Ibex fell 0.99% in 35 sessions, but earned 7,500 points
The ongoing price crisis has weighed on Europe for months, yet its impact is uneven. Across Spain, wages have largely frozen or fallen behind inflation, while many small and medium-sized enterprises strive to maintain positive balances. At the same time, Ibex 35 companies have benefited from a surge in profits, driven by energy and banking sectors. The divergence is striking: corporate profits climb while worker earnings lag behind. Since 2019, wages have risen by 7.4 percent according to INE data, a pace that trails the profit gains of Ibex well over eightfold during the same period.
On September 21, Solaria, the photovoltaic specialist, reported results for the first half of the year, closing the season with a mixed performance among the Ibex 35 firms. Between January and June, Solaria’s sector peers posted a total profit that reached 31,310.5 million euros. This figure marks a 12.7 percent increase from the first half of 2021 and a striking 61.6 percent rise compared with the pre-pandemic period of 2019, before Covid-19.
Economist Pedro Aznar of Esade notes that inflation creates winners and losers alike. He explains that firms across the board, including small and medium-sized businesses, can absorb higher costs by adjusting margins. Ibex companies stand as a prominent example, though some analyses argue that this success story masks broader trends within Spain’s business fabric.
Raymond Torres, director of state and international analysis at Funcas, relies on updated data from the Bank of Spain’s central balance sheet to ground his assessment. He points out that last year the labor surplus rose by 4.3 percent compared with 2019, indicating that price pressures have cooled somewhat when viewed in current prices. Yet profits among listed companies do not mirror the full strength of the economy as a whole, suggesting a more nuanced picture of margins and distribution.
Andrei Boar, a professor at UPF-BSM in finance and accounting, highlights that the most pronounced profit gains are concentrated in energy and banking. He notes that electricity consumption has rebounded to near year-ago levels, but at notably higher prices. Meanwhile, rising interest rates have benefited banks, boosting intermediation margins as Euribor climbs and floating-rate mortgages grow more expensive. Still, these improved margins may be pricing in only part of the story, and further gains for bank profits could emerge in the coming months.
Torres stresses that the pandemic dealt a harsh blow to workers and firms alike, and inflation has exacted a heavy cost on wage earners. Data from the quarterly labor costs survey show that effective hourly wages are 7.4 percent higher than in 2019, while salaries today sit 3.8 percent below pre-pandemic levels when inflation is accounted for. This paints a picture of skewed recovery where company profits outpace wage growth, potentially dampening consumer demand and investment if the trend persists.
Experts emphasize the need for a balanced approach to risk and reward. Companies should consider aligning profit growth with wage advancement to sustain consumption and investment momentum. The IMF and the G-20 have warned against protracted imbalances that could fuel inflationary pressures and weaken competitiveness across industries. A revenue agreement or similar mechanism may help stabilize the broader economy by ensuring a more even distribution of gains between capital and labor, reducing the risk of a price-wage spiral that could erode purchasing power over time.