Spaniards up spending as confidence, and cash, returns

Spanish consumer confidence is returning as the country eases away from recession

Cast an easy-going eye over the sparkling horizon formed by a sun-drenched Mediterranean and the word ‘bleak’ will no doubt be far from your thoughts. But it is exactly that word which has shaped many Spaniards’ lives these past few, recession-hit years.

At least, that’s what the headlines tell you. But in a country that places great emphasis on familial support, social bonds and a love of life, a collective fall in incomes was never going to be felt as keenly as it might in somewhere like the UK, where consumerism and materialistic one-upmanship form part of the everyday experience…

Nevertheless, Spaniards like a good shopping spree (interspersed with much lengthier bouts of beach – rather than retail – therapy), so reduced spending power over the past few years damaged confidence on a domestic level.

But recent figures from the National Statistics Institute show that Spanish household spending grew in the third quarter of this year, after contracting by 0.1 per cent in June. Since then, though, Spaniards have had more disposable income, spending more in stores, restaurants, bars and leisure complexes than each previous month – the first time this has happened in six quarters, and perfectly timed to coincide with Spain’s emergence from a two-year recession.

Equally, while GDP was up 0.1 per cent for the third quarter, exports continued to rise, up by 2.2 per cent in the third quarter, building on a 6.4 per cent for the second quarter. And while unemployment rates remain lodged around the 25 per cent mark, all other signs point to a sustained, if slow, recovery.

“Spain’s economic situation is starting to improve,” Robert Wood, economist for London’s Berenberg Bank, told Bloomberg. “Business sentiment is picking up, unemployment is probably close to a peak, and exports will continue to be a growth driver in the next year or two.”

Figures from Adecco – the world’s largest temping agency – appear to offer some hope on the employment front, too. Following their third-quarter profit rise of 61 per cent, the agency cited ‘especially encouraging’ demand for temporary assignments in Spain as reasons why they performed so well. Spain’s labour reforms and buoyant export industry are thought to be behind this increase, with the job market more flexible than ever, and employers more able to hire employees without the risk of tying themselves into long-term commitments.

Not ideal, of course: Spaniards want secure, long-term employment just like millions of others in Europe. But after radically overhauling an employment system that seemed to favour inaction and scare off investment and innovation, the tough reforms do at least appear to have injected renewed impetus into Spain’s economy, and dropped some much-needed cash into the pockets of its citizens in the process.