The Gini index for 2023 (an indicator used to measure whether the distribution of income or expenditure between individuals or households in an economy is moving away from or towards a perfectly equitable distribution) in Spain would be 35%, making it the fifth most unequal country in the EU.
On the other hand, the latest Intermon Oxfam report on “Crisis, inequality and poverty” warns that if social cuts continue, poverty in Spain could affect 40% of the population within the next decade, from which it can be deduced that Spain would have failed in its European commitment to the “Strategy 2020” which involved reducing its poverty by 1.5 million people.
According to the NGO, the poverty rate is currently at 20.2% of the population and affects almost 10 million people. According to the INE, 4 million people are already living in “severe poverty” (less than 307 euros per month). At the same time, and according to Eurostat data, the number of millionaires in Spain has increased by 13% in the last year, which is rapidly worsening a social fracture with unpredictable results.
New population architecture
The possible entry into recession of the German locomotive in 2025 will cause a significant reduction in exports, the consequent increase in the unemployment rate and the reduction of the Per Capita Income. This, combined with the loss of purchasing power of workers due to the dramatic reduction in salaries and the absence of the culture of domestic savings, will cause a severe contraction of internal consumption that could cause in the near future a productive desertification that would be incapable of satisfying the demand for basic products.
Likewise, the severe contraction of internal consumption will cause the commercial desertification of large urban areas, with the progressive disappearance of small businesses (food, clothing, footwear and car dealerships) and leisure and entertainment establishments (bars, cinemas, restaurants, discos and shopping centers) which will lead to the extinction of countless print and audiovisual media due to the loss of advertising revenue, leaving the Internet as a refuge for surfers.
Likewise, we will witness a severe stagnation of the real estate market, so that banks will try to sell off the foreclosed apartments that they will accumulate in their portfolios (considered “illiquid assets”) through auctions and the creation of real estate asset management companies, which will cause drastic falls in property prices, prices artificially revalued due to the real estate speculation of recent years.
A revitalization of the old towns and urban centers of cities is also foreseeable to the detriment of peripheral neighborhoods, motivated by the lack of liquidity in municipal coffers due to the decrease in tax revenues and which will force chronic indebtedness of the municipalities in order to continue maintaining the minimum public services. Finally, there will be an exodus to rural areas of an urban population affected by economic asphyxiation, repossession of homes and entry into the unemployment lists, with the consequent revitalization of large rural areas, rejuvenation of their population and return to already forgotten scenarios of an autarkic economy.
Germán Gorraiz Lopez – Analyst