June 22, 2021

Spain is not Italy, nor is it necessary for you | Economy

Spain is not Italy, nor is it necessary for you | Economy

The IMF has an advantage, it is predictable. Always put two fingers in the eyes. In this case, an alert on the cost of improving pensions and another on the advisability of not completely reversing the labor reform.

This is what the headlines highlight, it would be more. But the background breath of the mission entails optimism. The central message is that the expected deficit (1.8% by 2019) makes sense: "It is crucial and appropriate," say the editors. And the rhythm of structural adjustment that supposes (half a point of the GDP) "should persist".

The second message is arnica for the beleaguered Government. Guaranteed that the deficit remains under control, "raising higher incomes" than those needed for it (free translation: selectively increasing taxes) "can help finance additional expenses". Social.

More specifically, "protect the most vulnerable, support the employment prospects of young people and the long-term unemployed, promote innovation capacity and protection of the environment, as well as achieving distributional objectives".

Take chestnut, this comes from the cathedral of rigor! This is from the IMF! Written in Saint Augustine mode: "Love and do what you want"; or "sins" and idem. Well similar: control the deficit and you can raise taxes with which to do social policy. More significant: it is the IMF on the ground, much more demanding than the headquarters in Washington, slightly socialdemocratized from the unfortunate (but great) DSK.

The forecast that remains there (and that the mission ratifies) is that we still have a couple of years ahead, maybe even three, of strong growth.

The regret is that the last three years of the it was Mariano in reducing the deficit more (and, therefore, the debt, which is accumulated deficit).

So that when the next crisis arrives there would be fiscal "space" or "mattress" available to combat it: issuing debt. How to pay their deadlines, if they eat more and more part of the budget pie? That is the background alarm. Useful for almost all of Europe. Rescue in the environment of 2010, with small indebtedness (Spain came to reduce it to 37% of GDP), was effective. What would it be like now? Perhaps it demanded sacrifices far superior to those activated when the Great Recession.

Even with this, the overall impression in Washington's multilateral body is that Spain is well "anchored" within the framework of the monetary union.

So that all their governments end up acting (more or less) correctly. And they would do it again, even if there was another internal devaluation.

In short, Spain is not Italy. Nor does he need. But Italy is not Greece either, where it was relatively expedient to tackle populisms and implement sacrifices.

In Italy, the stubborn Peronist recipe is not easy to redirect. For the time being, he has already crushed the person who had that assignment, the Economy Minister, Giovanni Tria, is he still breathing? We will see what the markets decide. But in any case there will be spasms.


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