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The fear of unemployment or a drop in salary after the Covid led the Spanish to save 20,000 million in 2020

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The fear of losing a job, experiencing a drop in salary or, in general, having less income due to the economic deterioration brought on by the pandemic and the uncertainty about the future of the macroeconomic situation has driven the call “saving fear” in Spain.

The experts of BBVA Research have quantified the amount to which this money rises that the Spaniards have saved to avoid scares in the accumulated of all 2020 and they estimate that it stood at about 20,000 million euros, which means one third of the total extraordinary savings for the year.

The measures put in place to stop business bleeding, such as the Records of Temporary Employment Regulation (ERTE), have not been enough to induce confidence in the most risk-averse individuals, who have preferred to be cautious and save against possible eventualities related to their income. Not surprisingly, according to BBVA Research, Social Security closed the year with 830,000 fewer contributors than there would be in the absence of the health crisis.

Tax savings

The other two thirds of extraordinary savings correspond to a phenomenon typical of the exceptional situation that the pandemic has led to and which represents a differential element with respect to previous crises. It is the so-called “forced saving”, which is the money that the Spanish have accumulated by not being able to spend it on services in which they usually did, such as leisure or restaurants, due to sanitary restrictions.

For this concept, the Spaniards kept until 40,000 million euros throughout the year, according to BBVA Research calculations. Most of this saving was accumulated, of course, during the second quarter of last year, after which it decreased in the third by relaxation of sanitary measures, but it increased again in the last months of the year.

Rafael Doménech, Head of Economic Analysis at BBVA Research, at the Finance Observatory.

Jesus Umbria

Total, the extraordinary savings bag of the year (compared to the pre-crisis level of 2019) stood at about 60,500 million euros, a figure that, according to these experts, is in line with the reduction that the added value of the sectors most affected by the pandemic has experienced, mainly commerce, transport and hospitality.

In fact, within the euro zone, Spain was the country that recorded the greatest increase despite a context in which family incomes fell. The household savings rate closed 2020 at 14.7% of its disposable income (108.8 billion) and more than doubled 2019 records, when this saving stood at 60,800 million.

Consumption rebound

In the future, the forecast is that these savings will be released in the form of consumption, both due to the improvement in the economic situation and the opening of the activity of the sectors most affected by the pandemic thanks to the relaxation of restrictions.

BBVA Research estimates that this should be the case, although they explain that the “exceptionally high” uncertainty, both due to the origin of savings and the fact that focuses on the elderly and with a high income level, make it difficult to guess what the evolution will be.

However, the research service estimates that si all this “forced saving” was released in the form of spending, consumption could accelerate two points more than is already forecast, namely, up to 8%.

In fact, as Invertia reported a few days ago, consumption has started to rebound strongly after the lifting of the state of alarm and where the change has been most noticeable is in leisure and restaurant activities.

More specifically, in the first week after the end of the state of alarm, face-to-face consumption by families rose by 12% and consumption in bars, restaurants and leisure activities did so by 11%, compared to the timid rise (1%) that it registered just a week before, when it was still in force, according to data from CaixaBank Research.

However, BBVA’s research service considers that, although consumption in leisure, tourism and catering, which has fallen the most during the health crisis, is rebounding, “it is unlikely that it will compensate for the fall in 2020 in the short term”, with the risk, what’s more, that there has been a change of preferences in citizens and this expense is reduced in the future. However, they admit that “these effects are difficult to predict given the exceptional nature of this crisis.”

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