The truth about how Spain is changing

The Bank of Spain coronavirus report

Jun 30, 2020, 12:40 pm
Thread: Spain heading towards an economic crisis three times as bad as the last one because of Covid.
1. Let's look at the Bank of Spain report on the economic tsunami that will wash over us after the coronavirus healthcare earthquake. 242 pages long, so bit by bit. The key forecast: GDP will sink between 9% and 15% and Spain does not recover until end of 2022. Two long years.
Published: Jun 30, 2020, 12:40 pm | On Twitter
2. In other words, Spain is heading towards an economic crisis between two and four times as bad in terms of annual loss of GDP than during the 2008 crisis. The Covid state of alarm meant “the almost complete cessation of activity in a wide range of sectors”, says Bank of Spain.
Published: Jun 30, 2020, 12:46 pm | On Twitter
3. Bank of Spain: the cost of the coronavirus crisis “has been extraordinarily high in all areas”. New outbreaks cannot be ruled out. Spain has one of the highest mortality rates in the world. Spanish population is “very vulnerable to possible new outbreaks”.
Published: Jun 30, 2020, 12:54 pm | On Twitter
4. Meanwhile, government spokeswoman Montero, at the post-cabinet press conference, announces that Sanchez has gone off on a trip to...Mauritania. What will the Prime Minister do there?
Published: Jun 30, 2020, 1:01 pm | On Twitter
5. Bank of Spain: “The GDP of the Spanish economy suffered the largest quarterly contraction in its history, up to that point, in the first quarter of 2020", due to the impact of the coronavirus and “the measures taken to contain the pandemic”.
Published: Jun 30, 2020, 1:12 pm | On Twitter
6. Spanish Foreign Secretary says she is going on the trip to Mauritania with Sánchez and they're meeting Macron there. Why does this meeting in Africa matter more than coronavirus in Spain or preparing for the 9-15% hit to GDP the Bank of Spain is pointing out?
Published: Jun 30, 2020, 1:16 pm | On Twitter
7. But the bulk of the economic hit is coming in the second quarter of 2020, says the Bank of Spain. The -5.2% of the last two weeks of March will be small fry, “it could range between 16% and 21.8% in the current quarter”. Spain has fallen off the cliff.
Published: Jun 30, 2020, 1:23 pm | On Twitter
8. Since April, there has been a “gradual improvement throughout the quarter”, says the Bank of Spain, but “all private spending items have experienced very significant declines in the first half of the year”. Restrictions, future outlook, less confidence, uncertainty.
Published: Jun 30, 2020, 1:28 pm | On Twitter
9. Bank of Spain: “The outbreak of the healthcare crisis has led to historic collapses in confidence indicators and also unprecedented increases in economic uncertainty indices”.
Published: Jun 30, 2020, 1:34 pm | On Twitter
10. “... the spread of the disease to virtually all the world's economies and the widespread lockdowns have led to a synchronized global slowdown, which would also point to an intensification in the deterioration of exports”.
Published: Jun 30, 2020, 1:38 pm | On Twitter
11. Bank of Spain: during the months of lockdown, Spaniards have spent much less on eating and drinking out, cars, clothing, shoes, furniture and household appliances. They have spent more on food.
Published: Jun 30, 2020, 1:43 pm | On Twitter
12. “The impact of the crisis on employment is particularly pronounced,” says the Bank of Spain. 5.2 million workers affected. 752,000 have lost their jobs. 3 million on temporary lay-off schemes. 1.4 million self-employed have stopped their activity becuase of coronavirus.
Published: Jun 30, 2020, 1:51 pm | On Twitter
13. In the last two weeks of March, the first two weeks of the coronavirus state of alarm, 890,000 jobs were destroyed in Spain, says the Bank of Spain.
Published: Jun 30, 2020, 1:53 pm | On Twitter
14. The coronavirus crisis has affected services somewhat more than manufacturing, says the Bank of Spain. The decrease in demand and the shutdown ordered by the state of alarm are the main factors.
Published: Jun 30, 2020, 2:08 pm | On Twitter
15. There colours lead you to believe there are some positive provinces but they are all variants of less work. More has been lost in the south, the eastern coast and the islands, due to industry structure, temporary work rate and different rate of progress during unlockdown.
Published: Jun 30, 2020, 2:16 pm | On Twitter
16. Bank of Spain: “extraordinary uncertainty” about the cost of public spending announced by the Sánchez government during the crisis (furloughs, minimum income, healthcare supplies, regional funds, etc.). Bigger deficit, lower tax collection, more benefit spending.
Published: Jun 30, 2020, 2:26 pm | On Twitter
17. While “households and businesses have paid down debt” in the growth period between 2013 and 2019, Spanish public accounts have not been fixed, there is too much unemployment, too many temporary jobs and too little productivity growth. Homework still needs to be done.
Published: Jun 30, 2020, 2:34 pm | On Twitter
18. There is more “extraordinary uncertainty”, says the Bank of Spain, if we look at the elements that condition the future: the evolution of the pandemic, the damage it has done to the economy in the meantime, and the possibility of “disruptive episodes” in the financial system.
Published: Jun 30, 2020, 2:39 pm | On Twitter
19. Bank of Spain: “there is a non-negligible chance that new outbreaks will occur”. No one knows when or how hard. There are also no certainties about a vaccine. Uncertainty, uncertainty, uncertainty.
Published: Jun 30, 2020, 6:24 pm | On Twitter
20. New outbreaks: “The possibility that this may happen means uncertainty levels will remain relatively high in the coming months, which will have a negative impact on actors' spending and investment decisions”. Households and businesses.
Published: Jun 30, 2020, 6:26 pm | On Twitter
21. Bank of Spain: “There are also no certainties about how households and companies will adapt to the de-escalation plans that have been implemented in Spain and other countries in recent weeks, and what the new normal will be like”. More uncertainty.
Published: Jun 30, 2020, 6:29 pm | On Twitter
22. “Remarkable uncertainty” over how temporary lay-off schemes will end in Spain, due to their novel use in this coronavirus crisis. Bank of Spain notes there are companies moving from one type of temporary lay-off scheme to another without returning to direct employment.
Published: Jun 30, 2020, 6:37 pm | On Twitter
23. Bank of Spain warns, in its bureaucratic language, that temporary lay-offs cannot last forever and that some “might delay, rather than prevent, the process of job destruction” in the medium term. Logical if the underlying work is not being done due to a lack of demand.
Published: Jun 30, 2020, 6:41 pm | On Twitter
24. Risk to employment this time lies with the hospitality industry, tourism and commerce, etc. as they are more affected by the anti-Covid measures. If those jobs are destroyed, it will not be easy to move waiters, shop assistants and so on to other “more dynamic” industries.
Published: Jun 30, 2020, 6:47 pm | On Twitter
25. In the previous crisis, the report says, more than half of Spanish construction workers who had lost their jobs in 2008 had not yet found work again five years later, in 2013, “and only 23% had obtained employment in another branch of activity.”
Published: Jun 30, 2020, 6:50 pm | On Twitter
26. “A significant proportion” of normal (non-financial) companies in Spain will not reach the Covid finish line, warns Bank of Spain, without more liquidity this year. It's not just the temporary lay-offs. “The decline in sales”, supplies, rent, etc.
Published: Jun 30, 2020, 6:57 pm | On Twitter
27. Banks in Spain have granted €37.7 billion in mortgage and other loan deferments, says the Bank of Spain, in more than one million operations. As with temporary lay-offs and business cashflow, how long can the banks put up with that?
Published: Jun 30, 2020, 7:04 pm | On Twitter
28. Bank of Spain: 108,000 companies closed between the end of February and the end of May.
Published: Jun 30, 2020, 7:10 pm | On Twitter
29. More uncertainty. Many of these companies will just not return to the market: “there is a significant risk that the decrease in the number of companies registered in recent months may end up causing a permanent deterioration in Spain's productive economy”.
Published: Jun 30, 2020, 7:14 pm | On Twitter
30. In addition to the massive coronavirus uncertainty, there is a “lack of clear perspective” regarding Brexit and tourism. If there is no deal before New Year's Eve, WTO tariffs would mean even worse news for the Spanish economy in the sector most affected by Covid.
Published: Jun 30, 2020, 7:21 pm | On Twitter
31. In Spain's tourism sector, 7.8% of workers had been sacked by the end of May and 55% put on temporary lay-off schemes.
Published: Jun 30, 2020, 7:29 pm | On Twitter
32. Bank of Spàin: “Euro area GDP contracted by 3.6% in the first quarter, compared with the 0.1% increase expected before the expansion of the pandemic. The fall in activity is expected to be significantly more pronounced in the second quarter”.
Published: Jun 30, 2020, 7:46 pm | On Twitter
33. Bank of Spain calls for “a thorough review” of education in Spain, “a rethink of the institutional design of the education system” because of its importance in economic growth.
Published: Jun 30, 2020, 7:55 pm | On Twitter
34. Careful, says Banco de España, with the trend towards greater digitalization and online economic behaviors brought about by Covid. All good and well, but it could be a new threat to the Spanish economy, given the inherently global nature of such business and activity.
Published: Jun 30, 2020, 8:04 pm | On Twitter
35. Concluding this thread, “the impact of this health crisis on the Spanish economy will be very severe,” says the Bank of Spain. Only with the bit at the end of March, GDP “suffered the largest quarterly contraction in history”. Second quarter results still to be published.
Published: Jun 30, 2020, 8:12 pm | On Twitter
36. You can download the full Bank of Spain report here:
Published: Jun 30, 2020, 8:13 pm | On Twitter

Guarantee independent journalism

Your support guarantees the future of independent journalism. Every reader counts and it all adds up, whether you choose $5 or $10 or $25 each month. You invest directly in better reporting and more detailed analysis—in English and in Spanish—of the most important stories affecting Spain. The truth about how Spain is changing.
Iberian Adventurer
  • More text: audio scripts
  • Patrons Only: column
  • Patrons Only: audio
  • More audio: questions
  • More images: high-res
  • Patrons Only: videos
  • 20x30cm trip prints
  • We must witness Spain

Spain News Fan
  • More text: audio scripts
  • Patrons Only: column
  • Patrons Only: audio
  • More audio: questions
  • More images: high-res
  • Patrons Only: videos
  • All the news & analysis

Supporter Of The Truth
  • More text: audio scripts
  • Patrons Only: column
  • Patrons Only: audio
  • Support the truth

  • Your : €/month
  • Which country do you pay taxes in?

How does it work?

  1. Click on the you wish to
  2. Make sure your tax country is correct
  3. Enter your email address and credit card details
  4. The server will check your card and do some sums…
  5. Click "Support independent journalism now"
  6. That's it, welcome aboard, you will get a couple of emails


  1. If you would like to a larger , please click here
  2. You can print receipts or invoices for all your in "My Account"
  3. Any problems or questions, email:
Get The Spain Report by email

Get original, detailed, independent reporting and analysis of the stories changing Spain. Full-text articles delivered right to your inbox, in English. You can also choose to get them in Spanish. No ads, no spam. Just readers.

What is The Spain Report?

Independent reporting and analysis of the most important stories changing the country, written by Matthew Bennett, a British journalist who has been living and working in Spain for most of the past 20 years. Read more

Questions, stories, interviews, tips:
WhatsApp/Signal: (0034) 647 81 81 43
Twitter: @matthewbennett

©2020 Matthew Bennett
The Spain Report | In English | En español