The Spaniards are increasing their spending containment to the highest levels of the last ten years, if the reduction exercise entailed by confinement and the pandemic is not taken into account. Specifically, households placed their savings rate at 20% of their disposable income between April and June of this year, according to the Non-Financial Quarterly Accounts of the Institutional Sectors published this Friday by the National Institute of Statistics (INE). A percentage like this had not been recorded since the second quarter of 2021, when it exceeded 21%. After the declaration of the state of alarm in 2020, the rate rose to 33.6%. However, since 2013, private savings had not reached the current 20%.
These data imply that households have decided to retain their expenses and save a part of their income. In the midst of an escalation of interest rates, which has restricted families' access to credit, and inflation that, although its growth moderated in the second quarter of the year, continues to increase, families decided to increase their disposable income by 12, 2% year-on-year, up to 251,190 million euros. Consumer spending, for its part, was 200,740 million euros, 5.2% more.
In gross terms, Spanish households saved a total of 50,298 million euros in the second quarter, compared to 32,902 million euros in the same period of 2022. In relative terms, it represents a 52.9% more containment of spending. If seasonal and calendar effects are eliminated, the household savings rate reached 11.7% of their disposable income in the second quarter, two tenths lower than the previous quarter, but 4.4 points above the of the second quarter of 2022.
The INE also indicates a growth in the financing capacity of households in the second quarter to 34,510 million, compared to 17,313 million in the same period of 2022.
There are two reasons that would explain this increase in the household savings rate: the rise in interest rates and inflation. Alicia Coronil is chief economist at Singular Bank and explains that “families that have the capacity to save are stocking up.” Either to invest in attractive products or pay and amortize the mortgage. Raymond Torres, director of economic situation at Funcas, holds the same opinion, who points out that he was surprised by the INE data and points out that “the trend is clear”: although last year a minimum savings rate was reached, for inflation, essentially, at this time that need to “have an economic cushion” has been recovering.
Daniel Fuentes, director of Kreab Research, highlights that household savings are moving towards "a (somewhat volatile) normalization process after the pandemic and the energy price shock, which initially led to a historical maximum of 25% and subsequently to a minimum of 4%". He agrees that interest rates are the main cause. And he adds that "the increase in savings is an expected result of monetary policy", since "it is precisely what is pursued, with the aim of containing demand and, with it, inflation." On the other hand, "the strong job creation in the last year is a support for the aggregate of household income", despite the decrease in purchasing power.
Coronil assures that at this moment “some families are more concerned about being able to pay the mortgage than going on trips.” That is why there is a transfer towards the fixed rate and an increasing amortization of the credits. The reason why spending is maintained is rather due to the arrival of foreign consumers while national spending has suffered, says the Singular Bank economist.
Negative data published today by the INE affects companies, which have reduced their commitment to the future. Thus, the investment rate of non-financial corporations, once seasonal and calendar effects have been eliminated, stands at 22.5% of their gross value added, 1.1 points less than in the previous quarter. It is the worst record since 2015. Consequently, the INE estimates a financing capacity of 1,299 million euros for the sector, compared to 6,556 million in the second quarter of 2022.
The Spanish economy, for its part, registered a financing capacity compared to the rest of the world of 11,190 million euros in the second quarter, which represents 3.1% of GDP for that period. In the same quarter of 2022, this financing capacity was 4,732 million (1.4% of GDP).
This increase is explained by a greater balance of foreign exchanges of goods and services (17,377 million euros, compared to 5,750 million in the same period of 2022) which, together with the evolution of disposable income and current transfers, increase the balance of current operations abroad by 6,648 million compared to the same quarter of the previous year.
