Letter from... Madrid

By F. Javier De Mandizabal, CEO, ACH (Part of SEC Newgate)

I can describe the situation in Spain as of today as dire. A catastrophe in terms of:

• Sanitary Conditions
• Economic Consequences 
• Political Environment
• Social Environment 

It was all very nice, exciting and motivating: the daily rounds of applause, the extraordinary signs of solidarity, union, human behaviour, the effort and courage of the whole health and security sectors, as well as the armed forces, distribution, logistics, agricultural industries and, in general, all of the sectors deemed essential. Simply admirable.

But, then, after three horrible months, suddenly reality kicked in: the figures, the results, the data. And, it's hard to say, but it could not have been worse.

Sanitary Conditions.

More than 50,000 health professionals contracted the virus over those past months. Mainly because they could not get hold of the proper protection material, nor any testing kits, as our Government wasn't able to buy it in the markets.

Although nobody gives credibility to the figures reported by the Government, Spain leads the deaths vs. total population (death per million inhabitants) ranking. In terms of communication and media, it is most often reported 27,000 deaths rather than 45,000 (which could be the real number). But it is huge, in any case.

The centralization of the handling of the pandemic within the Central Government has become an unprecedented crisis (Note that the Spanish Health System was previously in the hands of the 17 autonomous regions). The chaos was predictable.

Economic Consequences

The tourism and services industries represent 40% of our economy. At the time of writing, there's no tourism and no bars, restaurants, hotels...

10% of our GDP comes from the automobile industry. Currently closed too.

To sum up the situation: different official institutions are talking about a decrease of the 2020 Spanish GDP from a range of 10% to more than 20%! This will significantly impact the unemployment rate which could equal 5 million or 6 million... 20%, 25% of the working population?

Political Environment 

We have the questionable honour of enjoying a Social-Communist Government, with strong liaisons with the Bolivarian Governments of Venezuela, Cuba, Iran and so on.

In that respect, the confidence they provide to the financial markets and to all remaining EU members is anybody’s guess. I would exclude the possibility of an intervention from Brussels in the short term time: the black men, as happened in Greece or Portugal in 2009.

The weakness of the Coalition Goverment is more and more unstable by the day. Nevertheless, we currently lack a strong alternative because of the division of the opposition.

Social Environment 

You can imagine.

So sorry not to share good news from my beloved country but, as other times in our great, great history, we shall never surrender. Whatever it may cost.