Less rich, more in debt and unable to save (even if they would like to). This is the map of Italian households drawn by the Bank of Italy’s Annual Report for 2022. Perhaps the most striking figure is the 693 billion euros of net financial wealth of households eroded in 2022. “High inflation” has had an impact and the sharp decline in asset prices”, according to Banca d’Italia. At the same time, however, the propensity to save dropped, going from 13.2% in 2021 to 8.1% last year. The lowest since 2008. The high geopolitical uncertainty and financial tensions, according to Palazzo Koch, are among the causes.
After a bubbly 2021, Russia’s brutal invasion of Ukraine has led to a generalized impoverishment of Italian families. If it is true, as remarked by the governor Ignazio Visco during his last Final Considerations, that in 2022 the Italian economy proved to be more resilient and resilient than expected. But it is equally true that Italian families are having an increasingly difficult time. There are two data that give the measure of the precarious situation in which the families of the country are. As the economists of the Bank of Italy point out, in 2022 “the savings rate fell further, to 10 per cent of gross disposable income, after the peak reached in 2020 (17.5 per cent) due to the exceptional compression of consumption during the most acute phase of the pandemic”. Together with “the huge capital transfers (4.2 per cent of disposable income), mainly attributable to building bonuses, savings have allowed households to make investments in real assets equal to 10.5 per cent and in net financial assets equal to 3.7 per cent of disposable income. But not all that glitters is gold, he points out. However, this last financial surplus “did not offset the drop (equal to 7.2 per cent of disposable income) in the real value of those components of wealth (deposits, bonds, loans and trade credits) whose nominal value is more exposed to the increase in consumer prices”. It follows that, in the face of price increases and volatility, net financial wealth fell by 14.4%, or 693 billion euros.
According to Istat surveys, the confidence climate indicator “deteriorated sharply following the outbreak of war in Ukraine and continued to fall in the following months in connection with price rises and the worsening of economic prospects”. Consumers, according to the latest Bank of Italy report, “believe that it is very advisable to save, but report that their ability to do so has been reduced”. Spending plans “may also be negatively affected by expectations of high inflation”, as emerges from an analysis of data from an experimental survey conducted by the Bank of Italy in the summer of 2022.
The second figure that should make us reflect concerns debts. In 2022, the debt of Italian consumer households to banks and financial companies “grew by 4.6 percent”. As the Bank of Italy points out, “compared to a slight slowdown in real estate mortgages (4.7 per cent), consumer credit accelerated (to 5.9 per cent)”. The positive passage, on the other hand, is that the general situation of the country remains better than many others: “At the end of the year, household financial debts amounted to 62.5 per cent of disposable income, about 2 percentage points less of 2021 and more than 30 points below the euro area average”.
Personal financing is worrying, given that it is growing. “In 2022 the dynamics of consumer credit returned to growth rates in line with those prevailing in the period preceding the health crisis: the incidence of these loans with respect to disposable income stood at 12.7 per cent, against 9.4 of the euro area average”. In the first months of 2023, the Bank of Italy remarks, “the expansion continued, affected by the continuous improvement in consumer confidence”.
Also in the light of these phenomena, a new warning has come from the European Central Bank (ECB). “Banking supervisors do not have perfect forecasting ability, and they cannot be expected to identify all the dangers that every bank faces. So, in the end, it is the banks, not the supervisors, who must assume the responsibility to identify and manage risks. And that means having solid governance and a solid risk culture, so that growth and profitability never come before prudence”, explained the president of ECB banking supervision, Andrea Enria, speaking at the annual conference on the challenges of the financial sector organized by the IMF, the World Bank and the Fed. An alarm of which the Bank of Italy is also well aware.