MADRID: Economic volatility in Spain has led firms to cut their TV ad budgets, with expenditure on the channel falling 18% in the first quarter of 2012.

New analysis from investment bank Morgan Stanley, reported by DigitalTV Europe, suggested that Spain's adspend prospects for 2012 as a whole are now "much worse" than previous forecasts had suggested.

In terms of individual broadcasters, Morgan Stanley reported a major drop for Mediaset España, whose ad revenues fell 17.3% during the first quarter.

But the firm's licence to broadcast the Euro 2012 football championships, which begin in June, should provide a boost for the second quarter. Growth is expected to be flat in this period before falling once again in the second half of the year.

Rapidly-deteriorating macro-economic conditions were cited by the analysts as the main reason for the decline in national TV advertising. In comments accompanying the report, they noted that adspend trends are more than 80% correlated to consumer expenditure in Spain.

"The negative impact of substantial belt-tightening, tight credit conditions, high private household indebtedness, slowing exports and higher oil prices has led Spanish macro expectations to take another leg down in recent weeks," Morgan Stanley added.

Latest official GDP figures from the Bank of Spain show a decline of -0.3% in the first quarter of the year, meaning the economy is now officially in recession.

Data sourced from DigitalTV Europe/National Statistics Institute; additional content by Warc staff