The 2012/04/20 at 05:40
Valérie Demon in Madrid
The confidence of Spanish business heads has improved in the second quarter of 2012. The harmonised confidence index, diffused by the National Institute of Statistics(1), has progressed slightly. Employers do not however consider that the economy is going to get out of the red – far from it; but they do believe that prospects in the second quarter will be much less worse than in the first months of this year. “We are in recession, but the persons surveyed seem to think that the low was reached at the start of the year. So they are hoping for an improvement, even if the second quarter will be negative,” explains Juan de Lucio, Manager of the Surveys unit at the Upper Council of Spanish Chambers of Commerce. While company heads who are pessimist about the sound functioning of their companies in the second quarter dominate over optimistic ones, their proportion has diminished.
According to Juan de Lucio, “the government’s different reforms and the decision to pay the suppliers of local administrations”, are all signs that in some way encourage confidence and may explain this improvement. The indicator on turnover confidence has significantly improved for the hotel and tourism industries, even veering towards positive figures. Businesses from these two sectors are therefore expecting improvements in the next three months. Even if expectations remain negative for construction, industry and other services, “there are fewer businesses that envisage a drop in sales and more companies that believe that their turnovers will progress in the future,” explains Juan de Lucio.
The employment indicator shows further decline in the second quarter. But here again, prospects between April and June will be less negative, especially for hotels and tourism, probably to take into account the tourist season that traditionally creates jobs in Spain. On the other hand, the investment indicator remains morose. All sectors seem to expect a second semester almost identical to the previous one, even tourism and hotels. Export remains the activity that brings a little hope to this sombre portrait, as the decline in the confidence indicator remains weak compared to those in other areas. Only the industry confidence indicator proves to be positive for the second semester, demonstrating that a clear majority of businesses are optimistic in this sector.
The weakness of demand remains the prime factor limiting business activity (almost 80% of businesses surveyed). Financial difficulties and access to credit come up second, but this factor has increased considerably (46% of businesses, compared with under 40% in the first quarter). “There is not yet any permanent solution, only support that is of course welcome, but inadequate,” declares Juan de Lucio. The Official Credit Institute has increased the number of lines of credit going towards SMEs, and the Santander bank has recently announced a 4 billion-euro line. “As long as there is no solution for the financial difficulties of banks, we cannot advance. The problem is that we have been in this situation for several years now, and many businesses have had to close,” regrets the Manager of the Surveys unit of the Upper Council of Spanish Chambers of Commerce.
(1) INE, survey conducted amongst 7,700 businesses.