Forecasting Eye

 

Four of us from the Cebr team were in Spain for different reasons last week. I had the great good fortune to be invited to speak at the Power 50 conference on e-gaming in the wonderful Puente Romano resort in Marbella on behalf of BDO. The others were paying their own way and therefore experiencing different sectors of the visitor economy….

 

Most analysts were shocked by the latest Spanish data for unemployment showing a rise in total unemployment in March from 14.4% to 14.7% and an even sharper rise in youth unemployment from 32.4% to 33.7%. After 6 years when unemployment has been falling this sharp rise has caused economists to ask whether the Spanish recovery has been halted in its tracks. Their concerns are reinforced by the industrial production data, down 3.1% year on year in March and the business confidence indicator which fell to -3.8 in April compared with a downwardly revised minus 2.4 in March.

 

My view from Marbella was that the shops and hotels seemed emptier than when I had made visits at the same times in previous years and others echoed that feeling.

 

But not all the indications were negative. One of our team observed that the Spanish economy had some similarities with the hipster economy in East London. And indeed I observed two years ago that Spain had one of the fastest growing tech sectors in Europe. The rise in employment in Spain in the year to March, at 596,000, is impressive.

 

Spain has produced its own Spanish speaking Uber in Cabify which is one of its first tech unicorns. But the central government first gave in to pressure from the existing cab companies to impose restrictions on Cabify and then passed the hot potato to the regional governments which are expected to be even more in the pockets of the local vested cab interests. And other gig economy companies have been given a hard time by the courts under pressure from the labour unions.

 

Yet services exports are 10% up on a year earlier and the gaming industry in Spain seems buoyant.

 

Whether the footloose Flat White Economy will be so keen to stay in Spain after the 3% tax on online advertising contained in the Digital Services Bill currently going through the legislative process in the Cortes is uncertain.

 

The latest EU forecasts for Spain released on 7 May predict growth for Spain amongst the fastest in the EU at 2.1% in 2019. This is almost certainly too high. But the jury is out on whether the slowdown is just a temporary blip or whether it is symptomatic of a deeper malaise. Almost certainly it will depend on how the Socialist government, which has stayed in power after the general election results a fortnight ago, responds to the need to encourage enterprise.

 

Contact: Douglas McWilliams dmcwilliams@cebr.com – 020 7324 2860