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Fiscal Year 2020

The economic climate

The economic environment in which the tax revenues were obtained was inevitably determined by the outbreak of the pandemic, confinement and the limitations on mobility and activity present throughout the year. The best way to see how all this manifested itself is Graph 1.1, which shows the variation in activity measured through the daily domestic sales data of the companies in the VAT Immediate Information System (SII) . As can be seen, the immediate consequence of the confinement decreed on March 14, 2020 was the sharp drop in sales to rates below -35%, decreases that in some activities reached -100% for a long period (see in this sense Informative Note 5 ). The abruptness of the fall is even blurred in the graph by showing the series as a 28-day average to avoid the enormous irregularity of the daily series.

After the minimum reached in mid-April, a recovery process began that developed with notable intensity in the first weeks until it became somewhat stagnant, first in the month of August and, more clearly, in the following months. . Only in the last days of the year was there a rebound that seemed to bring the rate closer to zero. In any case, as can be seen in Chart 1.2, the entire year remained below 2019 levels, a situation that still persists in the first quarter of 2021.

All indicators of economic evolution were consistent with this profile. GDP in real terms decreased by 10.8% in 2020. The year-on-year rate for the first quarter was already negative (-4.3%) and the minimum for the second quarter represented a decrease of 21.6%. The stabilization of the second semester resulted in an average decrease in the third and fourth quarters of -8.7%. In the aggregates most sensitive to confinement and restrictions, the trajectory was even more pronounced. This is the case of domestic consumption spending, with falls of close to 16% in the year, 30% in the second quarter and 13.5% in the second half of the year. employment also followed this pattern, despite the measurement difficulties due to the application of ERTE. Approximated by the number of full-time equivalent employees, which is the indicator most commonly used in the context of National Accounting, employment decreased by 7.5% with a decrease of 18.5% in the second quarter and at the end of the year. by -5.2%. Given the circumstances, it may be more appropriate to use the evolution of the number of hours to analyze the work factor, a data not affected, like the previous indicator, by the calculation of the average full-time working day, which is difficult to define in 2020. In that case, the fall is greater, 10.4%, and more consistent, at least in the first two quarters, with the behavior of GDP. In any case, the intense recovery after the minimum and a certain stagnation in the second half of the year can also be seen.

The sales reference indicators constructed with tax information reproduced this pattern of behavior in the year, with differences in the different indicators derived from the greater or lesser presence of SMEs, companies with greater representation in sectors most affected by restrictions on activity. As can be seen in Chart 1.4, in Large Companies and corporate SMEs the sharp drop in activity translated into the loss of around 25% of turnover in the second quarter that they had a year before. As the most severe measures were relaxed, these losses moderated. In June and July the recovery occurred with intensity, but since August the trend stabilized, and only from November onwards could new improvements be observed, although insufficient to reach positive rates. The profile, although similar in all companies, is more pronounced when SMEs are included in the group, with a greater weight in productive branches such as hospitality, restaurants, commerce and leisure services, whose sales fell significantly. above the set (more detail can be found in this link ).

The employment indicators, both the number of recipients from the declarations of withholdings from work and the affiliated with Social Security , also showed a strong drop in the second quarter and subsequent recovery (Graph 1.5). When it comes to approximating the behavior of employment, both indicators encounter the drawback derived from the effect of ERTE. Workers covered by ERTE remain on the companies' staff, in one case, and registered, in another, regardless of the percentage of the day they are working. This also conditions the calculations of productivity or average remuneration, which are also affected by the restructuring of employment typical of the loss of activity and which, being more intense in certain sectors, distorts the aggregate estimates.

On the nominal side, prices also suffered the consequences of confinement and restrictions. In the GDP deflator the effect was not significant, just a moderation in growth of a few tenths compared to last year (Graph 1.6), but in the aggregates most sensitive to the situation the impact was relevant. The private consumption spending deflator, for example, only grew by 0.2% in the year compared to 1% in 2019 and 1.5% in 2017 and 2018. And the same could be seen in the CPI. Its interannual rate was negative since the second quarter (Graph 1.7), especially due to fuels, greatly affected by mobility limitations. Eliminating these in addition to other volatile components, the underlying CPI, which measures the trend in consumer prices, maintained growth in the first half of the year of 1.2%, slightly above last year, but in the second it was corrected ending the year with an increase of 0.4%.

Given the evolution of real variables and prices, the macroeconomic aggregates most closely related to income, internal demand in nominal terms and compensation of employees, had a very negative behavior. The first decreased by 10.7%, while the second decreased by 5.4% (Graph 1.8). This difference is relevant for the subsequent analysis of bases and taxes because it reflects, even if incompletely, the compensating role of income from the public sector (in this case salaries) that made income in 2020 have better results than the spent. As will be seen in the following sections, in addition to public salaries, pensions and unemployment benefits (including transfers through ERTE), they made it possible to reduce the impact of the crisis on income. Both pensions and benefits are not directly included in the two previous aggregates, which only include expenditure and a part of primary income but not the income generated in redistribution.