The governor of the Bank of Spain, Pablo Hernández de Cos, highlighted this Friday from Binéfar (Huesca) that it is “fundamental” to rigorously implement the new fiscal rules to gain credibility, “especially in the first moments starting in spring.”
At the XI Somos Litera Rural Forum, the governor spoke in depth about the state of the Spanish economy with the lawyer and former politician Josep Antoni Duran i Lleida. During his speech, he highlighted some of the positive elements of the reform of fiscal rules approved by the European Union last December, among which he cited its emphasis on the sustainability of public debt, the control of public spending or that take into account the “close” relationship between economic growth and fiscal sustainability. “But we have not made progress in simplification, the tax rules are still very complex,” he added.
Furthermore, the governor pointed to a “very important absence”, such as the lack of a common European fiscal policy, which should be combined with the end of the banking union and the development of a common capital market. “If not, it will be very difficult for Europe not to end up being left behind,” he added.
During his speech, Hernández de Cos also highlighted the good performance of the Spanish economy in recent quarters in terms of growth, something that he attributed to the national specialization in the services sector – with a “buoyant” tourism sector -, the lower energy dependence of Russia or public consumption “more dynamic than we expected”, among other factors.
Even so, he pointed out the existence of some signs of weakness, such as the low dynamism of private investment or the low productivity of the economy. For this reason, he opted for a process of fiscal consolidation, which allows the reduction of the structural public deficit and the gradual reduction of public debt, and the promotion of structural policies that allow greater dynamism in productivity.
Regarding inflation and the reduction of interest rates – “possibly in June,” he added -, the governor assured that it will depend on three variables: salary dynamics, “which will slow down but will remain robust”, productivity and salary margins. , which “can serve as a cushion” in a context of weak demand. “All this makes us think that (inflation) continues to converge towards 2%,” he added.
The governor also congratulated himself on some “positive” elements of the labor market, such as “robust” employment growth or the reduction of temporary employment, which has resulted in greater stability. Even so, he pointed to certain “worrying signs” such as the fact that the Spanish economy has an unemployment rate double that of Europe or the lack of qualified labor, a sign of a “poor functioning” of active and passive job creation policies. employment.
Hernández de Cos also stressed that studies on the economic impact of climate change are “real and very significant.” In his opinion, “early and coordinated” action can help alleviate its physical costs, something that requires the combination of regulatory impositions with incentives for innovation and compensation policies for those most affected.
Meanwhile, at the doors of the forum, a hundred farmers have gathered to demand improvements in the countryside. The event, which is held at the Ciudad de Binéfar hotel, also has the participation of the Minister of Industry and Tourism, Jordi Hereu, and the president of Aragón, Jorge Azcón.
