How slow and painful will recovery be in Spain? All restrictions during the coronavirus crisis hit Spain hard. This is a country that is heavily dependent on tourism and personal activities. The star of the film is the HORECA sector (hotels, restaurants and cafeterias). And unfortunately, at the time, this was the sector that was hardest hit. The cancellation of flights and the reduction of international tourism by decree were obviously devastating for Spain. The first months of 2021 could be a continuation of 2020.
The government of socialist Pedro Sánchez is weaker than ever and now the hope lies in European aid. Not much can be done without a lot of fiscal power. In 2020 the Spanish economy shrank by around 12% and the workforce lost a million jobs. In Spain, deflation has led to a sharp fall in income. And the new wave of infections doesn’t make things any easier. Nobody wants to be detained, of course, but some authorities have been forced to take measures to prevent further deaths.
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With the help of the vaccine and the Recovery Fund, things could improve for Spain next year. We’re not talking about an overnight change. But yes from a gradual change. The first half of 2021 will likely be very similar to the final months of 2020. However, many see a light at the end of the tunnel. Economic growth in the next year will certainly be around 6.8% with moderate inflation of 0.9% and a deficit of -5.1%. We’re not talking about a super-recovery, but at least autumn is slowly being curbed.
I fear that the Spaniards will have to carry their cross for longer in economic matters. The crisis was particularly severe in the most touristic areas such as the Canary Islands and Andalusia. For many, government aid is the only option. C.Laro that Spain, as part of the European Union, does not have the same fiscal and monetary policy freedoms as other countries. In other words, in many ways the fate of the Spaniards will be decided in Brussels.
Europe is not a homogeneous area. There are departments of all kinds. And because of the great complexity of the union, working collectively is not always easy. In other words, bureaucracy is often a stone in the shoe. The northern countries, led by Germany and France, rule almost everything, and the Mediterranean countries are often the poor relatives who always need help. The south almost always wants more help and the north almost always says no. The stern rich in the north and the poor poor in the south.
The tensions arising from the economic crisis in Spain, in the context of a weak government and a divided European Union, could spark the flames of extremism. In other words, Vox could take advantage of people’s frustrations and the country could take a radical right turn. There is a latent danger there. Catalan separatism could also get creative in this crisis. So far the Spaniards have shown admirable stoicism. But a society in crisis is a time bomb.