Spanish families increased the containment of spending to maximum levels of the last ten years, if the pandemic is not taken into account. Between April and June, households devoted one out of every five available euros to saving, according to the quarterly non-financial accounts of the institutional sectors published yesterday by the National Institute of Statistics (INE). Such a percentage has not been recorded since the second quarter of 2021, when the rate exceeded 21%. After the declaration of the state of alarm in 2020, the rate rose by 33.6%. However, since 2013 private savings had not reached the current 20%.
It is a possible reaction to the uncertainties of the economic situation, with inflation that refuses to moderate and interest rates that will remain high for a long period. From here, it seems that families do not trust the economy and that those who can save.
These are data that contradict the trend of last year, when the INE itself indicated a drop in savings, and also some studies on this year as a whole, which indicate that the savings rate would decrease due to inflation and the economic slowdown, which would cause consumption to grow more than income. It is true, in any case, that the INE data refer specifically to the second quarter of the year, not to the whole.
Specifically, Spanish households saved 50,298 million in the second quarter, compared to 32,902 million euros in the same period of 2022. In relative terms, this represents a reduction in expenditure of 52.9% more. If seasonal and calendar effects are removed, the savings rate reached 11.7% of disposable income in the second quarter, a record two dozen lower than the previous quarter, but 4.4 points above that of the second quarter of 2022.
The reasons why families increased their savings rate last quarter were essentially two, according to experts: interest rates and inflation. Alicia Coronil, chief economist at Singular Bank, explains that “families that have the ability to save are making provision”. Good for investing in attractive products or paying off your mortgages. This is the opinion of Raymond Torres, director of the economic situation at Funcas, who points out that he was surprised by the INE data and points out that “the trend is clear”: the Spanish are tending to “have a cushion” economically.
Daniel Fuentes, director of Kreab Research, points out, for his part, that household savings are heading towards “a (slightly volatile) normalization process after the pandemic and the energy price shock, which lead at first to a historical maximum of 25% and, subsequently, to a minimum of 4%”. Fuentes adds that the savings that are beginning to be accumulated is “an expected result of monetary policy”, since “it is precisely what is being pursued, with the aim of containing demand and inflation”.
Coronil concludes that, at this moment, “some families are more worried about being able to pay the mortgage than going on a trip”. That is why there is a transfer towards investment at the fixed rate and a growing amortization of credits. The reason why consumption expenditure remains high is due to the arrival of foreign consumers, while the expenditure of Spaniards has been affected, points out the economist of Singular Bank.
A negative figure published yesterday by the INE affects companies, which have reduced their bets on the future. Thus, the investment rate of non-financial companies, once seasonal and calendar effects have been removed, stands at 22.5% of their gross added value, 1.1 points less than the previous quarter. It is the worst record since 2015. Consequently, the INE estimates for the sector a financing capacity of 1,299 million euros, compared to 6,556 million in the second quarter of 2022.
