A year of interminable crisis across Europe and worldwide
It has been over a year since the Covid-19 virus was detected in Wuhan, China, and invaded the lives of hundreds of millions of people. The virus is an ever-present threat and danger which continues to cause fear, anxiety, and uncertainty. More than a year, therefore, has passed with the world getting up and going to bed to the rhythm of health reports, restrictions, and the health crisis which is affecting more and more people. In these circumstances, it is difficult to know exactly what is going on and envisage a way out of the crisis in the coming weeks.
From second lockdowns, as seen in France and Ireland, to drastic restrictions and the maximum alert level for the economy at the end of the supposedly festive season of 2020, the situation is extremely worrying, even alarming, in more ways than one. With a growing fear that will need to be managed by different European governments, a likely future economic shock is expected across several industries that have already been hit hard. There is no doubt that many aspects of our everyday and social lives have been frozen throughout the different lockdowns and this has impacted large parts of entire sectors. These include culture, hospitality, the foodservice industry, tourism, sports, and outdoor activities.
The problem, therefore, is as much a health issue as it is an economic one since these industries support a significant number of people, either directly or indirectly, and some countries have been affected more than others by the various restrictions put in place. No country can claim to have freed itself from the menacing shadow of the virus and they are all trying, as best they can, to protect themselves from the disastrous consequences of Covid-19. If we take a closer look at the map of Europe, it seems that several countries are likely to suffer more from this crisis due to the nature of the economic activities of its industries. Among these, Spain, a large part of whose GDP is based on the tertiary sector and tourism, has already experienced a serious economic crisis about 10 years ago, from which it has only just recovered with great difficulty.
French newspaper Sud-Ouest states: “The tourism industry in Spain, the world’s second most popular destination, will suffer a loss of more than €100 billion in 2020 due to the Covid-19 pandemic according to the Spanish employers’ association Exceltur.
"If this forecast comes true at the end of December, this will set us back 25 years in terms of economic activity generated by the tourism sector, according to the organisation’s Executive Vice-President.”
Spain’s tourism industry is in turmoil
Tourism accounts for a large part of Spain’s means of income generation. This is a sector that currently finds itself in great distress in all areas. An even more alarming situation is that this runs alongside political problems that risk fracturing in the long term, in an already unstable country. Record financial losses, an exponential unemployment rate, and a disastrous health crisis provide all the ingredients required for Spain to experience the same tremors it encountered a decade ago. However, in the current climate, it may experience a worse collapse.
Spain, the European “weak link”?
It’s well-known that during the economic crisis of 2007-2008, caused by the subprime mortgage crisis, and the consequent collapse of the financial bubble which followed, Spain, along with Greece and Ireland, was one of the hardest-hit countries in Europe. The construction sector had been developed, which did not make good economic sense at times. This was the case for Valencia, for example, a symbolic city with delusions of grandeur that the national economy could not support.
More and more companies went bankrupt, with a lasting impact on Spain’s GDP. The housing crisis and an exponential deficit were the ingredients that led to austerity measures among the harshest in Europe. These measures provoked anger among Spaniards and had a more indirect, but equally problematic, consequence. With the Spanish economy highly dependent on labour coming particularly from South and Central America, many Colombians and Ecuadorians were also affected and had to return to their home countries for lack of work. This very violent economic crisis severely impaired the country for several years affecting the economic powerhouse that drives the economy.
However, with Covid-19, will Spain be able to recover once again, given that the number of losses is increasing, and morale is low in the face of continuing uncertainty in the future? What will the consequences of closing bars and restaurants be for a country where the festive tradition is in its DNA? Nothing could be less certain, and the Spanish are reliving the same situations as they did 10 years ago, but with lockdown on top of it.
In a country that is putting all its cards on the table, (including tourism), this new uncertain arrangement will pose questions and perhaps will have to be readdressed. Spain is possibly a country that is overly dependent on seasonal economic activities which are more susceptible to destabilisation in the event of a shock. This is a disaster scenario that is becoming increasingly significant and whose effects the EU’s solidarity fund is trying to curb through aid to Spain and Italy (among others). However, southern Europe, traditionally singled out, is not the only part of Europe that is truly in the hot seat. Alongside them are France, Germany, Central Europe, and the Netherlands. It is all of Europe which finds itself in the thick of it. It is caught between the economic survival necessary for its economic fabric and the fear of significant increases in the number of positive cases. So, Spain is not alone —far from it— in being stuck at the bottom of the curve without having a solution to get out.
The informal economy is at half-mast, the ‘Spanish way of life’ will never be the same again and the Spanish political party Vox is in the background
In Spain where the informal economy has always been the essential matrix of its GDP, the shutdown of economic activity and lockdown has destroyed many jobs. The unemployment rate is highly problematic, with more than 15% of people without work, and this figure continues to grow. Not to mention its consequence: ever-increasing economic hardship and food banks.
A wide array of jobs are at a standstill and the Spanish economy is experiencing increasing difficulty in generating value. How can production happen when we are in lockdown? This dramatic squaring of the circle has led to an explosion of poverty across the country. It is also probably a tired cliché, but for those who are familiar with the Spanish way of life, it reflects reality. The Spanish lifestyle is a way of being culturally rooted and associated with a festive and welcoming environment. It has been a certain way of experiencing life since the Movida madrileña (a countercultural movement) in the 80s, which the director Pedro Almodóvar was the figurehead of.
It includes numerous characteristics such as eating out at restaurants, or sometimes on the go, tourism, nightlife in bars after 10 pm, and a whole range of activities that were dependent on one another and that made up Spain and its identity. As soon as evening falls, Spaniards often go out with friends or colleagues to enjoy a meal after work, which before the health crisis was a virtuous circle that made the economy work on a daily basis.
However, beyond the social side of things, another danger is lying in wait for the Spanish economy, there is growing discontent with the management of the virus by Pedro Sanchez’s socialist government. In a country where the concept of decentralisation is very strong, and where autonomous regions hold considerable weight, receiving orders from Madrid has gone very badly.
Lurking in the background, and adding even more confusion, the extreme right-wing party, Vox, whose criticism is becoming louder and louder, is to some extent taking advantage of the crisis to advance its own interests, particularly during anti-restriction protests. These tensions should therefore be taken more and more seriously against a backdrop of rejection of the current government, accused of having very poorly managed the health crisis, and against a backdrop of political tensions and votes of no confidence.
However, at present, it is difficult to make predictions and measure the consequences of this unprecedented global crisis. It is equally impossible to predict what will happen economically, or even socially, in a country that is often at breaking point and that needs national unity which has been so often disrupted in recent years. Although it is impossible to know what will happen, the Spanish situation must be taken into consideration, as it could spread to the rest of Europe like wildfire.
In this respect, it is also impossible to know whether, once the crisis is over, the ‘pre-Covid world’ will return, and whether tourists will be able to return to visit the country of Cervantes. Or if simply the Spanish way of life, of conviviality, will continue to exist as it did before the health crisis. With the economy being the backbone of the country, the populist consequences are equally unpredictable, as the rise of Santiago Abascal’s Vox party in Spain intends to take advantage of the situation to bring its full weight to bear on Spanish political life.
All these questions and risks remain unresolved, not only for Madrid, Barcelona, Valencia, or Seville but also Spain, which is thought of as a focal point for the ’post-Covid world’ that will need to be managed at a European level. This is at the risk of creating all the conditions required for harmful forces and circumstances to emerge if Spain is abandoned to its fate. However, in this myriad of problems, let’s look to a Spanish saying which affirms “de esperanza vive una persona”, meaning “hope springs eternal”. In any case, it will take a lot to try to recover from this crisis by limiting, as far as is possible, the damage in the long run.
Ultimately, the Spanish economy will be a sort of ‘compass’ for other countries, because if Madrid succeeds in finding viable solutions, it will be a way for other countries to see things more clearly and follow its path. For the moment, no one yet knows what this short-term future will look like but the question is on the minds of all European leaders and citizens alike.
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