Spain | Will savings fall further?

The record highs reached in household savings in the second quarter of 2020, has been one of the most striking characteristics of the current crisis. Since then, it has declined somewhat, which has lent support to the recovery in consumer expenditure and the housing market.

Key points

• Key points:
• Due to the restrictions and the uncertainties of the pandemic, during most of 2020 and the start of 2021, the saving rate remained high at around 14%, eventually falling to 8.8% of disposable income in the second quarter of the year — coinciding with the end of the state of alarm and increased vaccination.
• Despite this drop, savings still remain above their historical level and have left those households which have been able to accumulate resources, wealthier than before the pandemic.
• The available data suggests that expenditure on services has recovered in the third quarter of 2021, as families have decided to travel, eat out and generally enjoy themselves over the summer — thereby reducing their saving rate.
• In any case, those households that have accumulated wealth in recent years are getting older, have greater risk aversion and presumably—as things gradually return to normal—will stop spending quite so freely.
• The extent to which the positive effect of the reforms being implemented and the faster deployment of funds from the EU's Next Generation program can pick up the baton from them and help drive the economy, will be key to avoiding a rapid slowdown in the next few months.

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