According to the report ‘The evolution and destination of the extraordinary savings accumulated by Spanish households since the start of the pandemic’ published this Monday by the Bank of Spain, Spaniards have used the savings obtained during the pandemic, which at the end of the by 2022 they will reach 100,000 million euros, especially investment funds and deposits. In the same way, to obtain self-consumption goods and services.
According to the calculations of the organization directed by Pablo Hernández de Cos, households keep close to 50,000 million euros of this extraordinary savings in cash and deposits. While the amounts channeled into cash and deposits were similar to those observed in the Economic and Monetary Union in 2020, in the subsequent biennium they were much higher, so that currently the proportion of the extraordinary savings pool that is materialized ada in these instruments is much higher in Spain (44%), 20 percentage points more than in the euro area.
It is also invested in housing and to repay mortgages
For its part, the article indicates that a more modest proportion of said savings, but growing since 2021, has been allocated to the acquisition of non-financial assets, in particular, real estate and the repayment of housing loans. Specifically, the accumulated excess of investment in gross capital formation of households (2.7% of income) was accompanied by a larger excess of new credit flows for home purchases (4.2% of the rent). This is due, according to the Bank of Spain, to the fact that the new credit flows are used for the acquisition of new and used housing, but only the former, together with investment in rehabilitation, forms part of gross capital formation.
1.3% of the rent).
Inflation and its impact on savings
During the pandemic, Spanish households as a whole accumulated, like those in the rest of the euro area, a very high volume of savings and the rate reached in 2020 was almost 18% of their gross disposable income (RBD), more than double that of a year earlier. In 2021, the containment measures for the pandemic were progressively relaxed. However, the savings rate still remained at very high levels, almost 14% of income, which is the second highest level in the historical series, just below the maximum of 2020.
Households with lower incomes
Households with higher incomes concentrate a high proportion of the extraordinary savings accumulated during the health crisis. So much so that the quintile of households with the lowest income hardly increased their savings in this period. According to the report, in 2020, 20% of the lowest-income households will barely be able to accumulate extraordinary savings, defined as the difference between the savings rate for that year and that of 2019. The rest of the households will be able to do so, to a greater extent the higher his rent.
In 2021, as the impact of the pandemic on economic activity and consumption moderated, the extraordinary savings rates of households in the middle income quintile and, to a lesser extent, of those in both quintiles decreased, although they remained stable. above those registered in 2019
“Modest” contribution to wealth
With all this, the extraordinary savings accumulated since the start of the pandemic have turned into an increase in the net wealth of households, by contributing to the accumulation of financial and real estate assets and to the repayment of debt. In any case, the Bank of Spain points out that although accumulated extraordinary savings are very high compared to normal flows, their contribution to the increase in the balance of net household wealth since the start of the pandemic has been modest ( 1.4 percentage points).
Specifically, ordinary savings flows (that is, those in line with historical averages) have had a higher contribution (3.1 percentage points), while the revaluation of the real estate component has contributed 8.5 points. Therefore, the analysis presented indicates that households retain the enormous extraordinary savings accumulated during the pandemic in financial assets and, in particular, in liquid assets.
“Despite this, various factors suggest that, in line with what has been observed so far, this extraordinary savings pool cannot be expected to provide a very significant boost to aggregate household consumption in the coming quarters,” the agency warns. In addition, it is pointed out that the significant rise that has been observed in the cost of debt in recent quarters could encourage households to allocate a greater proportion of accumulated savings to repaying loans instead of to other alternative uses, in lí in line with what has been observed recently, and favoring the shift from the most liquid assets to others with higher profitability.