Spain | The gap between savings and investment and productivity

Summary

Spain's problem is not a shortage of savings, but insufficient investment. The challenge is to channel these savings, both domestic and European, into productive projects capable of generating a return, while creating quality employment and societal growth.

Key points

• Key points:
• The Letta and Draghi reports have flagged the following as one of the major structural problems facing the European economy: the inability to convert its high savings into productive investment within the Union itself.
• Europe does not suffer from a shortage of savings, but a lack of institutional and regulatory opportunities and incentives that allow these savings to be transformed into sufficiently profitable investments.
• Spain, in particular, represents a paradigmatic case of this phenomenon. Despite high domestic savings, driven by the private sector, productive investment remains low, particularly when expressed in terms of employment.
• The gap between savings and national investment is troubling, considering that the latter is one of the main drivers of productivity growth. Even more worryingly, investment per employed person remains virtually stagnant at end-2019 levels.
• Public investment should act as a driver of private investment, making it more profitable. However, for years in Spain, public spending has grown in current terms, but public investment has fallen alarmingly in relation to GDP.

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