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Everything that changes in Spain in 2021

Everything that changes in Spain in 2021
Covid vaccines, Brexit, bank closures and the return of tourism are just of the challenges Spain will face in 2021. Photos: AFP
Covid-19 will no doubt dominate our lives in 2021 but there is plenty more in store for the new year which people living in or moving to Spain need to know about.

The vaccine 

It’s the most pressing point on the global agenda and what’s most likely to restore normalcy to life in Spain.

Spain will begin vaccinating people against the coronavirus as soon as January 4th or 5th, its health minister Salvador Illa said on Monday December 14th.

It could be that that launch date is brought forward as the Pfizer and BioNTech vaccine is expected to get the European Commission’s authorisation for distribution on December 23.

According to a statement made by Prime Minister Pedro Sanchez in late November, Spain will have vaccinated a large part of its population of 47 million against the coronavirus by the middle of the year

Third wave?

Much will depend on whether Spain’s infection rate spikes during the busy Christmas period.

There’s an increasing mention in the Spanish press of the high possibility of a “tercera ola” (third wave), with reports stressing that despite the fact Spain currently has fewer cases than other European countries, the premature removal of measures and an ambiguous Christmas Covid plan by the central government spell trouble.

ANALYSIS: Spain risks a third wave with its confusing Christmas message

Both national and regional authorities are now in the process of deciding whether to tighten restrictions for Christmas

The return of tourism and travel?

Spanish tourism authorities announced in early December that the plan is to open Spain to holidaymakers in March 2021 through its new 'Travel Safe' campaign.

That of course doesn’t necessarily mean Spain won’t remain on or return to many country’s no-travel list if infection rates are still high in March, so much will depend on the introduction of a new vaccine and the country’s handling of the pandemic.

Currently all arrivals to the country have to present a negative Covid-19 test taken less than 72 hours before travelling. Spanish tourism authorities hope this won’t be the case by the time spring arrives.

READ MORE: How Spain plans to bring back tourists in 2021

Brexit and Spain

On January 1st 2021 Britons will wake up as non-EU nationals, a sad day for most UK citizens who live across Europe, not least the 375,000+ that have officially made Spain their home.

No doubt each and every one of them knows this already, but if Brits in Spain want to carry on residing here and they haven’t registered before, it’s imperative that they apply before 2021 and if for whatever reason they can’t (no appointments available or circumstances) that they can at least prove that they were living in Spain in 2020.

It will be markedly harder for Britons wanting to move to Spain to do so after Brexit, and although the exact details of this are yet to be confirmed, it will involve stricter requirements regarding income, health cover, time spent outside the country and plenty more.

For British second home owners, ‘swallows’ and UK tourists who love spending time in Spain, the rules of the game will also change, from the 90-day limit to having to apply for a ETIAS visa waiver to enter the country and further setbacks relating to their status as third-country nationals.

READ MORE:

Spain’s floundering economy

Back in October, the International Monetary Fund reported that Spain would end 2020 with the worst-hit economy in the world and a GDP drop of 12.8 percent (the IMF figures have been revised up and down by a couple of percentiles).

It’s been a disastrous economic year for most countries however, and the forecast for Spain’s economy in 2021 is more positive at least, especially now that the Covid vaccine is within reach.

CaixaBank Research predicts a GDP growth of 6 percent and the Bank of Spain has given a growth range of between 4.2 and 8.6 percent; others such as ING aren’t as optimistic and put the figure around 4 percent.

What financial experts do seem to agree on is that there won’t be a sudden V-shaped growth of Spain’s economy in 2021.

Furlough ends, what will happen to jobs?

What Spaniards of a working age really care more about than the apparent state of their economy is their jobs and whether they’ll be able to recoup the stability and earnings so many have lost in 2020.

The country’s furlough scheme – the so-called ERTE which has propped up Spain’s job market since March – ends on January 31st 2021, so it may be only then when we start to get an idea of the full extent of “el paro” (unemployment in Spain).

According to the Economic Forecast Centre (Ceprede), Spain’s unemployment rate could go up slightly from the current 15.7 percent to 16 percent.

Spain’s government has actually announced that by the end of 2020, the jobless rate will stand at 17 percent; the Bank of Spain forecasts it will be between 19,4 percent.

No official body has predicted for 2021 anywhere near the 26.6 percent (6.15 million people) unemployment rate seen during the height of Spain’s last financial crisis, but the outlook is still hardly rosey and the same cracks will remain: a primarily service-based economy and an overdependence on tourism.

Road rules

The Spanish government’s new Traffic Code comes into force on January 2nd 2021.

It will include new speed limits for urban roads(down from 50km/h to 30 or 20km/h, harsher penalties on the driving licence point system and limitations to where e-scooters can be ridden.

You can read about it in detail here.

Will Spain’s property prices drop in 2021?

Different real estate experts, from popular property search engines Idealista and Fotocasa to market trend analysts, can't seem to agree over just how sharp the property price drop will be in Spain, if there will be one, and when house hunters in Spain can expect to see proper bargains.

Nonetheless, US credit rating agency Standard & Poor's recently forecast that in 2021 Spain will see the steepest property price fall in Europe, only to then rise very sharply in 2022, apparently leaving a short window of opportunity for budding property owners.

In December, Fitch Ratings published a report that also stated that among the world’s top economies, Spain will see the biggest property price drop in 2021 (4 to 6 percent), especially in Madrid and Barcelona where prices were overinflated prior to the pandemic.


READ MORE:

Fewer bank branches

Whether it’s a direct consequence of the pandemic or just due to a pre-planned strategy to cut costs, Spain’s different banks will be closing thousands of their branches in 2021.

Before Santander’s recent announcement that it would shut around 1,000 of its offices next year, the total number of closures had been estimated at around 4,000 between 2020 and 2021, with Caixabank (which is merging with Bankia) making up the bulk of these with 3,600 closures.

In practice this will mean that many people in Spain are going to have to travel further or resort to doing most of their banking online, a consequence which has been deemed particularly discriminatory for the elderly and those living outside of big cities.

Tax changes

Spain’s official budget decree (Ley de Presupuestos) for 2021 will go up for a vote in congress on December 29th. Here are some of the main points.

Regarding personal income tax, the draft law includes an increase from 45 up to 47 percent for big earners whose income from work exceeds €300,000; and from 23 to 26 percent for those earning more than €200,000.

There are also likely to be increases to the wealth tax on fortunes higher than €10 million.

There will be a tax increase on sugary drinks from 10 to 21 percent, from which bar and restaurant owners will be exempt.

If the law is approved, parental leave for new dads will be the same as for mums in 2021: 16 weeks with 100 percent of their salaries paid.

Non-contributive pensions would go up by 1.8 percent.

The IPREM index used to calculate if a worker is entitled to benefits will go up by 5 percent from the current €537,84 per month.

Stay tuned to this space as we will publish all the details on Spain’s new Budget Law as soon as it’s been officially approved. 

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