The COVID-19 outbreak is causing worldwide chaos, and Spain is one of the most affected countries. This fast-spreading virus is creating a global crisis that will no doubt have a huge economic and social impact on everybody and every business one way or another, from a stay-at-home parent to a prestigious city law firm.
Once Spain (and the rest of the world) is in the all clear, it is hard to predict what kind of world we will live in. We would like to think people will take the time to have more appreciation for social gatherings with friends and family, and be more conscious of personal hygiene. But there will no doubt also be a negative side: many businesses will have been forced to shut down permanently, people will go into debt and on a larger scale the social and economic impact will be huge.
The Spanish economy after COVID-19
According to experts, Spain could be facing an economic situation as bad (or worse) as the crisis of 2008. The good news is however that whilst the economy will surely go into recession it is expected to recover much faster this time as, though it might not feel like it right now as we live through it, the COVID-19 crisis is likely just a temporary situation.
Unemployment levels will skyrocket
Unfortunately we began to see the impact this crisis will have on unemployment merely days into the lockdown imposed on 14th March 2020. Since then, hundreds of thousands of people all over Spain have either lost their job or suffered an “ERTE”, where the work contract is stopped and the worker is faced with claiming unemployment benefits. The Spanish government has introduced a financial scheme to help businesses with their employees’ salaries, but it seems no amount of money during these times is enough.
This is a disaster for Spain, as until recently the country was proud to announce that unemployment levels were the lowest they had been for a very long time. The main goal right now is to try to maintain as many jobs as possible so that when the crisis is over people still have an income and are able to continue their normal lives as consumers as much as possible and put money back into the Spanish economy.
Public and Private debt
Another variable that will surely be impacted due to the coronavirus crisis is both public and private debt: people need loans from their banks to cover their basic expenses and the government is pouring endless amounts of money into schemes trying to help the country stay afloat. The fact that unemployment levels are growing on a daily basis is also not helping.
What will be the solution? Well, in order to resolve the public debt there will likely be a reduction in unnecessary public expenses, especially subsidiaries. The alternative would be to increase taxes, but for obvious reasons this is not an ideal solution for the citizens of Spain who are already struggling to make ends meet due to unemployment.
As for private loans, the good news is that interest rates will be lower than usual (they are likely to remain at 0.0% until at least 2022), oil prices have dropped 60% and the Euro is now weakened against the Dollar. All of this will be very beneficial for companies and households throughout the country.
Social impact: Will we ever have a normal social life again?
One of the main focuses for authorities and health experts during the on-going lockdown affecting half of humanity right now is when we will all be able to return to normal life. Whilst many countries are resisting such an extreme measure, Spain has had one of the most restrictive lockdowns in the world.
Now nearing the end of May and after over two months of strict lockdown, the current measures are slowly being diminished according to the Government’s “4 Phase” plan. However, not every region in Spain is in the same Phase, with Madrid being in Phase 0 at the time of writing and Málaga in Phase 1, for example.
As for our social lives, bars and restaurants are slowly re-opening but under strict rules to avoid mass gatherings, and with the start of Phase 1 we can now see friends and family in private and public spaces but only in groups of up to 10 people and whilst maintaining the 2 meter safety distance and wearing a mask if you cannot avoid close contact with others.
Street markets, concerts, sporting events and hotels are also starting to resume activity, but again with health and hygiene guidelines being enforced.
Social distancing is the new normal: everyone will be conscious of this practice, some even paranoid, for years to come. We can only hope that the Spanish government’s measures are eased correctly and without causing a relapse. Unfortunately it is unlikely the entire world population will be able to recover from the crisis at once, as some countries have already said that anyone over the age of 70 should stay inside for the next three months given that they are the most vulnerable to this illness.
What will be of Summer 2020 in Spain? Although we don’t yet know when Spanish borders will be completely reopened to travelers, the tourism industry has no doubt been hugely impacted by this crisis and a very quiet Spanish summer is expected with only national tourism. Last-minute trips will be the new fashion for those who can still afford it and a positive side to our restricted movements in recent months will be much better air quality and less pollution in the world, making our environment much more enjoyable and healthy.
In a nutshell, nothing will be a same after the COVID-19 crisis. We will look back to these months in the future and see it as a very short burst of chaos in the worlds’ history, but those of us who have lived through it will have learnt many lessons, from how important it is to wash our hands to how much we need to appreciate the world we live in and all it has to offer outside of our homes.
The Premier Law team wishes each and every one of you the very best during these challenging times, and we will see you on the other side!
