April 10, 2021

So Sanchez leaves the economy after calling elections

So Sanchez leaves the economy after calling elections


Behind the triumphalist speech that the President of the Government, Pedro Sánchez, pronounced this morning before announcing the date of the general elections, there is a less promising economic reality in the form of data. Sanchez leaves Spain economically weaker than he was. Although less than in countries such as Germany, which barely advanced by 0.02% in the fourth quarter of 2018, the national GDP is also slowing down and has been growing for a couple of quarters with moderate growth of 0.6% and 0%. , 7% without the measures adopted by the Executive have served to breathe air. Thermometers such as the Industrial Production Index show very pessimistic figures, with a decline of 6.7% last December, the second highest in Europe only behind the Irish. The Government itself, in the decree that approved support for the industry, recognized that in 2018 "the industrial sector, both in terms of size and employment, has moderated its growth in a greater proportion than the Spanish economy as a whole". Exports, which acted as an engine and lifeline for national companies at the most delicate moments of the crisis, have also lost their strength and, for the first time since 2009, last year lost weight in the national GDP, which now they represent 34%.

The slowdown of the economy is moving to employment. In June, when Sanchez arrived at La Moncloa, registered unemployment was 3.16 million people. In January it climbed to 3.28 million, which means there are 123,000 more unemployed. Things have not gone better in terms of job creation. The affiliation to Social Security in the middle of last year was 19 million people; now it is 18.81 million. And that has not materialized Sanchez's promise to modify the parts he considers most harmful to the labor reform. A reversal that, according to international organizations such as the IMF or the OECD, goes in the opposite direction to what Spain needs.

The debt and the deficit have not gone through the most appropriate path either. Despite the fact that the European Commission, the IMF, the Bank of Spain and the AIReF urged Sánchez to take advantage of the economic bonanza he found to reduce the debt, his policies were also in this respect on the other hand. Shortly after taking over the Economy portfolio, Nadia Calviño returned to Brussels to negotiate an increase in the deficit target from 2.2% to 2.7%. And he got it, with what that entails: a more hole in the accounts, more debt to cover it. Although the Executive promised to reduce the liabilities of the administrations, today the Bank of Spain has reported that it has stood at 1.17 trillion, new record. A situation that leaves Spain very exposed to a rate hike that, sooner or later, will end up hitting the country. And, perhaps, to the whole world, as many analysts fear.

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