Spanish households returning to former wealth levels

Spanish wallets are feeling fuller than at any point in the past eight years

Amid the government-deficit-miracle-recovery-bailout-EU-export-growth chatter that has come to define stories about Spain over the past two years, it can sometimes feel like one key demographic gets forgotten – the Spanish public.

While tourism soars, the property market recovers and the export industry booms, the only time the average Spaniard is mentioned is usually when referring to unemployment levels…

I am as guilty of that as any other journalist. When you scour the wires for Spanish stories, the past 24 months have been a rollercoaster of red-lettered warnings about the economy, through to – more recently – tentative recovery and hushed talk of growth. The wider picture has been unavoidable.

But news this week sees the headline writers home in on a figure that may at first seem relatively nondescript, but could actually be a more accurate pointer of Spanish recovery. And that figure is household wealth.

Yep, the cold, hard finances of Spaniards have been thrust under the microscope this week, and the signs are strong that the average family is feeling a little better off today than at any point since 2006.

Figures from the Bank of Spain have revealed that the net financial wealth of Spanish families is up 20.8 per cent on the same period as last year, and has increased by an impressive 8.1 per cent in the past three months.

The figures are calculated by comparing the difference between combined private savings and what has been borrowed, with the resulting €995.993 billion figure just shy of one trillion euros – or equal to the Spanish GDP.

And when household wealth surpasses national GDP? Why, that is – in anybody’s money – a recovery. Such bullish figures are a result of more job creation, slightly increased wages, a collective tightening of belts and saving for a rainy day, and an overall improvement in the financial markets, which helps interest rates make things look a little more peachy all round.

Equally, total household holdings – things like cash, bank deposits and shares – were collectively up, reaching €1.86 trillion, having previously reached a nine-year high in June last year, when they topped €1.7 trillion.

Such good news followed a Reuters report that revealed Spain’s public deficit (excluding town halls) was 5.44 per cent of GDP in November, which was actually a slight increase on October’s 4.87 per cent.

As a result of these encouraging figures, Spain’s Economy Minister Luis de Guindos has upgraded the country’s recovery forecast, revealing that he expects the economy to grow by one per cent in 2014.

“Two years ago, we were on the brink of collapse but thanks to the difficult measures we took internally, the situation is now totally different,” de Guindos said. “We are now beginning to see the results.”