Worthy successor to Nadia Calviño as guardian of orthodoxy, the new Minister of Economy, Carlos Body, underlines his commitment to the progressive reduction of the deficit and debt. “Fiscal responsibility is one of the important marks of this Government,” he maintains. Body (Badajoz, 1980) defends the effectiveness of the deployment of European funds, as well as the entry of the State into the capital of Telefónica: “We are not naive when it comes to evaluating the impact of the arrival of foreign capital.”
This week we learned that membership is approaching 21 million members. Last year, GDP increased by 2.5%. With these data, do you plan to maintain 2% growth for this year?
We are comfortable with our forecast of 2% growth for this year and I believe that all the news we are receiving regarding new macroeconomic data confirms the good situation of the Spanish economy. That 2.5% for 2023 is more than five times above the euro zone average and also has a particularly important component for the 2024 forecasts. And the fact is that in the last quarter growth accelerated and this represents a carry-over effect important for 2024 and in fact it is one of the reasons why the main analysts and forecasting organizations are converging towards our forecasts, with everyone also having a forecast of around 2%. Another important element is how the year has started, the labor market is a clear sign, it is being very good, the pulse of economic activity is being maintained, which positions us at a very comfortable starting point to maintain our forecasts.
However, the growth in the last stretch of last year was thanks to public consumption and this will not be maintained.
Our forecasts regarding the growth components for 2024 are focused mainly on private consumption, where we anticipate that there will be a pull as households partially recover the purchasing power that they have lost with the inflation shock in the last year and a half. Inflation is moderating and households, little by little, with salaries that grow above inflation, are being able to recover that purchasing capacity. In fact, we have seen good data regarding savings also in recent days, and that reinforces private consumption as one of the main drivers. In fact, we anticipate that the public sector’s contribution will decrease this year and we maintain our forecast of 2%.
Macroeconomic data are going well, but there are segments of the population, especially young people, with many problems, especially accessing housing. The rental rates are now in force, currently only applied in Catalonia. Will this reform really help change things?
We are fully aware of the importance of the housing market in this legislature as a fundamental factor, particularly for young people, to help them in this emancipation. In Spain there is a lack of housing supply, particularly in some urban centers that are more stressed and where we are acting in several lines. Firstly, we have launched the ICO guarantees, with which the State guarantees young people so that they can buy a home. Another additional step is benchmarks. Its publication helps to have greater transparency and, when setting contracts, there is a greater balance between owners and potential tenants. And there are also actions regarding supply. The Minister of Housing has already outlined several ways that we are going to implement to increase supply, and particularly in affordable housing. We are clear that it is one of the great challenges for this legislature.
However, the sector believes that the indices are going to have the opposite effect. Developers and builders say that it will take supply out of the market and will contribute to raising prices.
Profitability is achieved today by renting a home even within these ranges, because in the end we must not forget that the statistical elaboration of these price ranges is based on market data. The only thing we try to avoid are these speculative movements and to protect potential tenants through greater transparency.
The Bank of Spain warns that the 3% deficit objective will not be achieved if there are no additional measures. Will they apply budget cuts or a tax increase?
We are very clear about our commitment to the progressive reduction of the deficit and debt, because fiscal responsibility is one of the important marks of this Government. It has been this way in recent years and it will also be this way in the future. We see the repeated fulfillment of our objectives, in fact we are over-fulfilling, reaching 3.7% in 2023 and aiming towards that very important figure of 3% in 2024. I say so important because at the level of fiscal rules in Europe it is the limit between having increased surveillance or no surveillance at all. And for us it is key. I was asked to what extent additional measures are necessary or not. The extended budget contains the necessary measures and the evolution of both expenditure and income forecasts to be able to meet it.
The Bank of Spain also points out the lack of investment by companies as one of the main problems. Why do you think companies are not investing? Lack of confidence, uncertainty about the future?
It is true that when we look at the 2023 data, one of the surprises is the behavior of investment, where we expected greater growth. In the breakdown of the investment components we see that this more contained evolution is focused above all on investment in construction. It is not a generalized element of all sectors, but of a sector that is still partly suffering from the scars of emerging from the previous crisis. And this is closely related to the previous question of where we are going to propose measures, precisely to help and promote the construction sector as well, because it will lead us to partially cover that gap in new homes that are necessary. Therefore, I believe that this also helps to answer what possible factors may be behind it. It is not at all an element of trust or uncertainty. On the contrary, there is confidence in the Spanish economy.
There are complaints that the deployment of recovery plan funds is not reaching the ground.
This is one of the myths that we strive to disprove with data. This week we have published on the Recovery Plan website a transparency and analysis tool related to the entire execution of the recovery plan funds that we have called ELISA, where we are providing all the details on the execution of the funds. Some data? Let’s put the execution into place. From the General Administration of the State, more than 61,500 million euros of the 70,000 million allocated for the first phase of the plan have been summoned, that is, 87% of the funds have been summoned. Furthermore, this is a program until 2026. Three years have passed, and we have already executed more than 50% of the funds, more than 34.3 billion euros. That is, we are halfway through the game and half of the funds from the first phase have been executed. And then, when we look in detail, we see that 40% of these funds have been awarded to microenterprises and SMEs. I believe that these data are responsible for denying these claims.
This year we are going to have to survive without budgets, what specific problems does this pose for the economy?
The approval of budgets is a very important signaling element. The major economic policy priorities are framed there through these major budget lines. In practice, and taking into account how expansive the budgets for the year 2023 were, the extension for the year 2024 is not expected to pose any impediment to carrying out the necessary investments, although a little budgetary engineering will have to be done to go reassigning games. But it does not entail greater difficulty in that sense.
You have mentioned that you have not yet been asked any questions about the economy in parliament, a “deafening silence,” you said. To what do you attribute this silence?
We should ask the opposition what the reason is. Of course, I believe that we are in a very good economic moment and the data corroborate it: labor market, tourism, consumer confidence, foreign sector. I would be happy to discuss it in the control sessions and in any type of area. And I am looking forward to the economy being part of the public discussion, because, among other things, I believe that it is largely what citizens expect of us. I don’t know why they are not interested in the discussion of economic matters, but of course the data is very significant and very clarifying, and they deny those more catastrophic analyzes or predictions week after week, month after month.
The Government’s relations with large companies have oscillated between a certain tension and open confrontation. Doesn’t this permanent tension harm the economy?
If I look from my personal experience, the relationship with large companies and also through associations, with SMEs themselves, which is a large part of our business fabric, is good. I have had nothing but fruitful meetings and a good reception since I arrived.
However, we have heard the CEO of Repsol, Josu Jon Imaz, talk about how if the extraordinary tax on energy companies continued, they would transfer or divert new investments to other markets.
It is very difficult for any company to say that it is happy with the establishment of a tax. But when we see the impact that the exceptional levies that were put in place to respond to the shock of the Ukraine war have had, it has been a very positive impact. They have allowed for a fairer contribution from these two sectors to the social shield without affecting solvency and results, which have been record-breaking in terms of profits in both sectors. The establishment of these exceptional levies has been a measure that is rarely discussed today; Another thing is the forward discussion. What will happen beyond 2024? Once we are keeping in mind the possible permanence of these two figures, some additional element comes into play, it will have to go through negotiation in Congress and when we think about its permanence within the tax structure, other objectives will have to be taken into account. of economic policy, such as the need for investments in green matters.
The State will take up to 10% of Telefónica’s capital. Isn’t this interventionism?
We have a very useful instrument to protect the strategic interests of our companies and our economy in general, which is our regulations for analyzing foreign investments. Because we are a country open to foreign investment, but we are not naive when it comes to evaluating the impact of the arrival of foreign capital. Let’s look at France, Germany, Italy, whose governments are present in their large telecommunications companies. I think that is the conceptual framework in which we have to move.
Will they join the board of directors of Telefónica?
We will exercise our rights, of course, depending on the percentage of the capital that is in the hands of SEPI.
Do you know in what period that entry would occur?
We are cautious about any announcement.
Does the Government have a position taken on the Hungarian group’s takeover of Talgo?
The Foreign Investment Board will analyze the request based on our reinforced regulations, which seek to maintain a balance between attracting foreign investment and protecting our strategic sectors.
What do you think of the president of the Generalitat’s proposal for a unique financing system for Catalonia?
The discussion of the reform of the financing system is one of the most difficult in political terms. It has to deal with some important vectors. First, the sufficiency of the resources available to the autonomous communities to be able to face expenses as important as education or health. Then there is the element of sustainability of public finances. We were talking a moment ago about the need to reduce our deficit, to comply with fiscal rules. Well, this is a set. There is the State and there are the autonomous communities. Therefore, and this brings me to the third point, it must be considered as a whole. It is not simply a negotiation between the State and an autonomous community, because the entire regional financing is at stake and there are frameworks in which this negotiation occurs, such as the Fiscal and Financial Policy Council, where all the communities are present. .
Next June the mandate of the current governor of the Bank of Spain, Pablo Hernández de Cos, ends. Have you already chosen a replacement?
It is still early, because there are still three months left until the current governor’s term ends. We are evaluating the different candidates. So everything continues its course so that in June we have a successor with professional capacity and proven experience, as the current governor has.
Are you going to reach an agreement with the main opposition party?
The figure of the governor is not a figure of consensus. He is a figure chosen by the President of the Government.
