Spain's SMEs suffocate as public sector dominates

Private production is being strangled by record costs and a lack of orders, while public employment keeps up the appearance of a booming economy.

English · Original discussion in Spanish · Published

Private production suffocates while public spending keeps the party going

Is it possible that the Spanish economy is experiencing a duality where real dynamism has become trapped in public administrations? While private industrial and service sectors face a notable cooling, public employment continues to absorb a large part of the national money flow. This disparity creates a scenario where productive money seems to be disappearing due to lack of demand, leaving private companies in a constant struggle for survival.

The mismatch between production and consumption

The reality on the ground shows a cooling that is not always reflected in full terraces or leisure services. Productive money, that generated by the transformation of goods and services, is suffering a significant contraction due to the lack of steady orders. While the service sector maintains a steady pace — largely fueled by public employee spending — the industrial fabric faces runaway increases in raw material costs, with rises reaching even 100% in key products such as steel.

The profitability crisis and the weight of debt

For many medium and small companies, maintaining the current structure has become unsustainable. Many are selling at a loss to avoid collapsing, while ICO loans — which were a lifeline during the pandemic — begin to enter their critical phase of capital repayment. The pressure is such that the most common survival strategy is selling at competitive prices or adopting drastic measures such as EREs to reduce workforces by more than 50%.

The value bubble and corporatism

There is growing concern about the hoarding of resources. The trend points towards a model where large multinationals dominate materials, leaving traditional workshops in a competitive disadvantage difficult to reverse without a deep reorganization of prices. To this panorama is added the pressure of the real estate market, whose hyper-bubbled value conditions liquidity and the real purchasing power of families.

Refuge in bankruptcy proceedings

When room for manoeuvre disappears, the bankruptcy button becomes the most sacred salvation tool. In an environment where costs rise without demand responding with the same strength, the absolute priority for the businessman is to liquidate positions and prevent personal debts from absorbing the corporate ruin.

In a country that seems to have had it all, many wonder if we are living in real stability or simply a party sustained by the constant flow of the state printer while private foundations sustancia ilegal.

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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (1259 replies).

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