(MENAFN - AFP) Decked in luminous tinsel, the market stalls on Madrid's old Plaza Mayor sparkle with festive glee -- but in Spain's fifth Christmas of crisis, even Santa is tightening his belt.
Citizens are being tested this Christmas by rises in sales tax and the slashing of end-of-year bonuses which are cramping spending on traditional treats.
"In previous years you might spend three or four hundred euros on presents, but this year we'll be grateful if we can spend more than a hundred," said Noelia Serrano, 20, a shopper at the market.
Another, Paloma Martin, 51, says she too is spending less this year, fearing the impact of cuts on the health sector in which she works.
"Although I have a job at the moment, I don't know whether I'll still have it come January or whether they'll fire me," she says.
You know things are serious in Spain when austerity bites into popular treats such as "turron" nougat -- a sugary staple of Spanish Christmas dinners.
"We have families who have been coming to buy here for three generations," says Amelia Almodovar, manager of Casa Mira, an old turron shop in central Madrid.
"It's as if at Christmas, without turron, something is missing."
Casa Mira is packed with shoppers in the afternoon a week before Christmas -- but Almodovar has seen demand fall this year.
With one in four Spanish workers unemployed, the government is fighting to fix the public finances through cutbacks that economists say dampen demand.
It has failed to raise pensions in line with inflation and has hiked sales tax on various goods.
Almodovar says her business has produced at least a tonne less nougat this year than before the crisis started in 2008 -- about nine tonnes in all -- and has not raised prices so as not to scare off customers.
Jaime Castello, a professor of marketing at ESADE business school, estimates that spending on Christmas by Spaniards will be 40 percent lower this year than five years ago.
As the economy has crumbled since the collapse of a housing boom in 2008, average spending on festivities by a Spanish household has passed from 1,000 euros in 2007 to about 600 euros, he said.
"The impact of the crisis is definitely going to be felt by nearly all Spanish families this Christmas," says Castello.
"They will have to focus spending on the essentials of Christmas -- in Spain that means food. Christmas is still a time to celebrate with the family around the table," he said.
But he added: "Twenty-five percent of families will have to drastically reduce their budgets. Christmas is going to be very different for them."
Elsewhere in central Madrid, dozens queue in the cold at Dona Manolita's, a lottery ticket outlet that became legendary after selling several winning stubs for the Christmas lottery El Gordo -- "The Fat One".
A player pays 20 euros for a ticket that gives him a chance to win 400,000 euros from an overall pot of more than 2.5 billion euros.
It's a typically big kitty for Europe's biggest lottery, which has suffered only fractionally from the crisis.
Its commercial director Juan Antonio Gallardo says ticket sales have fallen 3.5 percent since 2008 and this year "are similar or slightly lower" than in 2011.
"It is a tradition in Spain. It is in Spaniards' DNA," he said.
In the queue at the lottery shop, Kiko Villar, 35, is waiting to buy his first ever Gordo ticket. He has been unemployed for a year.
"I have never played before. It never really occurred to me," he said.
"It's very sad really, but right now in Spain it is almost easier to win the lottery than to find a job."