A Spanish accountant’s thoughts on the last quarter of 2009

| 09-09-2009 | Spanish Business | Written by Matthew Bennett

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I had dinner last night with a friend who has worked as an accountant for the last twenty years – for the first time since before the long summer and we ended up talking about the state of the Spanish economy, of course. I thought you might be interested in her opinion of things.

New buildings for new companies?

The short answer is that things look very, very bleak for Spanish companies and the Spanish economy as we get ready for the last quarter of 2009.

Her accountancy firm deals with about 60 small and medium sized client companies in different sectors of the Murcian economy and takes care of their accounting and social security obligations.

There is always a long summer period in Murcia during which little real business takes place as everyone with even the slightest bit of sense decamps to the beach to sweat out July and August, so it’s always interesting to see what happens at the start of September when everyone comes back, switches on their computers and starts picking up the phone.

Apparently, all of the projects which in previous years get put off ‘until after the summer’ don’t exist this year. People are not even considering starting new business projects this September.

She has been an accountant since she graduated with a degree in Economics twenty years ago and she told me last night that this is the worst September she’s ever seen and that the first five days of post-summer work leave her with little hope for the next few months.

She told me that a large percentage of the SME’s she works with are right now hanging on to a very thin cashflow thread which shows every sign of snapping shortly.

She also told me that the average length of time these business have been around is longer than ten years and that most were solvent companies with a good economic record before the credit crunch and recession began.

None of them have ever closed since they became clients of her accounting firm, but wait for this: 15-20 of them will close before 2009 is over, all of them in the last quarter.

If that is similar to what is happening in other accountancy firms which deal with small and medium sized companies in the rest of the country, the implications for the Spanish economy in the last four months of the year – in terms of the business destruction, unemployment and GDP figures – are dire.