Tuesday, October 26

The economy is helping Pedro Sánchez. Even when?

The good performance of the Spanish economy had been in the news in recent days. Even in the right-wing media and in some international ones. Until Thursday, when it was learned that GDP had grown by a third of what was expected (with everything, 1.1%). This failure of the forecasts must have fallen like a jug of cold water in the socialist ranks that, according to all indications, trust almost everything to the economy to continue in La Moncloa after the future generals. Because more than one must fear that these failures could be repeated and that the scaffolding is mounted on not very solid bases.

Trying to understand something amidst the mass of propaganda that permeates the information is not an easy task. Although its protagonists say otherwise, Spanish politics is in an electoral campaign, almost nothing escapes that logic and it is, therefore, almost impossible to glimpse a discourse that responds to the reality of the problems in the midst of so much gesture intended solely for the Gallery.

However, there are some data that are difficult to answer. One is that unemployment has stopped growing and is even decreasing little by little. The government’s decision to maintain and even expand the ERTEs will contribute to this. Another is the macroeconomic forecasts made by different organizations. The most optimistic, that of the OECD, which forecasts that Spanish GDP will grow by 6.8% in 2021, the highest increase among all members of the organization. And all these forecasts agree that this positive trend will continue in 2022, in only slightly shorter percentages.

Another is that the Spanish stock markets are very strong. Another, that many large companies and banks are preparing to distribute substantial dividends. That of Banco Santander will be 6.2%, the highest in all of Europe. Another is that home sales are growing non-stop: 34.5% between January and July. All that news indicates that the world of money is lively. Who believes that the recovery is serious. Or, on the contrary, who thinks that the moment is good, after so many months of hardship, and that it is necessary to take advantage of it, lest it be over.

Then there are the shadows. One is the increase in non-performing loans, which some pessimists fear that if it continues to grow, growth may stop. It seems that the main responsible for this problem is the State, which does not pay in the agreed terms, putting some companies on the edge of the abyss. This has always happened, but if it has worsened, it may be because the State has assumed, and continues to assume, too many spending commitments and now it does not have the cash to face it.

Another problem that for now is not serious, but that can be if things go wrong, is inflation, the rise in prices. Inflation is above 3% in a good part of Western countries and although the voices that say that the problem is temporary are multiplying, some are beginning to fear the opposite. In the United States, there is serious talk that interest rates will rise soon. If that happens, the decision will end up being imitated by the euro countries and with it, sooner or later, the dynamics of economic recovery will be affected.

In short, the economy is doing well and the Government has reason to be happy. But you should not be overconfident that this will continue to happen until the eve of the elections. On the other hand, who guarantees that a good performance of the macroeconomic data will automatically translate into good electoral results for the Executive? Recent European political history is full of examples to the contrary. Of situations of economic optimism that have opened the door of power to the opposition, because that climate made change less traumatic and encouraged many people to support it.

So, let’s go to the concrete. And right now, are the prices of electricity and Budgets. On the first, it gives the feeling that the matter has lost impact. Because of the Government’s decision to keep the intolerable benefits that the electricity companies obtained from the price morass, which must have been very popular with a few citizens, and of different political colors; because the Executive has had to convince not a few that these outrageous growths were not going to affect their electricity bills; and because all the news are losing steam as they are repeated day after day.

Regarding the Budgets, we believe Pedro Sánchez when he says that there will be them and in a few weeks. He will know why you say so. Probably because it has already decided what concessions it will make to those parties, starting with its government partner, whose support it needs to approve the public accounts.

Everything indicates that this time there will be no miserliness, that Minister Nadia Calviño will have to lower her head. Because the approval of the Budgets will mean that the Government will continue at La Moncloa for at least one more year. And that’s too big a prize to narrow. Another thing will be when you have to deal with increases in expenses and debts. But those things are secondary for politicians for whom the priority is to win elections. In a few months, maybe around next summer, things may start to get darker. We hope it is not before.