September 19, 2020

The Government lowers the tone against companies before an unfortunate end of the year




Governing, at times, with his back to businessmen and the self-employed, has given Pedro Sánchez a few months of pandemic without broad consensus. Each step required days of negotiation or, in the worst case, unilateral measures. The situation became unsustainable with the CEOE. But the chief executive, if something has shown these years, is that he is a chameleonic politician. For this reason, it has changed its strategy with the productive fabric in this last week of August: now, a hand outstretched and lowering the tone of its ministers to stage unity and capacity for understanding. Knowing, too, that a turbulent end of the year is coming after the outbreak of the pandemic and for which he will need business support.

Today takes place the first day of the new economic course –Although it is still August– with a speech by Sánchez before the first swords of the Ibex in Madrid. There is no guest list announced, but ABC has been able to know that at least the bank, with which it has had its squabbles these months, will be well represented: the presidents of Banco Santander (Ana Botín), BBVA (Carlos Torres), Bankia (José Ignacio Goirigolzarri), etc … The intention of the Prime Minister is to convey “unity” with the companies just two days before meeting with the leader of the PP, Pablo Casado.

The President of the Government, in his 180 degree turnIt will also convene businessmen to design the distribution of European funds, as announced by ABC. The formula, finally, as this newspaper has been able to find out, will be to bring together the leaders of the companies by topic, and not all of them together as was originally devised.

The sign of this change in Sánchez is clear. Even its ministers put aside the confrontation when asked about the extension of the ERTE or about the future of social dialogue. Now, the Government transmits that it seeks unity; a unit that companies and freelancers demanded from Sánchez himself two months ago at the CEOE business macro-summit. And they also demand it now: both groups emphasize that if you turn your back on those who create jobs, the economic recovery will be incomplete.

However, there would be another underlying reason for the treatment to be now more cordial with the productive fabric, according to the sources consulted: the economic blow that is coming until the end of the year and also at the beginning of 2021 already with the statistics in hand. The outbreaks of the pandemic in recent weeks and the restrictions of other countries to travel to Spain (Germany, United Kingdom, etc …) have made the service sector take a step back. Lorenzo Amor, president of ATAIt is clear: «We face the new course with uncertainty and concern. At the end of August there was a significant deterioration in the activity of the self-employed. We are very concerned about the sprouts and their impact on consumption. According to his calculations, there are 280,000 self-employed workers who have not opened after confinement and around a million who “are on the wire”, in an almost critical situation.

Macroeconomic scenario

The Bank of Spain estimated months ago a fall in GDP in 2020 of up to 15.1%, that the unemployment rate would escalate in the worst scenario to 23.6%, that the deficit could reach up to 14% of GDP, and that the debt threatens to escalate to 126.7% in the most adverse situation. That was thought before the summer began. Now, the outlook has changed, experts say, and it is not expected to return to pre-Covid levels until the end of 2022. Ahead, two years in crisis.

In this summer time it has been known that Spain suffered the biggest setback in the economy of the entire European Union (-18.5%) in the second quarter and the second largest in the OECD, only behind the United Kingdom. And the prospects for the year as a whole, taking the European Commission’s forecasts, are worse in Spain than in most other territories. Even our country is the only one of the largest in the EU where the economic sentiment indicator (ESI) fell in August: from 90.6 to 88.1 points. That puts an end to three consecutive months on the rise, that is, of greater economic confidence.

Tough months are coming with the indicators on the handor, despite the fact that Spain will technically emerge from the recession in the third quarter – Airef estimates a 15.2% growth from July to September -. “The effects of the crises on the business fabric are not immediate but delayed and accumulated over time and more as has happened now that a moratorium on bankruptcy proceedings has been approved until the end of the year. The more prolonged and intense the losses, the greater the destruction of the business fabric, which in turn hampers the capacity for future recovery “, they explain from the Institute of Economic Studies. In this sense, the “think tank” requires tracing, testing and social distance so as not to have to return to restrictions on activity, which would be dramatic.

Promote trust and investment

Thus, sources from the CEOE point out that what is essential is that measures be adopted in the short term that favor “confidence and investment by companies.” Namely: «Maintain liquidity measures for companies and tax moratorium along with making ERTE more flexible. The opposite could aggravate the crisis and further delay the recovery of activity and employment. Employers demand a stable framework of action and avoid tax increases at all costs. What’s more, it calls for “attractive taxation.” Direct dart to the attacks of United We Can on the taxation of large companies, to which the coalition Government planned to impose a minimum rate on Companies.

Regarding taxes, experts They bring together measures at close range. Ignacio de la Torre, chief economist at Arcano Partners, advocates temporary VAT cuts as in Germany. There the general rate was reduced from 19% to 16% and the reduced from 7% to 5% until the end of the year. “The key is government aid to avoid a ‘shock’ of confidence,” he says. Valentín Pich, president of the General Council of Economists (CGE), comments that it is not explained how reductions in the IBI or the Economic Activities tax in the municipalities have yet been announced. A measure to support small businesses, mainly, which represents almost the entire Spanish productive fabric. And he also denounces that, at this stage of the pandemic, a clear regulation on teleworking has not yet come out. Homework is yet to be done at the beginning of the course.

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