Page 26 - economic report 2021

Accordingly, the fall in full-time equivalent jobs was 7.6% in 2020 and the recovery was 6.6% in
2021, so by 2022, only 1.4% of the jobs existing in 2019 are still to be recovered. But, if the actual
number of hours worked is considered, the trend is very similar to that of GDP (a drop of 10.6% in
2020 and increase of 7% in 2021), and in this case 4.3% of the hours worked before the pandemic
are yet to be recovered. Finally, the unemployment rate also fell from 15.5% in 2020 to 14.8%
in 2021. In fact, in the fourth quarter of 2021, the unemployment rate had already reached the
lowest level (13.3%) since 2008, just before the financial crisis.

In 2021, real wages decreased 2.5% due to the effect of rising prices, while productivity saw a
downturn of 1.4%. Consequently, real unit labour costs (ULC) shrank, something that had not
happened for years, and businesses were able to regain foreign competitiveness.

2021 featured gradual price growth, from Inflation rebounded due to rising
very mild general inflation at the start of the energy and commodity prices.
year (0.5% in January) to a record increase in
December (6.5%). This rebound in inflation
must be blamed on higher commodity prices (food, metals, etc.) and energy prices. The strong
recovery in consumption and investment around the world in 2021 meant that the productive
capacity of the global economy could not keep up, and this therefore caused bottlenecks in
commodity supplies and an increase in energy prices. In 2021, this situation had not yet affected
other components in the consumer basket, as demonstrated by the fact that underlying inflation
in Spain ended the year slightly above 2%.

Spain acquired a record SPAIN'S PUBLIC DEFICIT*

24 public debt of 120% of GDP. As % of GDP Chart 3.3

In the context of public finance, the Spanish
economy managed to reduce the public deficit
to 6.9% of GDP in 2021, after climbing to 10.3%
in 2020 as a result of the enormous budget
effort made to tackle the economic effects of
The external environment of the Andorran economy | III. The Spanish economy
the pandemic (ERTE - furlough, support for
the self-employed, minimum income scheme,
etc.). Part of this decrease can be explained
by the strong growth in GDP in 2021 (unlike f: European Commission forecasts (May 2022).
*Includes aid to the f nancial sector.
in 2020), and the other part can basically be
Source: Eurostat.
explained by the increase in tax revenue linked
to economic activity (revenue increased 13.2%
and expenditure 5.2%). All in all, the trend in the public deficit was more positive than the goal set
by the European Union (8.4%) thanks to the strong recovery in the labour market, which allowed
for a notable increase in tax collection.

Nevertheless, the public debt of the Spanish authorities as a whole continued to rise to €1.43
billion by the end of 2021, 5.8% more than the previous year, equalling 118.4% of GDP in the
fourth quarter of 2021, 1.6 points less than in the same quarter of the previous year, when it
reached the highest figure in the historic series. The major increase in nominal GDP (8.5%) made
the debt-to-GDP ratio shrink despite the nominal increase in debt.