Since the beginning of 2023, the money that Spanish households keep in bank deposits has been reduced by 19.5 billion euros, after going from the billion euros registered at the end of 2022 to the 984.8 billion that were accounted for at the end of July, according to data published on Tuesday by the Bank of Spain. This represents a withdrawal of 2% of these savings.
In relation to the same month last year, when deposits reached 997,400 million, the decline is a little more moderate, 12,600 million euros, 1.3%. Only April and June have broken this year's bearish trend, in which a drop of 5.5 billion stands out between June and July alone.
This tendency is much more acute in the case of companies. This year, until the end of July, the savings of companies in bank deposits were reduced by 18,800 million, this is a 6% drop. If compared to a year ago, the outflow of bank deposits from companies is reduced to 4.2%, after having decreased by 13,000 million euros.
In the case of families, behind this withdrawal can be seen the inflationary pressure that households are suffering, which reduces their monthly liquidity and forces them to draw on savings, as well as the increase in interest rates mortgages and also the bank's resistance to increasing the remuneration of these deposits.
General inflation peaked in the summer of 2022, when it exceeded 10% due to the strong impact of escalating energy prices. Since then, both the European Central Bank (ECB) and the Spanish authorities began to implement measures to slow the escalation which, although they have had an impact on the evolution of general prices, have not been sufficient to ease the financial stress in households. In Spain, the Spanish Government's measures to mitigate the impact of energy prices on families' pockets have been partially effective. The general price index has fallen from the aforementioned 10.8% that marked July 2022 to 2.3% in July this year, but underlying inflation, which does not take into account the prices of energy or unprocessed food, has gone during the same period from 6.1% to 6.2%.
For its part, the ECB's decision to end its zero interest rate policy to cool the economy has been a hard blow for families with mortgages, as the Euribor has gone from 0.992 % which marked in July 2022 up to 4.149%, with which it closed in July 2023. A speed of increase never seen in history which has left the family budget with a painful decrease.
In this environment, the number of families with the ability to save is getting smaller and smaller. Nevertheless, households as a whole still enjoy the savings accumulated since the outbreak of the pandemic which caused bank deposits to swell to exceed, for the first time in history, a billion euros at the end of 2022.
The need to make this savings profitable is what largely explains the flight of bank deposits since the beginning of the year. The escalation of interest rates, which have so quickly moved financial institutions to loans and mortgages, has had no correspondence in the case of the profitability of savings. Data from the Bank of Spain indicate that the average return on deposits in July 2023 was 2.27%. A remuneration that only new deposits enjoy, while those who have not changed institutions do not receive more than 0.5% in the best cases.
To avoid this lack of profitability, families have literally taken to the streets in the last year. Who does not remember the queues from February in front of the Bank of Spain? The aim was to resume the safe traditional investment of public debt. In 2023, Spanish families have become the main holders of Treasury bills. In addition to the State's support for the investment, one of the most attractive remunerations in the financial environment has been added, with up to 3.46% per annum.
This search for better returns for savings is not only reflected in the outflow of refugee savings to bank deposits. The leakage of money deposited in pension and insurance funds has already reached 21.3% since July 2022 and 2.5% since the beginning of the year.
Much sharper has been the fall recorded in collective investment institutions, which have fallen by 31% year-on-year and by 17.8% since January. Of course, in this case also influenced by legislative changes that affect this type of savings.
