Spain is still immersed in a situation that will be difficult to overcome. The forecasts offered by the Bank of Spain do not call for optimism. Furthermore, in a scenario in which the Government is fully fractured, political management has become more of a burden than an aid. The seriousness with which Spain is acting to face this crisis has been very questioned, because, in the face of such a painful scenario, any wrong policy can generate costs for an economy that, as public finances in the country show, is on the verge of collapse.
So far, many spending proposals have been put on the table. From the application of the minimum vital income to the incentive of consumption by means of capitals that could generate effects on a demand – on the other hand, extinguished by the possible decreases in income levels after the great shock of supply that our economy has experienced – are measures that have tried to be placed in the public gallery as measures to recover the economy. However, so far, only talking about recovery through spendingTherefore, as we have to justify admission, as we see, we still lack economic reports that support the proposals issued.
The forecasts cited by the Bank of Spain are quite clear in this regard. The rescue of Spain is imminent. The future financial situation that the country plans to present places us in a hypothetical scenario in which the deficit, with a high degree of confidence, could stand at 11%. On the other hand, through debt, the agency places the level of indebtedness of the Spanish economy by the time the pandemic has dissipated in 122%. In this sense, leaving a non-existent working capital to the Spanish economy to apply stimuli on its own, as if other European economies have done so.
Furthermore, in a scenario like the current one, and without the need to compute ERTEs, the Spanish economy plans to close the pandemic with a destruction of employment that, far from being the one foreseen by the Government, could place us in a scenario in which the unemployment rate stood at 22%. If to this we add the stoppage and the ballast of business profits Due to the aforementioned shock, the estimated tax collection through income and profits will be reduced.
Thus, as we see, the scenario is not easy. In fact, for any political formation in power, such a pandemic would be a simple matter to answer. But apart from this, the government’s management is very nuanced, and it can be clearly improved by another series of politicians who, regardless of political ideology, apply correct measures to alleviate the situation. Measures that were well focused with adaptive tools applied by the Government, such as ERTEs; but what they ended up going out of context with another series of measures that were completely unjustified, such as the repeal of the labor reform, as well as the prohibition of dismissal.
The Spanish economy not only comes out of this double crisis without capital, but also deteriorates in its structure as it has never been before. When the 2012 bailout occurred, our economy showed a scenario that, had it been shown during this crisis, would have even helped to make better decisions before the working capital, which despite being scarce, was superior to the current one; Well, remember, the level of debt was close to 90% in relation to GDP, while the deficit ranged from 7% to 8%.
So, in such a situation, Spain should start evaluating another series of structural measures that, far from repealing the labor reform, they can have an effect in an economy that needs such measures. Well, as we see, postponing the reforms to the coming political generations only shows an excessive selfishness of a Government that would be prioritizing, as always, its legislature to the country it claims to represent. Presenting an intergenerational solidarity that, sooner or later, we will have to pay.
Finally, not everything proposed is useless. In this sense, we are talking about the possibility that some measures, even being proposed by United We Can, are not entirely bad. However, the situation does not accompany its implementation and materialization. The Spanish economy needs to revive and get out of the pitfall, but for this we need focused measures. Starting to professionalize a profitable and sustainable utopian country for now, in a scenario in which we do not even present the conditions for it to be so, is a mistake. For this reason, we must work to recover the conditions, prioritizing a series of reforms that, like the adjustments of public spending, can vent our economy; also promoting recovery.
Francisco Coll Morales is an economist and coordinator of the studies service of Fundación Civismo