Spain’s Not Splashing the Cash as Coronavirus Lockdown Heavily Bites into People’s Spending

ECONOMISTS from three British Universities, working with Spain’s BBVA bank, have worked out that spending in Spain’s lockdown is an average of 49 per cent lower than during the same period last year.

Experts from the universities of Cambridge, Edinburgh and Imperial College in the UK linked up with the BBVA bank to study the “real time evolution” of how Spaniards spent money during the coronavirus restrictions.

They monitored 1.4 billion credit and debit card transactions during the first three months of 2020 to come up with their conclusions.

“This is an unprecedented set of figures taking in millions of everyday transactions, which reveal the underlying cost of the Covid-19 crisis,” said Vasco Carvalho, Professor of Macroeconomics at the University of Cambridge.

“We have found an abrupt and persistent decline in spending during lockdown, amounting to about half of what we might normally expect.”

The researchers found evidence of a major spending increase in the few days just before Spain’s lockdown began on March 14, when daily expenditure growth shot up by 20 per cent above average for the year.

Once the State of Alarm began, daily spending halved on average.

“While some considerable uncertainty surrounds the exact calculations, it seems hard not to conclude that the average spending of Spanish households is not falling somewhere between at least minus 10 per cent and minus 15 per cent during the period of lockdown,” said Carvalho.

The survey also shows a major lean towards online purchasing once the lockdown was enforced.

While both offline and online spending fell overall, the drop for retail shop sales was large, with non-food outlets closed.

Online shopping consequently increased its market share by about 50 per cent.

While shops unable to conduct business were obviously the worst hit – from bars to fashion retailers – the study shows that small local food shops and convenience stores benefited the most, increasing their market share more than even the supermarkets.

Other areas of spending that have seen big market share rises include the buying of mobile phone credit, as telecommunications become even more vital to social lives.

Pharmacies and insurance services have also seen big rises.

“Spending on commodities related to basic necessities, such as food and medicines, has more than doubled during the lockdown, whilst trade in fashion or personal services declined heavily,” said Carvalho.

“Restrictions to movement mean that outlets being based closely to the customer is a vital factor for business.”

The study found that putting everything together, the top 10 best performing spending categories during the lockdown went from an average of 10 per cent market share in the first two months of 2020 to 50 per cent by late March.

There were also regional variations, with the Madrid area badly hit by Covid-19, see an above average fall in spending.

Álvaro Ortiz, from BBVA Research, said: “Tracking this kind of event in real time provides important information for anybody looking to make key decisions in order to react more quickly to limit the economic damage in Spain caused by the lockdown.”