April 20, 2021

Bank of America alerts Spain that it is running out of time to make reforms

Bank Of America Merryl Lynch believes that Spain must "carry out a major fiscal adjustment before some sources of tension like the Brexit and the trade war between the United States and China will cause a recession in the global economy. According to its chief economist for Europe, Rubén Segura-Cayuela, «It is easier to do homework in the upper part of the cycle and we are running out of time. We are missing three percentage points of structural adjustment. "

"The alternative is that when we have a shock we can make a quick and poorly designed fiscal adjustment. It is better now to think carefully about the appropriate level of spending, how we finance it and what to do to get there, "he said yesterday, according to Ep. In the opinion of this entity, Spain has made reforms in recent years "that were very good", but "there are pending tasks. We continue to have a vulnerable economy on many fronts. " Segura-Cayuela pointed in this direction to adjustments in pensions, productivity, the labor market, educational reform and external debt among the most important issues to address "urgently" at the political level.

The Bank of America economist raised the need for "Decide the size of the welfare state" and see "how to finance it and make it more socially sustainable". "How to make the adjustment must be decided by the Spanish voting," he said. In addition, he indicated that Spain has a problem of insufficient income compared to other European countries, although it is possible to have lower rates and collect the same. In this line, he valued the work of the Fiscal Authority, an organization that is disseminating several reports on some of the main sources of expenditure in Spain. In his opinion, the AIREF is seeing where there is a space to achieve the same by spending less. "Maybe you just have to redesign some things," he predicted.

"The fear is that I do not see that urgency among the political parties," he acknowledged, noting that parliamentary majorities that require agreements of at least three parties do not help this type of reforms, although great state pacts are needed to carry them out.

(tagsToTranslate) sergio alonso

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