August 5, 2020

The CNMV warns that the low rate of financial savings subtracts potential from the Spanish economy | Economy



The Spaniards save very little, they remain quite indebted and the brick is by far the main destination of the remnant of family income. This combination is lethal and reduces the growth potential of the Spanish economy, according to the National Stock Market Commission (CNMV) in a study that has just been published. "In the short term this pattern of behavior of the investor, with great weight of real estate assets, generates a growth in domestic demand higher, but also more unbalanced, and directs the economy towards activities related to construction and real estate activities", which are less productive.

In 2009, when the crisis hit more severely, the savings rate of the Spanish rose to levels above 12% of gross disposable income, equating to the average of the euro zone. However, since then this ratio has not fallen, currently standing at its historical minimum (5.1%), more than seven points below the European average. In parallel, citizens were deleveraged considerably, taking household debt from 130% of gross disposable income to the current 100%, a level that is still above what happens in other comparable European countries.

Another characteristic is that the little money that is saved is mainly destined to the purchase of housing and not financial assets. Spanish real estate wealth exceeds 400% of GDP, while the ratio of the euro zone does not reach 300%. In the case of net financial wealth, however, the opposite occurs: in Europe the average is 150% and in Spain it is below 125%. In addition, the capital that goes to non-flats assets in our country is fundamental (40%) to liquid and very conservative assets such as cash and deposits, almost 10 points higher than what happens in the countries around us.

"In the medium term, the consequences of low savings and the great weight of real estate are financial imbalances, with the risk of generating bubbles, the decrease in labor mobility since Spaniards mainly have property, and the smaller development of the markets All this subtracts potential growth to the Spanish economy ", argue the experts of the CNMV.

The main cause that the supervisor sees for the lowest savings rate in Spain is the evolution of disposable income and its distribution. Growing inequality prevents many families from reaching the end of the month without a balance to save. "In this sense, the increase in the minimum wage can serve to allow households to save more," said these experts, in any case, believe that, taking into account the wage dynamics, believe that the savings deficit will be difficult to reverse in the short and medium term.

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