an average of €638 per year for every €10,000 held in cash. Extrapolated across the €6.3 trillion in total savings, this represents €422 billion in annual capital that fails to reach European businesses for growth.

Several factors contribute to this inertia: two-thirds of respondents have never switched banks for better rates, 46% miscalculate inflation-adjusted returns, and 19% are unaware that inflation affects cash. Additionally, 45% of those using multiple financial apps report that fragmentation makes investing more difficult. The report also notes that one in five Europeans holds no savings at all.