The economy is a world of self-fulfilling prophecies in which expectations count almost as much as facts. For this reason, the European Central Bank (ECB) closely monitors the sentiments of consumers in the euro zone and takes them into account when making monetary policy decisions. In its latest Consumer Expectations survey, what can be clearly seen is greater economic optimism among Spaniards compared to their European neighbours, among whom there has recently been widespread uneasiness.
In this ECB study, the Spanish stand out in terms of income expectations and economic growth in the next twelve months, but are more cautious when it comes to spending. The data correspond to June and are part of a survey carried out by the central bank among 14,000 adults in the largest economies of the euro zone, which are Germany, France, Italy, Spain, the Netherlands and Belgium.
The Spanish forecast is that their income will rise by 3% in the next 12 months, compared to the 1.2% European average. Their optimism exceeds that of the previous wave, while the percentage of the Netherlands falls back to 1.5% and that of Germany rises slightly to 1.2%. Citizens of Italy, Belgium and France believe they will not raise incomes by more than 1% next year.
This perception may be due in part to the salary revision agreement agreed between the employer and the unions in Spain in May, a little later than in other European countries. Social agents recommend increases of 4% in 2023 and 3% in both 2024 and 2025. Pensions rose strongly last year, by 8%.
When it comes to putting a percentage on economic growth, the Spanish do not get the official forecasts right. They are far below, but they also do not predict falls in GDP, as the Germans and the French do.
In Spain, respondents forecast that the national economy will grow by 0.3% next year, while Italians expect a minimum increase of 0.1%. The rest of the neighbors see big clouds: the Germans predict GDP declines of 0.4%, and the French, of 0.9%. The average for the euro zone consists of an economic contraction of 0.6%.
From these percentages it can be deduced that the Spanish do not know the official forecasts or do not believe them very much. The IMF expects Spain to grow by 2.5% this year, compared to the Government’s 2.1% and the Bank of Spain’s 2.3%. CaixaBank Research expects a rise of 2%, and BBVA Research, of 2.4%. The CEOE talks about 2%.
The French are also not on the right track when predicting a recession, as the IMF credits them with growth of 0.8% this year. The ones who don’t fail are the Germans, whose GDP fall forecast is barely a tenth of the IMF’s forecast.
Although for many people the rise in housing prices is an indication of economic difficulty, economists see in this perception another sign of optimism. The Spanish believe that, despite interest rate increases up to levels of 4.25%, housing will become more expensive by 3.9% in the next twelve months, compared to the 1.4% predicted in Germany or 0.3% in the Netherlands.
The ECB also asks about inflation, the problem that most obsesses it. Europeans have the perception that, in the last twelve months, prices have risen by 8% and predict that, in the following months, the rise will moderate to 3.4%. It is still a high level for the ECB, whose mission is to keep price increases at a maximum of 2%.
Spanish optimism turns to caution when it comes to spending. This is when they hit the ground running and are much more cautious than their European neighbors. Its forecast is that in the coming months consumption will increase by 3.3%, below the average of the large economies of the euro zone, of 3.4%,
The ECB has detected that the groups most likely to increase spending in the coming months are those under 24 and those over 55. It also shows that the Belgians will spend 4.2% more and the French 2.5%.
Despite this, the expenditure shown by the Spanish exceeds the consumption forecasts of different analysts and study centers. BBVA Research calculates that household spending will increase this year by 0.6%, compared to the 0% predicted by AFI or 0.6% by CaixaBank Research.
