| Wednesday, July 1, 2009

The Chairman of the Spanish small business association CEPYME has started the month well with his pessimistic analysis of the current state of the recession in Spain:

Spanish money

“Nope, can’t see those green shoots the government’s talking about anywhere round here. Just look at those 1000 companies a day that have closed in the first quarter of 2009. And you just wait until the summer ends, at the same time as the government’s Plan E business rescue plan, then it’ll all get even worse. That Plan E doesn’t work anyway.“

The Bank of Spain appears to agree, adding more wood to the fire by publishing a report on business lending which sums up what businessmen in Spain have known since well before Christmas last year: Spanish banks are not lending to Spanish companies, especially the small ones. They might have helped Florentino Pérez sign Ronaldo and Kaká over at the Bernabeu but lending to most businesses in Spain fell 5.4% in May.

Car sales would also agree with the Chairman of Spanish small businesses. Zapatero’s car sales rescue plan – not the Plan E but the Plan 2000E, in reference I assume to the 2000€ subsidy the government has offered us for buying a new car – has managed to slow but not stop the continuing fall in Spanish car sales, which fell a further 15.9% last month. ZP’s rescue plan has been responsible for just 16.9% of the month’s total sales in what is traditionally a good month.

Bars would agree too. Shockingly, in the country of the eternal bank holiday and with Pamplona’s San Fermín 2009 just around the corner, revenue in Spanish bars is down 22% and there are 15,000 fewer people working in them than there were two years ago. Spanish people are going out and drinking less. Things really are getting bad. If there isn’t enough to buy a few beers, then new cars will have to wait.

So less beer, no new cars and (a bit) more saving. Spanish household savings are up on last year but disposable income has dropped 19% and all of this non-spending in different sectors has hit government tax revenues by a whopping 12%, which would explain why they have just decided to increase tax on petrol and cigarettes.

The Spanish government has bet on Spaniards not giving up smoking tabs with their mates as they sit on their summer terraces moaning about the state of the economy and the heat, and on making the annual millions of journeys to the beach during the official summer holiday period which has started today.

With fewer new cars on the roads, maybe ZP is also betting on a higher number of journeys by tow-trucks as hundreds of the old motors break down half-way between Madrid and the Mediterranean.

Perhaps he can find convince us all to stay at home and watch more digital TV, which is starting to come on-line in Cantabria, in the north of Spain. The great analogical shut-down has begun and tens of thousands of Spanish TV viewers are, even as you read this blog post, fiddling with their new digital TV tuners.

I predict that, although digital TV offers lots of new channels and options, most Spaniards will end up watching what they’ve been watching for the last ten years anyway. At least Spanish men folk will have a good excuse to spend some of their recession-scarce cash on a big new digital screen, thus bravely saving ZP and the Spanish economy from having to come up with a rescue plan for the plasma TV industry.

Finally for today, in the southern region of Andalusia, where legend in the rest of Spain has it that they don’t do much more than watch stupid programmes on TV and drink beer anyway, Andalusian economists have just published a report in which they estimate a shocking 30% of people in their region (most of the South of Spain) will be on the dole by the end of 2009.