The financial and economic impacts of the COVID-19 epidemic are forcing many consumers to significantly cut back on their discretionary spending in 2020, particularly on big-ticket items such as automobiles and durables. Discretionary spending is not a priority for many Spaniards as the country was badly hit by the global pandemic.
Many Spanish consumers are clearly avoiding all types of new borrowing commitments during the COVID-19 pandemic and focusing their expenditure on essentials such as food and hygiene products. Auto lending and home lending are both set to witness massive declines in 2020 as a result.
The outstanding balance in Spain had been declining over the early part of the review period as many consumers looked to pay off existing debt after their experiences of the economic difficulties Spain had faced prior to this period. However, the outstanding balance had begun to creep up in 2018/2019 as consumer confidence began to recover.
Consumer gross lending is not expected to recover in 2021, with a largely flat performance, before returning to growth from 2022 onwards. The economy has been severely hit by the COVID-19 epidemic in Spain, and it will undoubtedly be some time before consumer confidence recovers to any great extent as the economy begins to recover.
Many Spaniards turned to pre-arranged overdrafts to help them get through the financial impacts of the COVID-19 pandemic. As their finances improve, there will be a clear trend towards clearing these overdrafts, with other personal outstanding balance set to continue to decline well into the forecast period before increasing again from 2024 onwards.
Financial institutions continued to increase consumer lending possibilities through digitalisation towards the end of the review period and this is set to develop strongly going forward. Banks are investing in fast credit, such as micro credits (up to EUR3,000.
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This report originates from Passport, our Consumer Credit research and analysis database.
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