Consumer credit in Spain hits 2007 highs as holidays drive borrowing

Consumer credit back at 2007 levels: the holiday spending spree

When was the last time Spanish households borrowed this much money to spend? You have to go back to 2007, just before the house of cards came tumbling down. Consumer loans — the kind that finance trips, screens and little luxuries — are back at highs last seen almost two decades ago. And the awkward question is: paying for what, exactly?

The answer, according to the analysis circulating on the fringes of the financial press, is simpler than it seems: to go on holiday. Not to buy a house or start a business. To spend in the present on the promise that the future will pick up the bill. Some sum it up bluntly: if you can't afford it, you can't afford it. But reality shows that more and more people decide they can, squeezing other budget items or simply ignoring the yellow warning notice from Correos (the Spanish postal service) when it lands in the letterbox.

Meanwhile, the beaches of Ceuta fill up with foreign tourists arriving with a whole year's savings to spend in Madrid. The picture is that of a country split between those who save for months to enjoy the money later and those who borrow so they don't have to wait.

There is, however, a nuance that shouldn't be overlooked. The legal framework has made it increasingly comfortable not to pay: Spain's second chance law (ley de segunda oportunidad) and the IMV (a minimum income benefit) shield part of the debtor's assets. That changes the calculation. "They shouldn't have lent it to me in the first place" becomes a repeated excuse when the notice arrives. And the consequence, the pessimists warn, is that those who save and pay their debts end up footing the bill for those who don't.

With financed consumption at 2007 levels, the precedent is hardly reassuring. That party ended in a bailout and austerity. Those warning that credit-fuelled spending without a safety net has history on their side are not far off. What remains to be explained is how to stop the bill, once again, landing on the same people as always.