The wealth of Spanish households: a microeconomic comparison with the United States, Italy and the United Kingdom

The financial situation of households in Spain has changed significantly over the last few years. Particularly noteworthy is the upsurge in household debt relative to their gross available income which, by the end of 2004, had more than doubled since the middle of the previous decade. This increase in indebtedness has, nevertheless, been accompanied by a rise in household wealth – both financial and, more especially, housing-related – stemming from the increase in house prices and from high residential investment. However, for a more precise assessment of the wealth position of Spanish households, it is necessary to carry out a more detailed analysis. Indeed, the analysis of differences in indebtedness or in the composition of wealth, according to income or age, will be important for drawing conclusions on aspects relating to macroeconomic and financial stability in the Spanish economy, such as possible sector vulnerability to unfavourable developments in financing costs, asset prices or incomes. The recent Spanish Survey on Household Finances (EFF) conducted by the Banco de España offers the possibility to analyse these issues. This article analyses the financial situation of Spanish households through comparisons with other countries, with a view to identifying both common and distinctive characteristics of the financial position of households in Spain. More specifically, the analysis compares Spain with the United States, Italy and the United Kingdom, where the detailed data needed to construct the variables needed in this analysis are readily available. The comparisons drawn with the United States and the United Kingdom are of particular relevance, since the position of households in these two countries, particularly on account of their high ratios of indebtedness, is considered to be one of the determining factors in the countries’ macroeconomic prospects. In addition to this introduction, the article has six sections and one annex. The first describes the databases used, a more detailed description of which is given in the annex. Next follows an analysis of the distribution of net household wealth and income in the countries under review. The following section analyses the ownership and composition of household assets and liabilities for all households and for different population sub-groups, defined according to income level and age. In the case of indebted households, ratios that measure the magnitude of the debt contracted in relation to household income and wealth are also given. Finally, the last section sets out the main conclusions.