Also, increased job insecurity, in an environment of structural changes linked to increasing competitive pressures – notably from emerging markets – may also explain the level of precautionary savings in the euro area.
Although private consumption – on the basis of recent indicators of household spending – is estimated to have grown only moderately in the last quarter of 2005, it is encouraging that consumer confidence has increased. Moreover, a further gradual improvement in labour market conditions in the coming years should favourably affect private consumption.