Entrepreneurs declare the state of optimism

A welder works at the factory of the Talgo railway company in Las Rozas (Madrid) Ricardo Rubio / Europa Press

The mood of the companies is staggering. Perhaps yes, this time, optimism is running through the offices after 17 months of pandemic anguish. The Business Barometer prepared by Deloitte, and published in this newspaper since 1999, has never been filled with so many decisive responses about the immediate future of the economy: it will improve for 82% of those surveyed in the remainder of the year and 2022 will even be more positive (90% think so). Transferred to the companies themselves, 65% of those surveyed believe that their balance sheet will improve in the second half and in 2022, 74% expect to grow in production and billing. In the survey, which offers a wide X-ray of production, exports, profits, investments and employment, 224 companies have participated whose combined turnover exceeds 950.000 million euros and employ half a million people, both in Spain and abroad.

Gone seem to be the terrible days when ICU occupation became a leading indicator of activity. We are in full rebound: 7 out of 10 companies consulted between June and early July, when the delta variant of the virus was already impacting, see the light after the end of the state of alarm. The uncertainty due to the increase in infections (the incidence is close to 700 cases per 100,000 inhabitants) does not make a dent in the forecasts. And if feelings are the fuel with which the polls are loaded, in this one there is ammunition in abundance. “We can see that this advance occurs at the same time as the improvement in consumer confidence, which has returned to pre-COVID levels. This, together with the good rate of vaccination and relaxation of restrictions, is causing an upward revision of the GDP projections ”,says Ana Aguilar, director of Financial Advisory at Deloitte. Funcas published this week that GDP will grow 6.1% in 2021 and 2022 in another survey where positive opinions outnumbered negative for the first time since the beginning of the pandemic. In the Deloitte Barometer, 47% of those consulted admit that their company is already at 2019 levels (they were 27% in the January survey) and 46% believe that it will be from 2022. Something that is also note on profits: in the first six months of this year, profitability has increased for half of the panelists thanks to the tailwind of domestic demand.1% in 2021 and 2022 in another survey where positive opinions outnumbered negative for the first time since the start of the pandemic. In the Deloitte Barometer, 47% of those consulted admit that their company is already at 2019 levels (they were 27% in the January survey) and 46% believe that it will be from 2022. Something that is also note on profits: in the first six months of this year, profitability has increased for half of the panelists thanks to the tailwind of domestic demand.1% in 2021 and 2022 in another survey where positive opinions outnumbered negative for the first time since the start of the pandemic. In the Deloitte Barometer, 47% of those consulted admit that their company is already at 2019 levels (they were 27% in the January survey) and 46% believe that it will be from 2022. Something that is also note on profits: in the first six months of this year, profitability has increased for half of the panelists thanks to the tailwind of domestic demand.profitability has increased for half of the panelists thanks to the tailwind of domestic demand.profitability has increased for half of the panelists thanks to the tailwind of domestic demand.

The situation has undoubted positive effects on employment. "That companies rehire is good news and this is reflected in the latest data on Social Security affiliation, with an increase of more than 230,000 people in June," Aguilar emphasizes. There are already as many affiliates (19.5 million) as before the crisis. In the study, these good feelings are also transferred, although optimism is more encapsulated: despite the strong increases in sales perceived, only 38% of those surveyed will make hires before the end of the year while half will keep their jobs and 11 % expect to decrease it. There is also a decrease in companies with workers under ERTE, an issue that, however, raises concern,since an overwhelming majority (72%) believe that the Government should maintain this extraordinary measure until the end of the year.

Suspense to the Government

The opinions on the economic management of the Government are clear: 67% of the companies suspend the Executive chaired by Pedro Sánchez.

When it comes to assessing the management of aid by the administration, the punishment is moderated: 29% evaluate it as good, 44% consider it to have been bad or very bad and for another 27% it is indifferent.

The promotion of exports, the improvement of competition in the market, the liberalization of the labor market and the reduction of public spending are the main corporate demands.

Allergic to tax increases, those responsible for companies (they usually answer the questionnaire for CEOs, CEOs or those responsible for financial management) do admit that they would need to raise taxes to pay for a better educational system and support research. They are not so clear when it comes to defraying the costs of the health system (46% think it is well financed) or infrastructure. They also do not believe that a new system is necessary to pay for pensions. Half of the panelists are satisfied with the vaccination rate in the country (only 20% think it is too slow).

The ERTEs are, says Yolanda Fernández Jurado, professor of Applied Economics at Comillas-Icade, “a double-edged sword, because they have made it possible to cushion the impact of the pandemic, but there is a problem: many companies have not been converted and many workers have not. they have realized that the landscape has changed.

There are possibilities that ERTE will become ERE ”.

And he adds another disturbing fact: "There is much talk that the pandemic affects the hospitality industry, but it will require adjustments in many sectors with intensive use of labor."

The "great unknown"

That is one of the great unresolved doubts that the Barometer also addresses: if after all that optimism there will be a comparable recovery in jobs. June ended with 447,800 workers at ERTE, 43.1% of them concentrated in food and beverage services and accommodation. And there are, with registered unemployment data, 360,000 more unemployed than before the health crisis. So, if hiring slows down, there may be more than half a million real unemployed caused by the crisis as the months progress and the stimulus ends.

Antonio Pedraza, president of the financial commission of the General Council of Economists, also points to employment as the "great unknown" after an exceptional month of June. “We do not know what the stopper effect of the ERTE is, how many of them will become permanent layoffs. And we do not know how the people who are losing their jobs are going to be placed ”, he reflects. He adds that the bankruptcy moratorium is cushioning the closures of non-viable companies, and although the destruction of companies has grown since January, so have the openings: a total of 46,353 companies were opened up to May, 2.8% more than in the same period of 2019. “I believe that both measures [the bankruptcy moratorium and the ERTEs] are correct because they are holding unemployment until circumstances change,but the reality is that the labor market depends on SMEs in a very high percentage. I think the attitude of Minister Nadia Calviño on the minimum wage is to be praised. A rise now, with the business structure we have, would have the effect of exacerbating unemployment ”, considers Pedraza. An unemployment that will cost to eliminate because many things have changed. Grant Thornton published another report developed by Oxford Economics on SMEs last Wednesday and notes that there is a clear imbalance between what companies demand and what the job market offers. Carlos González, consulting partner of the firm, believes it is due to two reasons: the rapid reactivation of activities that have been idle for a long time, such as tourism, means that there are many vacancies that sometimes cannot be easily filled. Y,on the other hand, it appreciates a gap between the skills that companies need in a context of rapid digitization and those that are offered.

Back to the office

In the human resources company Trivu, directed by Pablo González, they do not stop working preparing training and retraining plans for other companies.

“Employment is picking up, but in a different direction than what we have seen so far.

The demand is focused on profiles with well-developed digital skills.

They are also looking for leaders who are more prepared for changing environments and other positions are readjusted to new functions that did not exist before or were not considered so important, ”he observes.

Something that will be essential if, as it seems, teleworking is going to remain: 36% of the panelists have a third of their staff teleworking (which, according to the legal definition, consists of being more than two days away from the office) and another third works remotely one day a week.

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In line with the above, 42% of those consulted estimate that they will increase their investments with their eyes fixed on the digitization of processes (30%), artificial intelligence (20%), robotization (20%), cybersecurity (17%) ) and data analysis (11%).

The security of operations on the Internet is a headache for corporations, although practically all of them already have a person in charge in this matter.

Three out of four panelists have suffered at least one security incident in the last year and 28% even admit that they have suffered more than five incidents recently.

But the economy heats up and burns at times. Almost 7 out of 10 consulted think that inflation will increase and that a barrel of oil will not fall below 60-70 dollars or will even be above that level (this week it was trading at 72 dollars). Energy and raw material costs are rising, and some products, such as semiconductors or metals, are in short supply. Circumstances that make progress by sectors uneven.

In the association of automotive suppliers Sernauto they transfer that the shortage of chips will not be resolved "until well into 2022". The logistics have been turned upside down. Juan José Novoa, head of the economic-financial area of ​​the Port of A Coruña, one of the participants in the survey, admits that in his case the fall in traffic (focused on fuel, bulk and cruise tourism) has been profound and it has forced a reorientation to become a port focused on clean energy. They will not recover their best business figures until at least 2024.

From the real estate sector, Luis Guijarro, director of Hi Real Estate, also talks about the rise in prices due to the rise in construction costs: “We must be attentive to the evolution of contracts closed before the covid, which in some cases they will have problems to maintain the fixed prices ”. The tourism sector also continues to worry, where a good part does not have the capacity to transfer the increase in its costs to consumption and where only a third of companies trust that revenues will recover this year. Inflation also corrodes savings and the purchasing power of wages despite the fact that economists do not see the phenomenon as something worrying.

Taxation is another of the corporate headaches.

Now that the G7 has agreed to achieve a global floor in corporate tax (15%) and there seems to be a certain global consensus that only in this way will the bill for this crisis be paid, 6 out of 10 responses go in that direction , but at a very low rate: between 10% and 15% of profits.

For asking not to be.

The requests for rebates continue in this order, with social contributions, VAT, IAE (paid by companies that invoice more than one million euros) and, to a much lesser extent, personal income tax.

Entrepreneurs are also irritated by the regional fiscal disparity and ask for similar taxes throughout the territory.

Although at this point the answers that come from Madrid are mostly contrary to those of the rest.

As for the tear that Brexit caused, it seems to have been left behind for a vast majority of societies.

Concerns about exchange rates against the dollar and monetary policy are also easing, with the confidence that the ECB will maintain its ultra-expansive policy in the short term.

It will?

It seems so for Kyle Thomson, head of Financial Advisory at Deloitte.

Because the same pandemic that has triggered the use of sedatives and antidepressants among the population has helped economic institutions administer their own pain treatments.

“Central banks consider the price hike temporary.

We do not expect rate hikes, especially given the recent change in the ECB's decision to set the inflation target at 2% instead of 'below' 2% ”.

European funds

"We get out of this, the question is how", ponders the Icade teacher. The game is not yet won, despite that state of mind of confidence that borders the uncertainty of these months. The fear of the return of restrictions due to the rise of infections is still there. European funds can be great to cap off the recovery or a monumental fiasco. 94% of those consulted think the first and half of the companies expect to benefit from them directly. But, as Pedraza recalls, from the last cycle (between 2014 and 2020) Spain took advantage of only a third of the Community funds. Bad omen if now you have to manage 140,000 million in aid and loans at once. Fernández Jurado adds that the problem of community aid is not in the amount, "but in what you do with it." For now,They will make the next two years relatively uneventful, according to expert consensus. Although that word, tranquility, is just the one that nobody dares to use, seen what has been seen.

Not so important exports

A great lifeline for the Spanish economy in past crises, exports are now growing at double digits. Between January and May, Spain sold goods worth 125,351 million, a figure that is slightly above that registered in 2019 (in 2020 they fell by 10%). But the contribution to the growth of the foreign sector is not being the same as after the Great Recession due to the strong increase in imports, as pointed out by the director of the Research Service of the Spanish Chamber, Raúl Mínguez. Nor has the number of exporters varied too much (some 68,000 companies in total, of which 30,360 export more than 50,000 euros per year). It was foreseeable that an open economy like the Spanish one, integrated into world value chains, would quickly recover the export flow,But for those consulted by the Business Barometer, the situation, beyond returning almost to normality, has not provided them with new markets or extra support to go through difficult times. The panelists are optimistic about what will happen in the coming months: up to 57% expect that their sales to the rest of the EU will be increased, while only 6% respond that they will decrease, and 38%, that they will remain the same . The European Union continues to be the favorite destination of Spanish companies (61% of sales) and the fear of new outbreaks of the virus continues to be the main threat to commercial exchanges. There are still a large part of companies (42% of the study sample) that do not export. By destinations, Latin America is of particular concern.It has not provided them with new markets or extra support to get through difficult times. The panelists are optimistic about what will happen in the coming months: up to 57% expect that their sales to the rest of the EU will be increased, while only 6% respond that they will decrease, and 38%, that they will remain the same . The European Union continues to be the favorite destination of Spanish companies (61% of sales) and the fear of new outbreaks of the virus continues to be the main threat to commercial exchanges. There are still a large part of companies (42% of the study sample) that do not export. By destinations, Latin America is of particular concern.It has not provided them with new markets or extra support to get through difficult times. The panelists are optimistic about what will happen in the coming months: up to 57% expect that their sales to the rest of the EU will be increased, while only 6% respond that they will decrease, and 38%, that they will remain the same . The European Union continues to be the favorite destination of Spanish companies (61% of sales) and the fear of new outbreaks of the virus continues to be the main threat to commercial exchanges. There are still a large part of companies (42% of the study sample) that do not export. By destinations, Latin America is of particular concern.up to 57% expect their sales to the rest of the EU to increase, while only 6% respond that they will decrease, and 38%, that they will remain the same. The European Union continues to be the favorite destination of Spanish companies (61% of sales) and the fear of new outbreaks of the virus continues to be the main threat to commercial exchanges. There are still a large part of companies (42% of the study sample) that do not export. By destinations, Latin America is of particular concern.up to 57% expect their sales to the rest of the EU to increase, while only 6% respond that they will decrease, and 38%, that they will remain the same. The European Union continues to be the favorite destination of Spanish companies (61% of sales) and the fear of new outbreaks of the virus continues to be the main threat to commercial exchanges. There are still a large part of companies (42% of the study sample) that do not export. By destinations, Latin America is of particular concern.The European Union continues to be the favorite destination of Spanish companies (61% of sales) and the fear of new outbreaks of the virus continues to be the main threat to commercial exchanges. There are still a large part of companies (42% of the study sample) that do not export. By destinations, Latin America is of particular concern.The European Union continues to be the favorite destination of Spanish companies (61% of sales) and the fear of new outbreaks of the virus continues to be the main threat to commercial exchanges. There are still a large part of companies (42% of the study sample) that do not export. By destinations, Latin America is of particular concern.

The collapse

It is still too early to calculate what scars 2020 will leave on the foreign sector. In a study published a few months ago by Funcas, several economists compared the fall in exports during confinement with the period known as "collapse", observed during those same months of 2009. And they warned that the covid-19 had had a negative impact even greater than that arising from the international financial crisis due to a deeper deterioration in the portfolio of products and destinations.