Publications

Economy of the European Union

From this page you can access thematically grouped Analytical Articles published in the Economic Bulletin from 1999, ordered by date of dissemination within each year.

All documents are available in PDF format PDF File. Opens in a new window

  • 21/12/2020
    Euro area household income and saving during the first wave of the pandemic (382 KB) Ana del Río and José Antonio Cuenca

    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.

  • 15/12/2020
    Impact of lockdown on the euro area labour market in 2020 H1 (337 KB) Ángel Luis Gómez and José Manuel Montero

    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.

  • 04/12/2020
    Brexit: situation and economic consequences (336 KB) Alejandro Buesa, Coral García, Iván Kataryniuk, César Martín-Machuca, Susana Moreno and Moritz Roth

    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.

  • 19/11/2020
    Effects of e-commerce on prices and business competition (312 KB) Aitor Lacuesta, Pau Roldan and Darío Serrano-Puente

    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.

  • 17/11/2020
    Recent developments in the cost of bank equity in Europe (410 KB) Luis Fernández Lafuerza and Javier Mencía

    This article assesses the cost of bank equity in Spain and the euro area since 2007, focusing particularly on the period of the COVID-19 pandemic. There was a marked rise in the cost of equity in March 2020, followed by a decline in the subsequent months. The article assesses the factors responsible for this movement, and compares it against the change in interest rates on alternative bank funding instruments.

  • 20/10/2020
    Digital platforms: developments in their regulation and challenges in the financial arena (319 KB) Sergio Gorjón

    As has happened with other industries, large technology companies are increasingly present in the financial services sector. In addition to being providers of digital tools and solutions, these firms can also act as a distribution channel for goods and services that are traditionally produced by financial institutions. Further, in certain business niches, BigTech firms are also emerging as new, direct competitors to banks. Without prejudice to the potential benefits that this new situation could present, the significant disruptions caused to industries by the increasing consolidation of digital platforms’ activity have prompted European institutions to instigate various actions aimed at nurturing the fairest functioning of the markets in which they act. One of the most recent examples is the Regulation on promoting fairness and transparency for business users of online intermediation services, in addition to other competition and general regulatory initiatives for European digital services markets. Despite their broad scope, these measures enable some of the challenges that major digital actors pose to the financial sector to be addressed. However, they do not give a satisfactory response to another series of more specific and equally relevant matters, such as credit procyclicality, adverse selection and interdependencies. For these matters, more specific approaches are needed that help trace parallels between the activity of these platforms and of those that are already regulated, as a first step in the process to adapt the current regulatory and supervisory framework.

  • 13/10/2020
    Developments in the collective investment industry in Spain between 2008 and 2019 (336 KB) Laura Álvarez and Sergio Mayordomo

    This article shows that collective investment undertakings (CIUs) have grown notably in recent years, both in Spain and other European countries. These developments have come in step with greater sector concentration and a rising percentage of assets managed by entities registered abroad. In line with the evidence documented internationally, the investment portfolios of CIUs domiciled in Spain reflect an increase in risk-taking over the last few years, although the weight of lower credit quality fixed-income instruments is very low. There are very close links between the Spanish banking sector and CIUs. First, a very sizeable share of the assets of Spanish CIUs is managed by subsidiaries of Spanish deposit-taking institutions. Second, a very significant proportion of CIUs’ investment portfolios comprises financial assets issued by the banks themselves. Therefore, in-depth analysis of these interconnections is essential to assess the resilience of CIUs and that of the financial sector as a whole.

  • 24/08/2020
    Spanish companies exporting goods to the United Kingdom: stylised features and recent developments by Region (352 KB) Eduardo Gutiérrez Chacón and César Martín Machuca

    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.

  • 27/05/2020
    The heterogeneous economic impact of COVID-19 among euro area regions and countries (488 KB) Elvira Prades Illanes and Patrocinio Tello Casas

    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.

  • 17/03/2020
    The EU-MERCOSUR free trade agreement: main features and economic impact (383 KB) Jacopo Timini and Francesca Viani

    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.

  • 11/02/2020
    The relationship between inflation rates in advanced economies (305 KB) Luis J. Álvarez, Ana Gómez Loscos and M.ª Dolores Gadea

    This article analyses the link between the changes in and the drivers of inflation in a broad range of advanced economies, with special emphasis on those of the euro area. Inflation rates are seen to be highly synchronised across countries, especially in the euro area economies, reflecting their close economic and financial links and the common monetary policy. Also, the comovement of inflation is found to be a phenomenon that tends to be more visible in the medium and long-term. At the same time, the synchronisation of core inflation, which is based on products with more stable prices, is seen to be limited. The interdependence of headline inflation, by contrast, is significantly higher and has increased considerably in recent years. The drivers of inflation, according to New Keynesian Phillips curve models, such as inflation expectations, the cyclical position and external prices, also help to explain the relationship between inflation rates in advanced economies and especially in those of the euro area.

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