[Economics] A predictable economy in Europe

[#Wittels-]

Today it is impossible to understand the Spanish economy without contextualizing it in the European Union (EU) and, more specifically, in the Economic and Monetary Union (EMU). Spain has always had a proactive role in the construction of the monetary union, being one of its founding members. Maintaining this role depends on being perceived as a credible and sustainable partner that pursues the common good above individual interests.

This requires a defined, concrete country model, which is in this predictable register, with an adequate economic fiscal policy and structural reforms aligned with the requirements of belonging to the EU.

 

A country that respects common rules and makes the necessary efforts to improve the competitiveness and resilience of its economy can count on sufficient authority to propose the necessary reforms or essential risk-sharing mechanisms.

It is in this context where, at the time of the legislature in which we find ourselves, it would be convenient to stop, look back, see what we have done and, above all, think about what we are going to do. The first exercise, looking back, does not project a clear, defined, concrete, predictable economic model. On January 28, the INE published the advance of the Quarterly National Accounts of Spain for the fourth quarter of 2021. In year-on-year terms, the GDP experienced a growth of 5.2% in 2021. Is this a good fact? As always, it is good to know where you come from and who you are being compared to. For example, compared to the previous quarter, the GDP only grew by 2.0%, which represents a slowdown compared to the previous quarter.

 

Throughout the year 2021, different organizations and studies have been updating their forecasts regarding the Spanish recovery to date, and all of them with certain downward adjustments as the months of the year progress, except from official positions. Therefore, knowing the consensus on the part of the main national and international economic studies services, the advanced data presented to us by the INE was consistent with the economic updates of the economic consensus, and with the lower growth of the fourth quarter, thus confirming a some slowdown in the pace of the Spanish economy.

 

Along with the absence of a definitive model of economic growth, they may cite other factors that could add to this data, and among them would be the advance of the omicron variant, inflation and cuts in supply chains as other determining causes of the general slowdown of the economy in 2021 and, above all, in the future.

 

Lastly, we also find a weight factor in relation to the actual pace of execution of the Next Generation EU funds. Throughout the month of January, we learned from the Governor of the Bank of Spain that the estimated impact of these funds on the Spanish economy has been fading compared to the expectations generated. While in March 2021 a contribution to GDP of close to 1% was estimated for the same year, as of December this figure fell to 0.3%. Recently, specifically on Thursday, February 10, the European Commission, in a logical sequence, corroborated what was mentioned above, and forecast a growth of the Spanish economy for 2022 of 5.6%, far from the 7% that has been officially announced. It is in this scenario of an "Economy in Europe" where we would be the only economy, one of the important ones in Europe, which has not yet recovered pre-pandemic levels, and which according to these latest forecasts would be announced by the end of 2022.

 

An increase in the activity rate and an improvement in productivity is essential

In the second part of the analysis that I posed to you, that of the prospective aspect, the question that we should be asking ourselves and demanding answers is: what country do we envision in a few years? How can Spain achieve real convergence in per capita income with the eurozone ? For this, it is necessary, in addition to defining ourselves in a clear model, that we value the economy of intangibles, the basis of the future, to set the conditions that guarantee a certain balance between financial capital, natural capital and social capital.

 

It would be necessary to insist on actions that, within this new paradigm, contribute, without charging the public treasury or the taxpayer, to the reduction of the unemployment rate, the increase in the activity rate and the improvement of productivity. It is in this European reality that continuous and lasting alliances must be sought, promoting a European axis that seeks greater cohesion and strength of the EU. There Spain must decide what role it wants and wishes to play. We understand that your action is very important, but we also believe that without clear facts and actions there is no real option to influence, lead and, as a consequence, prosper.

 

Link: https://www.eleconomista.es/opinion-blogs/noticias/11624483/02/22/Una-economia-previsible-en-Europa.html