This, in turn, introduces uncertainty over the behaviour of the incomes of these agents, which means they tend to postpone their consumption and investment decisions. The sharp decline in the consumer confidence indicator in March (the largest decrease in the historic time series, which goes back to July 1986) gives an indication of the magnitude of these effects. This fall suggests that the increase in uncertainty may have begun to adversely affect household spending decisions. The results of the latest edition of the Banco de España Business Activity Survey (EBAE) suggest that the war has begun to worsen the expectations of non-financial corporations regarding their turnover and also the duration of the global supply chain problems, which is now estimated to be longer. Third, the invasion of Ukraine will affect the Spanish economy through the trade channel, the direct impact of which is assumed to be moderate, as bilateral trade flows with the countries at war are relatively limited. In 2019, the last year before the pandemic, Spanish goods exports to Russia and Ukraine represented only 1.6% and 0.3% of the total, 2  respectively. Russian tourism, meanwhile, accounted for 2.2% of total spending by foreign tourists. However, the indirect effects on Spanish trade flows may be significant. The war will particularly affect central and eastern European countries, which are more exposed to Ukraine and Russia, and, therefore, the growth of Spanish export markets.
Furthermore, in economic terms, given that these deposits were used to a significant degree to finance illiquid assets outside Iceland, such a payment, if it had been possible, would have amounted to a net transfer of resources from Iceland to other countries – where the United Kingdom would have been prominent – at a time when Iceland was going through its deepest financial and economic crisis in the post-war period. That made no sense whatsoever! However, the preference given to deposits under the Emergency Act is a key element in the fact that recoveries on the failed banks’ estates will cover deposit claims from the foreign branches in full. In international discussion, there have been a number of misconceptions about this process. There have been claims that Iceland allowed its banking system to collapse, with what now seem reasonable results, and that others should consider doing the same. The fact is that Iceland kept the domestic part of its banking system running throughout, and at significant expense; otherwise, the consequences would have been dire. Some have claimed that the banks were nationalised. They were not. The failed private banks are private companies in winding-up proceedings governed by law. The Government fully recapitalised one of the new banks. The other two are private banks owned primarily by the estates of the old banks. Others have claimed that Iceland defaulted and got away with it. The opposite is true. The credit of the sovereign was preserved, and all debt obligations have been paid on time.