Mario battles the Wutsparer

THIS week millions of people in the Netherlands celebrated the national holiday by getting up at dawn, staking out a patch of pavement and selling off their junk. The traditional King’s Day flea market gives the Dutch a chance to indulge in their favourite pastime: bargain-hunting. Their eastern neighbours are just as frugal. “Germans love saving. They think there’s something morally inferior about people who borrow,” says Reint Gropp, a German economist. In both Dutch and German, the word for debt also means “guilt”.

Their taste for saving and aversion to borrowing helps to explain why both countries’ citizens have lots of money in their saving accounts. This seemed to serve them well when interest rates were high. But in recent years, as rates hovered near zero, Europe’s best savers grew angry that their thrift was not rewarded. Now they have found a scapegoat: the European Central Bank and its suspiciously Italian chairman, Mario Draghi.

This month Germany’s finance minister, Wolfgang Schäuble, attacked the ECB’s policies of negative interest rates and quantitative easing, blaming Mr Draghi for the rise of the populist AfD party. At a hearing, Dutch MPs prodded their own central bank’s governor to say whether he thinks the ECB is exceeding its mandate. Pieter Omtzigt, a Christian Democrat MP, later said that the ECB was “a Mediterranean central bank” whose policies are redistributing wealth from northern savers to southern sovereign borrowers.

The media are on the attack, too. “Who can stop Draghi?” roared a typical German headline. (“We would stop Draghi!” answered an online article by Nicola Beer, general secretary of the liberal FDP party.) In Die Welt, a daily, Hans-Werner Sinn, a conservative economist, claimed low rates would cost Germany €327 billion ($369 billion). In another article, the paper cited estimates by DZ Bank that after six years of low rates, the average German citizen will have lost out on €2,450 by the end of 2016.

The conflict over the ECB has brought back the tensions between Europe’s north and south that emerged during the euro crisis. With their large current-account surpluses, Germany and the Netherlands are net lenders; low interest rates hurt them and help southern European countries, which borrow more. This is partly due to savings habits. Germans put aside 17% of their disposable income, while the Dutch save 14%—on top of their huge pension-fund assets of €1.3 trillion, almost double their GDP. That compares with 11% in Italy, 9% in Spain and negative savings rates in Cyprus and Greece. Both Germany and the Netherlands are particularly affected by ageing populations, which means saving more makes sense.

But the Germans and Dutch seldom mention why the ECB is setting such low rates. The euro-zone economy is barely growing, and may be on the verge of deflation. Trying to force rates up now would be disastrous, says Michael Burda of Humboldt University. Particularly in southern Europe, indebted governments would have to redouble austerity measures, households would curtail spending, firms would defer hiring and troubled banks would be pressed by rising costs. That could send Europe into recession—a boon for political extremists. Besides, the bank’s control over rates is limited: as Mr Draghi reminded critics last week, low interest rates are “a symptom of low growth and low inflation”, not the cause.

If German and Dutch savers are vulnerable to low rates, it is partly due to their own investment habits. In Germany nearly four-fifths of household wealth is in bank deposits, life-insurance policies or pension funds, where performance is closely tied to interest rates. In the Netherlands two-thirds sits with pension funds and insurers. Southern Europeans save less, but they spread their bets more: in Italy and Spain pensions and insurance make up less than a fifth of household wealth, while over a third is in equities. And southerners are more likely to own their homes than Germans, so they profit from rising house prices when mortgage rates fall.

Hoist by their own pension funds

Home ownership is higher in the Netherlands. But last week the largest Dutch pension funds warned they may cut benefits in 2017. Premiums may be raised, too. As for Germany’s savings banks, they have spared depositors by not passing on the ECB’s negative rates, but real returns are still only just above zero. The German media talk of Wutsparer, or “angry savers”.

Another flashpoint is inequality. A new book by Marcel Fratzscher, an economist, claims that Germany’s bottom 40% has less wealth than anywhere else in the euro zone. Germany’s financial industry is lobbying its government, especially Mr Schäuble, to stand up for savers (and for them). “It’s the first time countries and institutions in the north are really suffering from the euro-zone crisis,” says Guntram Wolff of Bruegel, a think-tank in Brussels.

Germany and the Netherlands could have enacted reforms long ago to make household wealth less dependent on interest rates. Germany’s hundreds of small savings banks struggle in a low-rate environment because regulations bind them to a simple business model of taking deposits and lending locally. Countries such as Italy and Spain got rid of such set-ups years ago. The real target of German voters’ anger should be their own government, which has hesitated to reform.

The Netherlands’ pension funds, meanwhile, generally promise defined benefits. Legally, they must meet strict coverage ratios, so when rates fall they are forced to save large amounts of cash. They end up “fighting rates like Don Quixote”, says Gerard Riemen of the Dutch pension federation. This is an unfortunate side-effect of low rates, which are intended to encourage spending, not saving.

Mr Draghi’s job—as defined in its German-inspired mandate—is not to guarantee yields for savers, but to meet the ECB’s inflation target. But with elections in both Germany and the Netherlands next year, he has become a punch-bag for Eurosceptic populists. Mainstream parties are terrified of losing older voters, and many join in the ECB-bashing.

The result, says Robert Grimm of Ipsos, a pollster, is a “moral panic” that Germans are again bailing out dubious foreigners. This, he thinks, has indeed aided the AfD’s rise. In the Netherlands, the debate over the ECB, like that over the Greek bail-out, feeds into citizens’ sense that they have lost control. “Voters feel powerless,” says Frank van Dalen, a political consultant. “The general signal is ‘stop’.”