Spanish finance minister Luis De Guindos has been regaling us with tales of the pick up in the economy of late but has any recovery come too late for the average Spaniard?
Bloomberg have a report from the Spanish national statistics office (INE) that shows that Spanish household savings dipped into negative territory in Q1. This is the first time this has happened since the report series began in 2000.
- Q1 spending was higher than income by €2.9bn
- Gross savings came to -1.9% of available income
- Household income fell 2.7% to (€157.7bn) on the year while spending rose 1.9% to €160.6bn
It’s a very worrying and ominous sign for Spain as the spending needs to be funded somehow. There may be an element of cash in hand work that is slipping the tax net and thus these figures, but overall the last few years was always going to culminate in a squeeze on incomes. Whole generations of families have been struggling and dipping into savings to get by. As we know, that’s not a sustainable way to live.
Spain needs a big turnaround and needs it fast as those numbers are only going to get worse. Debt is the obvious choice to replace savings but in the current climate that’s going to lead down a whole new dark road altogether.
The question is how many other European countries are suffering the same fate?
