Bank deposits continue to rise despite the holidays – Moorpark College Reporter
The pandemic continues to alter the usual patterns of the economy. July is a month when household deposits traditionally decline as savings are used to finance vacations. Last year, however, they increased for the first time since 2010 and this year it was repeated. Families had saved 942,800 million euros in deposit institutions (banks, savings banks and credit unions) last month, 1,100 million and 0.1% more than in June, as a published this Wednesday the Bank of Spain.
Households thus closed the month of July with 49,000 million more (5.6% increase) in the bank than they had twelve months earlier. Compared to February 2020, the last month before confinement was declared, the increase amounts to 90,900 million, an increase of 10.6%.
Authorities and experts hope that all of these savings saved will be funneled into consumption as the situation normalizes and activity reopens and this is one of the main drivers of the country’s economic recovery.
The latest data does suggest that while families continue to increase their deposits, it is also driving spending spikes. Advanced GDP data for the second quarter indicate an increase in final household consumption of 6.6%.
Some data for July also point in the same direction. Hotel nights for nationals amounted to 14.9 million last month, 97% more than a year earlier. The BBVA, meanwhile, reported that spending on their cards and outlets in Spain last month was 28% higher than in the same month of 2019.
Less than companies
Unlike households, businesses reduced their deposits last month to 294.9 billion euros, 5.9 billion and 1.9% lower than the previous month. While families have been increasing their bank savings almost uninterruptedly since the start of last year, businesses closed in July with an amount almost equal to what they had in June 2020. In total, they are still 43, 1 billion more than those they had saved in February before confinement, which implies an increase of 17%.
This decline in corporate savings in banks in July does not seem to indicate an increase in investment. On the one hand, the economic uncertainty of the first half caused gross capital formation to fall by 0.2% in the first quarter and by 1.5% in the second.
But also, for companies that invest, it may be more interesting to borrow than to draw on deposits, since stimuli from the European Central Bank (ECB) make financing historically cheap both in the capital markets and in the economy. bank credit. As it stands, the drop is likely related to the financial woes many of them are suffering from, as the Bank of Spain has been warning for months.