Analysis FAES The economy, ...is the economy!

04/04/2019

On  January 10th, 2008, just two months before the general elections held on March 9th, 2008 and less than a year before the worst economic crisis in the history of Spain and the rest of the world, José Luis Rodríguez Zapatero, then President of the Spanish Government, accused those who, according to him, were unjustifiably spreading "economic scaremongering" of "anti-patriotism". Moreover, based on good consumption data from that year's Christmas campaign, he dared to increase his bet by raising from 1.6 to 2 million the jobs that would be created due to his management of the economy, which would lead us to full employment, finally, thanks to socialist policies.

Rarely in the history of liberal democracies has so much political myopia been concentrated. Beyond the good intentions that are presumed to any government, the truth is that the 2 million jobs were not created and furthermore, more than 3 million were destroyed in a short time period; the loss of income was the most serious since the existence of statistics and we went from having a budget surplus to a public deficit of more than 11%. Crises are never welcomed, but neither are they unexpected. And of course, this time, the alarms were more than obvious. The imbalances that the Spanish economy had accumulated were beating resistance records in the economy manuals and the external vulnerability, expressed in one of the highest foreign holdings of debt in the world, was extreme. And the inevitable happened.

Today, a little less than a month before the April 28th elections, we cannot help it but feel that we have learned nothing from the past. If not being able to anticipate the most serious crisis in history, that still keeps open wounds in our economy, was myopic, not to prepare for a future that has been sending us constant alarms is even more. We have left behind the peak of growth in the economic cycle. The geopolitical uncertainties and the advance of protectionism can already be seen in Spanish exports, cancelling out and even making a negative contribution from the external sector to economic growth in the upcoming years. The standstill of our main trading partners, especially Germany and France, has led industrial production to record negative growth rates. Companies with positive financing capacity, however, maintain investment at a level below equilibrium in the hope of clarifying the many uncertainties generated by the Spanish political system in a global environment of multiple risks such as the one we are going through.

Justifying the budgetary joys of government election Fridays by using the perception that the economy is doing well, and will continue to do well, is reckless. After almost six years of intense growth, the Spanish economy has not managed to lower the unemployment rate of 13-14%; the public deficit forecast for this year will surely exceed 2.5%, failing to meet the European target and fueling a debt that consolidated around 100% of GDP. It is true that Spain has cleaned up its financial system; it is true that we have reduced external debt; it is true that the real estate sector in Spain, although very dynamic recently, does not reach the levels of inflation that it reached during the bubble. But it is also true that monetary and fiscal policies have been extreme, to the point of having exhausted, according to many analysts, the real margin from the public sector if new difficulties were to come. This being the situation, we have a government whose electoral irresponsibility delves into the greatest imbalance that haunts us, which is no other than the public deficit and the high public debt. The ECB annual report cannot be more conclusive. Spain hides a growing structural deficit that is not only not being tackled down but is being irresponsibly fueled.

There are many structural problems in our economy, and more will come if we continue diverting attention from what really affects citizens most in their daily lives. It should be remembered that the reformist agenda was stuck in the long period of political instability from which we have not yet emerged, and that to a large extent, the economic cycle, which is now clearly slowing down, is the result of past efforts from which we will not be able to live indefinitely.

One of Spain's main structural problems is the inability of the political left to generate a sustainable economic discourse; the permanent temporary inconsistency between objectives and tools; the unwillingness to abandon class approaches that are outdated, but that serve and legitimize paradoxically unjust short-term policies; the little ambition to find another way for economic growth and common welfare other than deficit and growing indebtedness. Not only has Spanish socialism not extracted the moral from the fable of the ant and the grasshopper, but it has also tried to make us believe that the ant is the bad guy in the tale.

We are putting a lot at stake in the April 28th elections. The government coming out from the ballot boxes will have to deal with complicated economic situations – to say the least-. The policies implemented in the forthcoming years - or the inability to do so- will determine the depth and the impact of that crisis on the economies of the Spanish families. If these elections are carried out without talking about the economy, as Sanchez's government pretends, it will be a democratic fraud like that of 2008, taking into account the promises made and the results obtained. Let's talk about economy with responsibility.

Translated by Carmen Amado Paredes

#Economy #Spain #Deuda #Deficit #Elecciones