The economic climate

In 2021, the economic context was mainly characterized by two elements: the progressive improvement in activity and the rise in prices, both particularly intense in the second part of the year.

The year had a bad start marked by the effects of the third wave of infections and the impact of Storm Filomena. After a few first weeks in which activity was still below pre-pandemic figures, sales began to recover and since August they were decidedly above those of 2019. Graph 1.1 illustrates this evolution. The series shown are the daily sales provided by the Immediate Supply of VAT Information system , the activity indicator that is closest to what is happening in the economy. As can be seen, until the end of March sales were lower than those of 2019 and 2020, but, after that month, a continuous progression was observed that caused the year to end with growth above 20% compared to 2020 and 4 % compared to 2019 as a whole.

The improvement in daily sales was influenced by both the real component and price increases, which became more pronounced as the year progressed. Chart 1.2 gives a good idea of the effect of prices, especially given their sluggishness in 2020. Already from the beginning of the year, greater nominal than real dynamism began to be seen and this difference became accentuated as the months passed. In the fourth quarter, prices explained, on average, around 15 points of sales growth. In any case, once the prices were discounted, the last months of 2021 were already above 2019, as seen in Graph 1.3.

Other sales indicators originating from tax information offered signals similar to the previous ones. Chart 1.4 reflects the quarterly evolution of the total sales of Large Companies and corporate SMEs in the last three full years. Especially in the indicator with the greatest coverage, that of Large Companies and corporate SMEs, the continuous improvement is clearly observed from the minimum caused by strict confinement in the second quarter of 2020. When analyzing the graph, two facts stand out in particular: on the one hand, a more consistent progression in SMEs than in Large Companies (due to the greater weight of the activities that suffered the most from restrictions throughout the pandemic period in the former) and, on the other, the significant acceleration of sales in the final part of the year, closing the last quarter above the results of 2019. For the year as a whole, the total sales of Large Companies and SMEs were, in real terms, only 2.3% lower than in 2019.

In the aggregate most commonly used to monitor the situation, the GDP , the two elements mentioned as characteristic of 2021 can also be seen, although with a lower intensity than that deduced from fiscal variables. In real terms, GDP grew by 5.1% in the year, going, in a quarter-on-quarter rate, from a decline of 0.5% in the first quarter to an average increase of 2.4% in the second half. Nominal GDP, for its part, increased by 7.4% in 2021, with a quarter-on-quarter decrease of 0.8% in the first quarter and growth of 4.8% in the last (4.5% in the second half of the year). In both cases the figures for the year were far from 2019: -6.2% in the first case and -3.2% in the second. Even further away was the nominal non-financial mercantile GVA, which is an aggregate closer to what sales of tax origin represent. In this case, the year closed almost 10% below what it was in 2019, a very different result from that deduced from sales. Graph 1.5 shows these three aggregates (real GDP, nominal GDP and mercantile GVA) on a quarterly basis and in comparison with what was the year before the outbreak of COVID.

The other relevant indicator in the conjunctural monitoring is employment , although whatever the approximation used is highly conditioned by the effect of ERTE, which influences differently depending on the sources and therefore also The results and conclusions that can be drawn from them are different. Thus, for example, membership began to register growth compared to 2019 figures starting in June and the figure for December was already 2% higher than the same month of that year. During the year, the average membership was slightly higher than in 2019, as seen in Graph 1.6. However, affiliation does not allow us to precisely eliminate the impact of ERTE on the work actually performed. The hours worked from the National Accounting would be the most appropriate indicator, but its practically stable behavior since the second quarter of the year (just in the period in which activity improved the most) and the strong sectoral changes that have occurred in recent years make interpretation difficult. Full-time equivalent employment, which is a transformation of hours from the average day to full-time (not easy to define or estimate in these years), is also not immune to these problems (the notable differences between hours and employment equivalent in the last two quarters of 2021, which can be seen in Graph 1.6, is a good example of this). In relation to 2019, the employment measures of the National Accounts in 2021 were, for the year as a whole, below those of 2019, although in the case of equivalent employment in the last two quarters they already exceeded the average for that year.

For its part, the fiscal indicator of employment, the number of recipients of labor remuneration from the withholding declarations of Large Companies and corporate SMEs, followed a trajectory throughout the year similar to that estimated by the National Accounting for employees. full-time equivalents in non-financial commercial activities (this detail is important because we must remember the different behavior of public employment in the last two years). In Graph 1.7 you can see this similarity and the difference with the salaried affiliates, with different treatment, as has been said, of the ERTE. Only the latter reached 2019 levels.

Regarding the second characteristic feature of the year, the evolution of prices, Graph 1.8 clearly illustrates their peculiar behavior through the two basic indicators: the Industrial Price Index (IPRI) and the CPI. The strong rebound that has occurred since the first months of 2021 stands out, especially in comparison with the negative rates that had been the trend in 2020, a consequence of the collapse caused by confinement in much of the world. The rebound is observed in both the IPRI and the CPI, although the intensity is very different (note the difference in the scales). The acceleration in prices is also more pronounced when monthly data is analyzed than when the entire year is assessed. In annual terms, the general CPI ended a year with an increase of 3.1% (0.8% the underlying CPI, which does not include energy products or unprocessed foods), having remained at an average lower than the average for half the year. 2% and including an upward bias due to the measurement of electricity prices being based on the regulated tariff (in fact, the private consumption deflator in National Accounts only grew by 1.9% in 2021).

It is also worth highlighting two facts linked to this price evolution. First, most of the rally has to do with the considerable increase in energy prices that occurred since March (see Chart 1.9), although the previous downward trajectory had changed since mid-2020. And, secondly, even taking into account the importance of the energy factor, the behavior of the IPRI without energy shows (Graph 1.10) that the inflationary process had a more general nature. Industrial prices had begun to recover the growth rates prior to the pandemic in the last months of 2020 and from the first months of 2021 they presented a clear increasing trend, although this was not reflected in the central core of consumer prices until almost end of the year (the CPI without energy only rose above 2% in December, and the same happened with the core CPI). The increases in industrial prices are understood by analyzing the prices of industrial raw materials (“The Economist” index) and food (FAO) in international markets (Graph 1.11), which were already registering growth in the central months of 2020. Analyzing with a little more perspective, it can even be concluded that inflationary tensions had begun at the end of 2019, but that the pandemic stopped them. Once a certain normality was recovered, tensions were unleashed again and this time with more intensity.

Finally, we must mention, although throughout the report it is commented in different sections and in detail in Information Note 1, to the possible influence of this inflationary rebound on income growth. The first thing to say is that, in general, there is no direct or immediate relationship between the increase in prices and the increase in collection, but in the particular case of 2021 there are also additional reasons to think that the impact of the Prices were relatively low. The fact that there is no direct and immediate relationship between prices and collection has to do with the existence of income that comes from operations produced in previous years (this is the case, among others, of the differential quotas of direct taxes, annual VAT refunds or settlements carried out by the Administration), or they include delayed price increases (the update of pensions due to price deviations has materialized in 2022, as have salary increases). The most direct relationship between prices and income occurs in indirect taxes, particularly VAT. However, as has been seen, in annual terms the growth in consumer prices was not so high (3.1%, including the upward bias of the incorrect measurement of the price of electricity) and was concentrated in the second part of the year. anus. Given that the accruals for November, December and the fourth quarter, the periods with, up to that point, the largest price increases, were entered in the first months of 2022, the impact of these higher prices was not reflected in the 2021 collection, but in 2022. To this we must add the rate reductions in electricity consumption (in VAT and in the Special Tax on Electricity) that caused a loss in revenue greater than the gain provided by the increase in prices.