At the same time, disruptions in maritime transport, difficulties in the supply of certain inputs and higher input prices affected the recovery in the primary, industrial (particularly in the case of transport) and construction sectors from mid-2021. By demand component, consumption recovered significantly, but not enough to return to pre-pandemic levels.1 It therefore appears that households – particularly higher income ones – still have a high volume of saving built up since the start of the pandemic. Turning to housing, building permits reached levels similar to those seen prior to COVID-19. However, the drastic fall-off in housing starts in 2020 Q2 and Q3 has continued to weigh down on construction completion volumes in 2021 and 2022. For their part, house sales and purchases surged. Private productive investment grew by 8.8%, driven by the intensification of digitalisation and by firms having to adapt to the pandemic containment measures. To date, the boost from the Next Generation EU (NGEU) programme has been modest. Net external demand contributed nearly 0.5 pp to GDP growth in 2021. By component, at end-2021 trade in goods stood at levels only slightly higher than a year earlier, due to the impact of bottlenecks. By contrast, exports of tourism services recovered vigorously.2 It is worth highlighting that the total number of exporters3 exceeded pre-pandemic levels by 5.5%. However, in 2021 the stable export base (firms that have been exporting for at least four consecutive years) was still 1.4% down on two years earlier.
Regarding incomes policies, based on the findings of the assessments required by law, further adjustments must be made to the conditions governing eligibility for Spain’s minimum income scheme (MIS), to ensure that this instrument can effectively fulfil its mission of eradicating extreme poverty while avoiding undesired effects. To that effect, social security authorities have recently signed agreements with several research institutions in order to evaluate social inclusion itineraries linked to the MIS. Housing affordability has tightened in recent years. According to Eurostat data, 48.7% of Spaniards living in market-price rented accommodation in 2020 were at risk of poverty or social exclusion, the highest rate in the European Union (where the average stands at 32.3%), while 35.9% devoted more than 40% of their disposable income to housing, versus the EU average of 25.8%. The Draft Law on the right to housing seeks to ease such difficulties, which hit the young and lower-income households particularly hard. However, some of the measures envisaged, such as rent control, may not have the desired effect or may even have adverse effects in the medium term. Conversely, certain measures that could give a significant structural boost to the supply of rented housing, such as offering greater effective legal certainty to landlords, are absent. 17  (iv) The challenge of increasing firm size, facilitating cross-sector reallocation and fostering innovation Another major challenge is the small size of businesses, which results in less innovation and low productivity.