Spain | Household financial vulnerability: between dystopia and fable

Summary

The COVID-19 pandemic is turning society's finances into a mixture of two diametrically opposed worlds, much the same as the tiny Lilliput and the gigantic Brobdingnag from Jonathan Swift's dystopian world in Gulliver's Travels.

Key points

• Key points:
• Financial vulnerability is measured by the length of time individuals are able to maintain their consumption habits after losing their main source of income but without lowering their living costs, resorting to credit or moving house.
• The increase in the average saving capacity of Spanish households and the growth in the number of households in which all members are unemployed are two sides of the same coin, the widening of the financial vulnerability gap.
• The financial winter following the pandemic will not necessarily impact all households, and not all those that it does affect will be affected to the same degree.
• The reduction of financial vulnerability cannot be achieved solely through policies that increase households' income. Other tools are required to promote saving and encourage households to plan for the future.

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