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In the year of the end of free money, Spanish companies and households managed to reduce their debts by 21,900 million euros, to 1.66 trillion (-1.3%). This was reflected in the financial accounts of the Spanish economy, published this Wednesday, which recognized that indebtedness fell to 125.1% of GDP last year, compared to 139.4% in 2021. The vast majority of this reduction was It was carried out by companies (20.5 billion) that, anticipating a rise in credit with the rate hikes that began in June, would not have chosen to pay off their debt or be more careful when requesting new financing.
The pandemic led to a sharp increase in the debt of families and companies: from 1.61 trillion in 2019 it went to 1.65 the following year, which represented a jump of more than 40,000 million euros in one year. In 2021 it continues its upward trend, up to 1.68 trillion. Although last year was the first year of moderation in the debt of families and companies since the start of the pandemic, this is still 3.1% higher than in 2019.
The slight reduction in household indebtedness has not, however, translated into an increase in their net financial wealth —which is obtained by subtracting debts from financial assets such as deposits or shares. It is reduced and 0.2% the previous year, it has lost 1.96 trillion euros, it is expected to be raised and 9.4% in 2021.
The composition of the household financial asset portfolio — of 2.7 trillion euros, a figure similar to 2021 — did not suffer great variations last year: deposits and cash (40%), which increased slightly, followed by equity holdings (31%), investment funds (14%) and insurance and pension funds (12%). The latter were the ones that suffered the most in 2022, one of the most difficult years for investment since the 2008 financial crisis, and their weight in the portfolio of Spanish households fell by more than two points.
Deposits
With the case of 40% of their assets in deposits in 2022, it is now possible to follow a change in trend for Spanish families: although at the end of the year they began to be remunerated by the banks, the deposits are not yet reflecting the rate increases of the European Central Bank. And, with some financial institutions that do not get to launch into a deposit war, clients are looking for profitability in other products, such as Treasury bills.
In addition, inflation has forced Spaniards to draw on savings to face price rises, a trend that is being confirmed in 2023: in the first two months of the year, deposits fell by 18,000 million euros. All this leads to a reduction in the financial assets of families, who do see, on the other side of the scale, how their financing becomes more expensive: mortgages that are reviewed with the Euribor in March will rise more than 50%.
In the future, it will be reduced to the net value of 2.4 billion euros from last year, and to 0.2% of GDP. To this amount, the Bank of Spain points out in its report, the effect of the fall in the prices of the fixed-income securities (bonds) that they have issued was added. Every time central banks raise rates, bonds already issued lose value. This is because, with increases, the fixed-income securities that are issued will pay better, making their peers already in the market less attractive—and therefore devaluing.
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