Spain hosts some of Europe’s largest household saving capacities, yet its savings rate faced a sharp pullback in the first quarter of the year, pressured by lingering inflation. Across Europe, Spain stood out as one of the nations where households held back the most, with a noticeable dip in deposits and a slowdown in savings growth, even as the overall EU trend showed a marginal uptick of 0.1% from the end of 2021. The pattern reflects how wages and living costs are shaping family finances, with Spanish workers earning at roughly half the EU average and saving less as a result of higher consumer outlays and constrained income growth.
Spanish deposits and savings rates have contracted in two consecutive quarters, a trend that Eurostat confirms. The country moved from a savings rate of 14.1% in the first quarter of 2021 to around 7.5% at the start of 2022, signaling that households are drawing from their buffers as price pressures intensify. The calculation behind this figure is straightforward: savings divided by gross income, measuring the share of earnings that households set aside for future use.
What makes the current landscape different is the pre-pandemic baseline and the unusual spike in deposits during the health crisis. Constrained spending on hospitality, travel, and entertainment led many middle-to-high income households to accumulate funds. By March 2022, those extra savings had largely been used up, effectively eroding the accumulated cushion that pandemic-era restrictions had temporarily created. This phenomenon helps explain why current savings appear to lag behind European peers even as disposable income trends improve in the broader region.
Same expense, less income
When looking back at the quarters preceding the latest data, the fall in the savings rate is partly driven by a drop in household disposable income in early 2022. Consumption patterns, education spending, and investment continued to climb overall, yet they fell by about 1.4% from the last quarter of 2021. The distinctive factor for Spain is that Spaniards maintain spending patterns closer to European levels even as incomes lag, resulting in a tighter balance between what households earn and what they can spend. The net effect is a visible compression of savings against a backdrop of still-growing European incomes.
Further context comes from broader indicators. The Fedea foundation, in its monthly briefing, highlighted the trajectory of wages and borrowing costs using Eurostat data. The takeaway is clear: wages in Spain rise at roughly half the pace of the European average, while purchasing power erodes as price levels rise. The hourly labor cost index increased by just over 4% across the EU and by a little more than 2% in Spain in the first quarter, underscoring the pressures on household budgets across the continent .