The Bank of Spain insists on an income pact to avoid an inflationary escalation

The Governor of the Bank of Spain has declined to pronounce himself today in Barcelona on the consequences of implementing a tax on banks, although he has recalled that "it is not easy to establish a tax that does not end up affecting" the economy in one way or another other.

Thomas Osborne
Thomas Osborne
26 July 2022 Tuesday 10:58
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The Bank of Spain insists on an income pact to avoid an inflationary escalation

The Governor of the Bank of Spain has declined to pronounce himself today in Barcelona on the consequences of implementing a tax on banks, although he has recalled that "it is not easy to establish a tax that does not end up affecting" the economy in one way or another other. These effects range from negative effects to the stability or contraction of credit or prices.

Hernández de Cos has insisted today on the need to carry out an income pact in Spain to avoid that "the context of the current inflationary episode" ends up generating a price escalation. He has said it in the conference given this afternoon within the framework of the La Vanguardia Forums, held in the La Pedrera building in Barcelona.

Cos has detailed that this pact consists of "an agreement between companies and workers, within the framework of social dialogue, to share the inevitable decrease in national income." On behalf of the State, the governor has pointed out that the fiscal impulse policy with aid should focus on "supporting the lowest-income households, which are the ones that suffer the most from the impact of inflation, and the companies that are most vulnerable to this new disturbance. In his opinion, these measures must have "a temporary nature, so as not to generate an additional increase in the structural public deficit."

As Hernández de Cos has already said on other occasions, he has asked that once the effects of the war in Ukraine are overcome, a plan for "a multi-year fiscal consolidation plan" is put in place, which implies adjustments in public spending.

In the final part of his speech he referred to the need for Europe to face the challenges posed by the new international scenario together.

Regarding the decision to raise rates by the ECB (European Central Bank), Hernández de Cos has defended that "it supposes an advance of the exit of negative interest rates, but it does not imply an increase in the terminal level of the path of types".