Spain is one of the countries where households began to lose income at the end of 2021, before the war broke out in Ukraine and inflation ended up getting out of control, weighing down the purchasing power of families. The Organization for Economic Cooperation and Development (OECD) published this Thursday an analysis of the evolution of GDP per inhabitant and household income in which it concludes that, despite the fact that the economies of the richest countries in the world are recovering from the disruption caused by covid-19, household income is suffering after the withdrawal of public support.
The organization, based in Paris, details that the end of the public subsidies deployed to try to placate the economic collapse caused by the strict confinements of the first waves of the pandemic are having an impact on family income. “The trend in household per capita income reflects, among other things, reductions in pandemic-related government assistance paid to households since early 2021,” she notes. Although the institution chaired by the Australian Mathias Cormann warns that, in the OECD area, GDP per capita increased by 1.2% in the last part of last year, it also insists that the real income per capita of households it fell 0.3% in that last quarter. “Real per capita household income has stagnated for the past six months and has followed GDP per capita growth for the third consecutive quarter,” he underlines in a statement.
In Spain, household income fell by just under 1.6% in the last quarter, coinciding with a more rigid application of ERTEs and aid for the self-employed.
“Economic growth always receives a lot of attention, but when it comes to determining how well people are doing, it is also interesting to look at the indicators that highlight the economic activity of households,” explains the multilateral organization, which acknowledges that even so “Household income was 3.8% higher in the fourth quarter of 2021 than in the fourth quarter of 2019, before the start of the pandemic.”
Spanish families, however, are taking longer to recover their pre-pandemic income level. Spain is, along with Ireland, Greece and the Netherlands, where households are furthest from recovering their pre-crisis level, according to OECD data.
Among the G7 economies, the largest decline in real per capita household income in the fourth quarter of 2021 was recorded in Canada, as government transfers to households continued to decline. Households in the United States, Germany, and the United Kingdom also experienced declines in per capita income. By contrast, real per capita household income increased in France and Italy.
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In other OECD countries, the experience was mixed in the fourth quarter of 2021. There were declines in per capita household income in Belgium, Finland and Spain. However, strong growth was recorded in Hungary, Portugal and Denmark.
“In 2021, year-on-year growth in GDP per capita in the OECD area was 5.1%, much stronger than the 1.7% growth in real household income per capita. Italy, France, the United Kingdom and the United States all saw growth in per capita household income in 2021, but the United States was the only G7 country to see increases in both 2020 and 2021.
The evolution of per capita household income throughout the pandemic reflects both the size and timing of government assistance payments. Canada and the United States made broad-based monetary payments to households in the second quarter of 2020, a policy that the United States repeated in the first quarter of 2021. As these temporary aids dwindled, rents fell.