Financial x-ray of Spain: debt, increasingly aggravated by the COVID-19 crisis
The coronavirus pandemic has had a profound impact on consumption habits and the economic situation, especially, of single-parent families and young people, as evidenced by the recent COVID-19 financial report from the investment and financial services company EOS. According to this report, 15% of those polled were forced into debt due to the pandemic and 24% predict that they will have to do so in the coming months. 2,000 Spaniards participated in the representative survey.
Day to day debts
44% of Spaniards who took on debt did so to cover their day-to-day living expenses, followed by housing (23%) and education (15%) costs. But the tense economic situation has not only caused indebtedness, but in some cases has even led to situations of over-indebtedness. 16% of those polled said they had not been able to pay their debts since the start of the pandemic.
Single-parent families and young people, the most affected
The hardest hit by the pandemic are single-parent families: 23% said they had to go into debt because of COVID-19, and nearly a third (29%) said they were in debt distress. In addition, 37% of single-parent families fear that they will have to borrow money in the next six months.
The crisis has also worsened the youth unemployment rate in Spain, which is already quite high, and which, according to Eurostat, rose to 40.9% (November 2020). As a result, the 18-29 generation must above all face a higher than average economic burden. Thus, 18% of those under 30 say they have borrowed from the coronavirus, while among those over 50, it is only 13%. In addition, 30% of young people questioned fear having to go into debt in the future, while only 19% see themselves in this case.
“Young people are more inclined to take on debt, which highlights the need to raise awareness and work on financial education from an early age,” analyzes Carlos Lorenzo, managing director of EOS in Spain.
Limited consumer consumption due to the pandemic
Although the pandemic has significantly affected the Spanish economy, in a European comparison the debt situation in this country is similar or even better. While here 15% of the people questioned are in debt due to the pandemic, in Croatia it was 19%, in Romania 28% and Bulgaria 32%. According to the COVID-19 financial report, only Germany, with 12%, has a lower number of consumers in debt. However, the tense economic situation affects the consumption habits of Spaniards. A clear majority of those surveyed (86%) parked necessary or planned expenses during the pandemic. What the Spaniards did the most without were vacations (68%), renovations (37%) and the purchase of furniture (28%), but they also gave up health expenses (12%) or education (11%).
And after the crisis? Most of those surveyed miss travel, and this is what 67% spend money on first after the pandemic.