Publications

This article assesses the immediate impact the first wave of the pandemic had on euro area household income, consumption and saving, both at the aggregate level and for the main economies in the area. Drawing on the institutional sector accounts, with information to Q2, there was a contained decline in household income, despite the worsening labour market, thanks to the speed and extensive scope of the economic policy measures approved. However, the collapse in consumption during the lockdown meant that saving rebounded in an extraordinary fashion. The outbreak of the second wave and uncertainty over the scale of the economic impact will contribute, for some time longer, to saving remaining relatively high and to the accumulated reservoir of private saving not fully materialising in the form of greater expenditure.

Labour markets in the euro area in 2020 Q2 were severely affected by the COVID 19 lockdown measures. In this context, the conventional concepts of employment and unemployment are insufficient to describe labour market developments. Job retention schemes averted potential redundancies and replaced them with temporary lay-offs and reductions in working hours. Further, many workers who lost their jobs were unable to seek work owing to mobility restrictions. Accordingly, under the conventional measure of unemployment, they were not considered unemployed. A broader measure of the unemployment rate, taking into account this type of inactivity and temporary lay-offs, lifts the share of the euro area population available for work who were totally or partially unemployed in 2020 Q2 to 27%. The sharp increase in unemployment, understood in this broader sense, and the short-time work schemes prompted an unprecedented fall-off in employment in terms of hours worked. This decline was highly uneven, with Spain being the hardest-hit country. In principle, temporary lay-offs should help curb the potential hysteresis effects on the euro area’s labour markets. However, the more protracted the health crisis, the more severe these effects will tend to be.

The effective departure of the United Kingdom (UK) from the European Union (EU) opens up a new period of relations between the two areas. The current health crisis limits economic policies’ room for manoeuvre to accommodate the costs of transitioning to a new economic relationship, whatever final form it may take. This article describes the most recent developments in the negotiation process and outlines three possible scenarios for the future EU-UK trading relationship, providing simulations of the potential macroeconomic impact in each case. Moreover, the recent trend in trading and financial relations between the United Kingdom and Spain is set out in a box.

The first part of this article describes developments in the profitability, solvency and liquidity of Spanish non-financial corporations, drawing on the integrated CBSO database, which contains annual information up to 2019. This analysis evidences that, at end-2019, the corporate sector was in a relatively strong position to withstand an adverse shock. This was, however, compatible with the existence of segments that were in a more vulnerable position. It then analyses the impact of the COVID-19 crisis on the firms’ financial position, on the basis of Central Balance Sheet Data Office Quarterly Survey data for the first three quarters of 2020, which include a relatively small number of generally large firms. The COVID-19 crisis has triggered steep drops in ordinary earnings, employment and profitability levels in this sample of firms. In addition, extraordinary gains and losses have performed very negatively. This has led this group of firms to record a net loss in the Central Balance Sheet Data Office Quarterly Survey for the first time since 2002. The financial position of these firms has also deteriorated in 2020. The average debt ratios and the average debt burden ratio have risen, caused by both higher corporate debt and, to a greater degree, lower ordinary earnings. However, the firms have increased their liquidity buffers as a precautionary measure. The article also includes two boxes. Respectively, these analyse the impact of the COVID-19 crisis on the profitability and the solvency of the corporate sector in 2020, on the basis of various microsimulations. The findings of Box 1 show that the decline in profitability appears to have been particularly steep in the SME segment and, especially, in the sectors hardest hit by the crisis. Box 2 evidences that the crisis seems to have prompted a sharp rise in the financial pressure borne by the firms, in addition to undermining, albeit more moderately, their solvency.

This article describes the boom of recent years in e-commerce in Spain, which reached a 14% share of sales in 2016, similar to the euro area average. The COVID-19 pandemic may have accelerated this trend, with some authors indicating a 6 pp increase in the share of sales during March of this year to over 20%. This article reviews the academic literature analysing potential price differences for the same product depending on whether it is sold in a traditional establishment or through a digital platform. The papers assessed do not observe significant price differences between the two markets. They also show that online markets display some of the same characteristics that are observed in traditional markets, such as a low frequency of price changes and high price dispersion for the same product sold in different online points of sale. Lastly, it is estimated that the development of e-commerce has nurtured business competition in Spain, reducing mark-ups. However, there is no evidence that corporate profits have been affected, which may reflect lower fixed costs associated with the sourcing of certain inputs for digital channels.

The favourable course of the pandemic from early March onwards prompted the Chinese government to gradually ease the most stringent measures taken to fight COVID-19 that had been in force since January, relaxing confinements at home and the restrictions on both mobility and the pursuit of economic and business activity. This article describes the main features of the phase of economic recovery in China so far in 2020. These notably include, in first place, the considerable progress already made in the economic recovery in the country as a whole, although it was initially more lagged in Hubei province, where the pandemic originated. Second, people’s movements have gradually returned to normal, reaching pre-crisis levels in early October. Third, industrial activity has seen a swift recovery, albeit one partially underpinned by temporary factors, such as supplying the demand of other economies with lockdown measures in force. Moreover, services activity, which requires a high degree of social interaction, still lags. Fourth, as regards spending, the consumption of durable goods has recovered more slowly, while the saving rate has increased, which could be attributable to precautionary motives. Lastly, the pandemic appears to have exerted overall downward pressure on inflation in the country as a whole. Nevertheless, it may not be possible to fully extrapolate the experience of China to other economies, owing to the combination of some specific factors, such as the health strategy pursued and, in the economic sphere, the temporary but notable support of the external sector through manufacturing exports.

This article analyses recent developments in the average effective retirement age in light of the 2011 reform and the different forms of retirement. The analysis shows, first, that the effective retirement age has tended to increase in recent years as a result of the net increase in the retirement age within all forms of retirement, which has more than offset the opposite effect prompted by the growing share of the various forms of early retirement. Second, the impact of the 2011 reform, from the standpoint of retirement age, seemingly remains limited, as the percentage of new retirees who take retirement on the basis of legislation prior to the reform is still significant, and the statutory retirement age for workers with sufficiently lengthy contribution histories is still 65. Third, on average, workers who take some form of early or partial retirement have the lowest retirement age, although they generally have longer contribution periods and higher regulatory bases.

The Central Balance Sheet Data Office Quarterly Survey (CBQ) data for 2020 H1 show that the lockdown measures introduced in the context of the COVID-19 health crisis had a sharp adverse impact on activity, albeit with notable differences across the sample firms. This led to a sharp contraction in ordinary profit and profitability levels, resulting in a net loss in aggregate terms, something not seen in the CBQ since 2002. In addition, firms increased their indebtedness to fund larger operating deficits. The share of ordinary profit (Gross Operating Profit plus financial revenue) used for interest payments also rose slightly, reversing the downward trend of this ratio in recent years. The article includes a box that analyses firms’ liquidity needs in 2020 H1 as a result of the fall in activity, investment in real assets and debt repayments, and the financial deterioration recorded by these firms.

The COVID-19 pandemic has significantly altered the financing of the non-financial private sector. Financing of the self-employed and businesses has risen as a consequence of both the increase in demand, stemming from greater liquidity needs and from the perceived increase in refinancing risks, and the expansion of supply, stimulated by the introduction of public guarantee programmes and by the European Central Bank’s policies on the provision of liquidity to credit institutions. In contrast, new lending to individuals has fallen, largely as a consequence of the deterioration in the macroeconomic outlook, which has reduced the supply and demand for credit in this segment. The adverse impact of the COVID-19 crisis on the credit quality of deposit institutions’ portfolios is currently being mitigated by the measures taken by the economic authorities and the institutions themselves (in particular, the public guarantee programme and legislative and banking sector moratoria). However, non-performing loans have increased since the start of the pandemic, both in the case of lending to non-financial corporations and to households. The non-performing loans ratio of deposit institutions has, however, held steady since March, as the expansion in lending (the denominator of the ratio) has offset the increase in the volume of non-performing loans (the numerator).

This article analyses, by region, the trade exposure of Spanish firms to the United Kingdom, based on individual information from the Balance of Payments and the Central Balance Sheet Data Office. Exposure to the UK economy shows some regional variability. Since 2016 there has been a fairly widespread downward trend of this exposure in terms both of nominal exports of goods to the United Kingdom and of the number of companies engaging in this activity. The vulnerability of Spanish export companies to Brexit is, in part, moderated in broad terms by their productivity levels and by the degree of geographical diversification of their exports, which are higher than at firms which trade with the main euro area partners.

The Financial Accounts of the Spanish Economy show that in 2019 households received, for the second consecutive year, positive net bank financing in a moderate amount, similar to that received in 2018, mainly owing to the increase in consumer and other lending. These developments were compatible with a further reduction in household bank debt (to 57% of GDP at year-end, down 2 percentage points (pp) from the level in 2018 and 29 pp from its peak in 2010). At the same time, the gross financial wealth of households increased – unlike in 2018 – mainly as a result of the rise in value of their financial portfolio, in line with the appreciation of stock market indices and fixed-income securities. As regards firms, the net flow of bank lending received from resident financial institutions was once again negative, in an amount slightly lower than that of the previous year, contributing to a drop in their debt ratio to 73% of GDP, down 2 pp from 2018 and 47 pp from the maximum levels recorded in mid-2010. Finally, in contrast to the previous year, non-financial corporations’ own funds increased, owing to both fund raising via this channel and, to a greater extent, the increase in the value of these instruments.

In recent years, information on the usage of cards as a means of payment has been increasingly used as an indicator of private consumption. The advantages of such information include its daily frequency and the short time lag from the moment of spending until it becomes available. This article uses this indicator to analyse Spanish household consumption since the state of alert was declared in mid-March and to explore the corresponding determinants. Indeed, the drop in consumption during the COVID-19 health crisis has been far greater than that suggested by the usual determinants, indicating that other factors could largely explain the developments observed. Included here are the greater uncertainty as to the course of the disease and its economic repercussions, and the restrictions on people’s movement and on various economic activities during the state of alert. Card payment data can be used to investigate the importance of social distancing measures when explaining the developments observed in consumption since mid-March. The article identifies that the indicators of payment card usage show a high correlation with the course of the restrictions on movement and activity. The information available also shows how in-person purchases were replaced by online shopping during lockdown.

On 20 April 2020 the West Texas Intermediate (WTI) oil futures price for May delivery turned negative for the first time in history. Other crude prices also posted very low values and their volatility soared, far more than that on stock markets. This article analyses the differences between the spot and futures markets for crude, demonstrating the key role they played in the source and subsequent correction of this event, which affected above all WTI contracts more than Brent. The article also highlights the increasingly significant presence of oil exchange-traded funds (ETFs) and their growing use as a retail investment instrument.

The data from the Central Balance Sheet Data Office Quarterly Survey (CBQ) for 2020 Q1 show that the lockdown measures introduced in the context of the COVID-19 health crisis had a sharp adverse impact on the activity of the sample firms in the first quarter of the year. This led to a sharp contraction in ordinary profit and profitability levels, even reducing final net profit to a negative aggregate value, something that had not happened in the CBQ since 2002. In addition, the need to cover operating deficits contributed to a rise in these firms’ debt, and the share of ordinary profit (gross operating profit plus financial revenue) used for interest payments also rose slightly, reversing the downward trend of this ratio in recent years. The article includes a box that analyses firms’ liquidity needs in 2020 Q1 (as a result of the fall in activity, investment in real assets and debt repayments) and the financial deterioration recorded by these firms.

According to the balance of payments statistics, Spain’s net lending stood at 2.3% as a percentage of GDP in 2019, slightly down on the prior year, against a backdrop of continued, albeit slowing, economic growth. Developments in net lending are explained by the reduction in the capital account surplus, resulting from the decrease in funds from the EU, stagnation in tourism receipts as a percentage of GDP and the widening of the deficit on non-energy goods, which offset the improvement in the energy balance prompted by the decline in oil prices. There has been an abrupt change in the outlook for the economy’s external balance as a result of the COVID-19 health crisis, with major uncertainty in the near future about the scale (and even sign) of its effects on this balance, against a backdrop of a drastic reduction in the foreign goods and services trade. For the time being, the information on the balance of payments relating to March shows a net borrowing position, for the first time in that month since 2012, associated with the sharp fall in tourism receipts caused by the measures to restrict movement adopted in Spain and in source countries. Future developments in inbound tourism, in particular, will depend greatly on how quickly restrictions on movement are lifted. This, in turn, hinges both on how the pandemic continues to unfold and on risk perception, which could lead potential tourists to voluntarily adopt social distancing measures. In 2019, the negative net international investment position of the Spanish economy decreased for the fifth year running, to stand at 74% of GDP, its lowest level since 2006. These developments, which represented the biggest fall in the last seven years, were underpinned by the nation’s net lending position, the positive amount of valuation effects and GDP growth. In terms of financial flows, excluding the Banco de España, the surplus balance of financial transactions of the Spanish economy was lower than in 2018, influenced by the rise in purchases of general government debt by international investors, which was only partially offset by the fall in foreign direct investment inflows. For the first time since 2014, the financial account of the Banco de España showed a surplus, affected by certain changes in the implementation of the ECB’s monetary policy.

The global spread of COVID-19 and, above all, the social distancing measures adopted to contain the health crisis have resulted in a significant standstill in economic activity in most economies. The economic impact on different countries’ or regions’ economies may vary significantly depending on their respective productive structures and will also be influenced by the cross-sectoral customer-supplier relationships in the domestic and international supply chains. This article investigates how the impact of the shock triggered by COVID-19 may vary depending on these two characteristics: differences in the productive structure and cross-sectoral connections. First, the impact of two different scenarios envisaged for Spain on the value added of its different regions (Comunidades Autónomas) is quantified. Then, those same scenarios are used to estimate the impact of an identical shock on the largest euro area countries (Germany, France, Italy and Spain). The findings confirm that the effects of the restrictions imposed on economic activity in Spain to contain the pandemic vary according to the region on account of the different productive structures and cross-sectoral relationships. Broadly speaking, it appears that the estimated impact is significantly higher in the regions most exposed to the sectors related to accommodation and food service activities, such as the island regions. The impact would also be high in other regions, which tend to be those where the manufacturing of vehicles is of particular importance, due not only to the closure of production plants, but also to the spillover effect on other sectors. By applying to the main euro area economies the same degree of sectoral shutdowns as that observed in the Spanish economy, the impact on Germany, France and, to a lesser extent, Italy is comparatively smaller than in Spain. The differences in productive structure and cross-sectoral connections render the Spanish economy relatively more vulnerable to a common shock such as the current pandemic due to its greater reliance on those sectors particularly stricken by the social distancing measures.

This article analyses the characteristics of workers who are potentially more affected by the COVID-19 crisis and their employment possibilities in other productive sectors. Sectors related to travel, accommodation and food services, leisure and wholesale and retail trade, which have been particularly affected by the measures adopted to limit the impact of the pandemic, concentrate 19.6% of total employment in Spain. On the other hand, sectors related to distribution, logistics and information and communication –demand for which appears to be less affected or might even have increased during the lockdown– account for 7.4% of total employment. Among the workers from sectors that are most affected, the proportion of women, young adults, the lesser-skilled, and workers with less experience and with temporary contracts, is especially high. The analysis based on the tasks performed by workers in the different sectors suggests that the potential mobility of the employees that have been hardest hit by the crisis is scarce, especially in accommodation and food services and in wholesale and retail trade, in part owing to the limited intensity of use in those sectors of tasks associated with information and communication technologies, writing, reading and numerical skills. However, workers in sectors related to shipping and leisure or entertainment activities might have more opportunities of finding a job in other areas. These results point to the need to support training in certain skills for the potentially unemployed in the sectors most affected by the pandemic in order to facilitate their transition to new vacancies.

This article analyses changes in investment by foreigners in the residential real estate market in Spain between 2007 and 2019. Two indicators are used for this purpose: gross purchases by foreigners as a percentage of total transactions and net purchases (purchases less sales) relative to the housing stock. A distinction is made between resident foreigners and non-resident foreigners. Non-resident foreigners who invest in the Spanish real estate market mainly come from high-income European countries, while resident foreigner buyers are mostly from countries from which Spain receives immigration, such as Romania and Morocco. The article also shows how non-resident foreigners concentrated their purchases in the islands and in the Mediterranean coastal provinces, while residents distributed their purchases more evenly throughout Spain. Finally, there is no statistical evidence supporting the hypothesis that investment by non-resident foreigners has in itself contributed significantly to an increase in house prices. However, the high correlation between population growth and the increase in real estate prices suggests that the increase in the foreign population resident in certain provinces, particularly in the islands, appears to have contributed to raising house prices through its effect on the demand for property.

COVID-19 has spread globally, and most countries have adopted extraordinary measures to mitigate its effects on public health. These include bringing part of economic activity to a standstill and the confinement of the population, and they are exerting a most severe contractionary effect on GDP and employment worldwide. While the resolute action of national and supranational authorities will contribute to alleviating these effects, their magnitude remains, for the moment, highly uncertain.
This article develops a set of scenarios for the Spanish economy that consider various alternative assumptions about the duration of the confinement and the persistence of the shock the economy has undergone. In this connection, two different methodologies are used. The first rests on an assessment of sectoral output losses as a result of the epidemic containment measures; the second is based on simulations of the main transmission channels of the economic effects of the pandemic, using the Banco de España Quarterly Model (MTBE). The results of the different scenarios point to reductions in Spanish GDP in 2020 unprecedented in recent history. That said, the scale of the reductions is highly sensitive to the starting assumptions, over whose plausibility there is much uncertainty. Once the height of the crisis is behind us in the short term, activity should begin to recover at a rate which will in any event depend on how the health risk is perceived in the coming months and on the capacity for recovery of that part of the productive system most damaged by the current shutdown. With a view to 2021, foreseeably the Spanish economy will substantially - but not fully – recoup the course of activity and employment expected before the pandemic.
It is necessary to highlight, in any case, the provisional nature of these calculations. They must be subjected in the coming months to ongoing revision as new information progressively becomes available.

According to the Central Balance Sheet Data Office Quarterly Survey, non-financial corporations’ activity lost momentum in 2019, resulting in a slowdown in job creation. However, the high inflow of dividends contributed to an increase in ordinary profit and, as a result, average levels of return on ordinary activities also grew. In addition, financing costs continued to decline, allowing the spread between the return on investment and this indicator to widen again. Extraordinary costs and revenue had an adverse impact on net profit, triggering a notable decline. Average debt ratios, expressed as both a percentage of assets and as a percentage of ordinary profit, continued to fall in 2019. The share of profits used to service debt also continued to decline and stands at a record low. The article contains a box analysing the recent developments in trade finance and the average supplier-payment and customer-collection periods.

This article describes the main characteristics of the trade agreement reached between the European Union (EU) and the Common Market of the South (MERCOSUR) in 2019 and presents estimates of its possible impact on trade and GDP in the two areas.
It is an ambitious agreement involving the full liberalisation of almost all of the goods trade between the two blocs, facilitating the provision of services and the reduction of non-tariff barriers, and envisaging reciprocal liberalisation of public procurement. Similarly, it includes provisions on the protection of the environment and workers’ rights.
The agreement’s estimated effects on trade and economic activity will be significant for MERCOSUR. The impact for the EU will be more modest, yet always positive, since trade with MERCOSUR is less significant for EU members. Spain is among the EU member countries whose economies will benefit most from the agreement.

In the final stretch of 2019, the funds raised by households and non-financial corporations grew at very moderate rates, somewhat below those recorded in the first half of the year. This occurred against a setting of weak demand for funds, in which credit standards for bank loans had tightened slightly, although the cost of credit declined again, in keeping with the more accommodative monetary policy stance. Deposit institutions’ loan portfolios continued to contract, albeit at a more moderate pace, while their average quality improved, with further reductions in the NPL ratio and in foreclosed assets.