Home » Survey finds Spain most pessimistic in Europe about Covid-19 economic impact

Survey finds Spain most pessimistic in Europe about Covid-19 economic impact

Covid-19 is changing sentiments in all markets, including real estate

A European-wide survey of business sentiment towards the economic impact of the coronavirus, by the credit management services company Intrum, finds that Spain is the most pessimistic country in Europe, especially in the hospitality and leisure industry that makes up Spain’s vital tourist industry.

Intrum’s survey was conducted among financial executives and business leaders in 9,980 companies across 29 European countries, and gives us an idea of business and consumer sentiment in Spain and other European countries that are Spain’s main trading partners, and a source of demand for property in Spain.

In a white paper presenting the results of the survey published last week, Intrum explained that “Sharp drops in GDP across Europe are now pushing down revenues for businesses, restricting cash flow while increasing pressure on businesses to manage their cash and liquidity more efficiently.”

“The long-term economic effects of Covid-19 on European businesses are uncertain. But in the short-term, the crisis is already affecting consumers, leading to increased negative financial pressure and wellbeing. Lower disposable incomes are impacting consumers’ ability to pay invoices on time.”

None of this bodes well for demand for property in Spain, neither the local or foreign variety of demand. People who can’t pay their bills on time because of the economic crisis brought on by the pandemic and lockdown response, will certainly not be able to afford a home in Spain.

Split by country, the survey finds that Spanish respondents were the most pessimistic when it came to the question of the risk of a pan-European recession. A full 92% of respondents ranked this risk as a challenge for their customers to overcome, compared to an EU average of 57 %, and just 33% at the other end of the scale in Croatia.

“Severe, negative impact”

Even more demoralising was the response to the question of how severe will be the negative impact of a recession on business. Once again Spain was the most negative in Europe with 54% of respondents expecting the anticipated recession to have a ‘severe negative impact’ on business, compared to just 14% in the Netherlands, 21% in Ireland, and an EU average of 38%. The Greeks, in comparison, are quite upbeat about the situation, with only 24% expecting a ‘severe negative impact’. Maybe years of economic hardship have made the Greeks more stoical.

Source: Intrum

Of all the sectors surveyed, the hospitality and leisure industry is the most pessimistic in Europe, with 42% expecting a ‘severe negative impact’ on business. As tourism is so important to Spain, this goes some way to explaining its chart-topping negativity, as revealed by this survey. But why, then, are the Greeks more upbeat? Perhaps because their Covid-19 crisis was so mild, whereas Spain has had one of the worst cases in the world.

Source: Intrum

Expectations are just thoughts about the future, but they do tend to influence decisions in the present. Negative expectations in Spain will not help the economy or housing market. They could, however, create the conditions for a buying opportunity for cheery foreign investors with good balance sheets taking advantage of low interest rates and discounted Spanish house prices as despondent vendors in Spain lose heart, or are forced to sell in a liquidity trap.

SPI Member Comments

Leave a Reply

Facebook Comments