Artículos

The ultra-expansionary monetary policy in place until 2021 had the obvious benefit of providing official liquidity at a time when the banks were finding it hard to raise it privately. The disappearance of that official liquidity will foreseeably translate into higher deposit
betas across the eurozone, including in Spain, where the process is already beginning to accelerate, albeit with a lag relative to the eurozone average.

In what looks to be the tail end of the monetary policy tightening cycle, the insurance business in Spain is staging spectacular growth in revenue (premiums), fuelled by life
insurance products. With rates now looking more likely to stay high for longer, momentum in these products is expected to continue; however, from a broader perspective, the sector is likely to suffer, particularly in the non-life business, from the economic slowdown and high costs of claims in the motor insurance segment.

After one year of intense interest rate increases, coupled with very slow pass-through to deposit rates, households have moved decisively to reconfigure their savings, and also
their borrowings. In this process of recomposition of household financial flows and the search for an alternative to deposits, the early cancellation of debts, especially variable rate mortgages, which are undoubtedly the most affected by the rise in interest rates, has
gained increasing significance.

After Spain’s public deficit initially soared to 10% of GDP and the public debt level rose to historical highs of 120% of GDP in the wake of the pandemic, reactivation of the economy and significant growth in tax revenue has since helped to underpin improvement in the
county’s fiscal metrics. However, under a stricter EU fiscal framework, budgetary stability in Spain will face significant hurdles, unless further fiscal adjustments and reforms are
implemented.

Growth in total state revenue is expected to slow in 2024, while growth in public expenditure
is forecast to slow over the same time frame. Given that wage and pension increases will continue to put upward pressure on the deficit, achievement of the 3.0% of GDP target required under EU fiscal rules will be difficult.