Spain is the large EU economy in which the least is saved: families set aside 7.6% of their income compared to 12.7% in Europe

The rise in prices and the recovery in consumption after the pandemic have made a dent in household piggy banks. Spain is not only the large economy of the European Union where families set aside the lowest proportion of income, but also the one in which savings fell the most in 2022, falling to levels lower than the pre-covid situation.. All this, while household spending grew in the Iberian country above the European average and family income suffered the biggest drop among the four large community economies.

Spanish families saved 7.6% of their income in 2022, compared to the 12.7% reserved on average in the EU as a whole, according to data released this week by Eurostat. The proportion of savings registered in Spain is far from the figures recorded in the large European economies. The percentage of income reserved by French and German households, for example, is more than double that saved in Spain. If in the south of the Pyrenees households set aside 7.6 euros of every hundred earned, in the north of the mountain range families save just over 17 euros and in Germany, almost 20. Even in Italy the amount is close to 10 euros.

Habits when managing household income are heterogeneous throughout the Old Continent. According to 2022 data, savings rates exceed 15% of the average income in much of Central Europe – with Switzerland (23.4%) and Germany (19.9%) in the lead – while it is not enough 10% in Southeast Europe —except in Slovenia (14%) and Hungary (13.4%)—, thus placing it below the European average. In fact, in Poland and Greece the rate is negative, indicating that households spent more than they earned and therefore had to use savings accumulated in previous years or take out loans to finance their expenses.

Beyond geographical differences, savings suffered in 2022 in practically the entire continent, although the drop registered in Spain was especially pronounced. The proportion of income set aside by households in the Iberian country last year was 44.6% lower than that kept in 2021, when the percentage of savings reached 13.8%. In this way, the downward trend undertaken after the savings boom produced by the stoppage in consumption during the pandemic is consolidated for the second consecutive year.. In 2020, Spanish households kept an average of 17.5% of their income, an unprecedented rate in the historical series. Two years later, the volume of savings is already below the pre-covid level (8.2%).

Compared to 2020, the savings rate sank by 56.4% in 2022 in Spain. According to Eurostat data, this is the fourth largest decline on the continent, only surpassed by Estonia, Latvia and Lithuania.. Compared to the rest of the large European economies, savings behavior has been significantly more volatile in Spain. In Italy, the data also recovered the ground gained during the pandemic, although it remains at a level similar to that of 2019. For its part, in Germany and France the drop in savings in the last two years barely exceeds 16% and the proportion of income retained by households remains above pre-pandemic data, registering the third best mark in the world in 2022. historical series.

Not only did savings reduce in 2022, so did income. According to Eurostat data, in gross terms, the real income of European families – once taxes, social contributions and the effect of inflation have been deducted – decreased on average by 0.8% last year, thus registering its first decline annually since 2013. In Spain, the fall in household disposable income reached 2.8%, which placed the Iberian country as the fifth EU State in which family income fell the most, only ahead of Estonia, Lithuania, Czech Republic and Latvia. More modest was the decline recorded in Italy (-1.38%), while France (-0.4%) and Germany (-0.6%) were above the community average.

Increase in consumption

This decline in family income and savings in 2022 was framed in a context of inflationary crisis, accentuated by the outbreak of war in Ukraine and the consequent uncertainty about energy supply.. Compared to 2021, prices shot up on average in Spain last year by 8.4%, which was an unprecedented increase. The rise was especially pronounced in the CPI for food and energy, which increased respectively by 15.5% and 11.6% year-on-year.

The inflationary escalation thus translated into an increase in spending spent by households, whose total consumption in 2022 in Spain was equivalent to a total of 793.6 billion euros, 15.1% more than the previous year.. According to Eurostat data, this increase in family spending was higher than the European average (12.3%), as well as the increase registered in the remaining three large community economies (8.2% in France, 9.8% in Germany and 13.8% in Italy).

However, not all of the increase in household spending was due to rising prices.. The full recovery of consumption also comes into play due to the end of the restrictions imposed during the pandemic.. In this way, discounting the effect of inflation, family spending grew by 8.1% in Spain in 2022 – 4.7% in the EU -, driven especially by the reactivation of the leisure and restaurant sectors.. Specifically, the amount allocated to hotels and restaurants increased in the Mediterranean country by 33.1% compared to 2021 and spending on culture and entertainment increased by 34%.

Savings readjustment

After a delicate 2022 economically, in the last year inflation has begun to give a respite to pockets. In fact, the European Central Bank ceased the rate hike launched in July 2022 in October, after ten consecutive increases and leaving rates at an unprecedented level of over 4%.. The objective of the monetary authority was and continues to be to cool the economy to control prices and return inflation below 2%.. In October the figure grew to 3.5% in Spain and moderated to 2.9% in the eurozone, according to Eurostat.

Faced with the new scenario, families are readjusting their savings, according to a study by economists Marta Alberni, Ángel Berges and María Rodríguez published this Wednesday by Funcas. According to researchers, in the last year households have taken advantage of the rise in interest rates to pay off their mortgage debts, producing around 75,000 and 85,000 early cancellations, for a total value of between 9,000 and 14,000 million euros.

However, the authors point out that the “most intense” recomposition of savings is occurring in deposits, which are usually the main destination of household savings and concentrate around one trillion euros.. Specifically, there is an “important transfer” from sight deposits to time deposits, as the latter enjoy a higher remuneration. Furthermore, in recent months families have also opted “in a significant way” for investment funds and for the direct purchase of fixed income securities, such as Treasury bills, which aroused real fervor among savers at the beginning of anus.