The bank tax arouses misgivings in the Bank of Spain due to doubts about its impact on the economy and the stability of the sector. In a new session of the Vanguard Forums, Governor Pablo Hernández de Cos declined to comment on the consequences of the implementation of a tax on banking, although he recalled that "it is not easy to establish a tax that does not end up affecting" the economy of one way or another. These effects range from damage to stability to a credit squeeze or an increase in loan prices.
"What is requested from the perspective of a central bank is that a potential tax does not affect the volume of credit, interest rates, or negatively affect financial stability," declared the governor.
Hernández de Cos recalled that the banking sector, although it is in a better situation than it was in 2007, has important challenges to face, such as the foreseeable increase in non-performing loans.
Regarding the recent rise in rates by the European Central Bank (ECB), Hernández de Cos 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 rate path" . In the post-conference colloquium, the Governor indicated that in his opinion an optimum neutral level of interest rates could be around 1.5%.
In relation to the economic growth forecasts, the governor advanced that a revision of the GDP estimate would probably be carried out, which would be "especially" intense in the projection for the year 2023. The governor assured that in his latest forecasts, those of June, the Bank of Spain contemplated that the Spanish economy would grow 4.1% this year and 2.8% in 2023.
Hernández de Cos declared that the Spanish economy will present a "relatively robust" growth in the second quarter of this year, but added that the dynamics of gradual slowdown in growth leads one to think that his estimate for the economy must be "pronounced" revised. Spain in 2023. The Government already lowered its forecast yesterday (see attached information).
Hernández de Cos insisted at the beginning of his speech 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. Hernández de Cos explained 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." Asked if the containment of income should also affect pensioners, the head of the Bank of Spain replied that it is an exceptional measure that affects the Toledo Pact.
Regarding the policy followed by the State, the governor pointed out that the fiscal stimulus policy with aid should focus on "support for lower-income households, which are the ones that suffer the most from the impact of inflation, and for companies more 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 he has said on other occasions, Hernández de Cos asked that once the effects of the war in Ukraine are overcome, "a multi-year fiscal consolidation plan" be launched, which implies adjustments in public spending.
In the final part of his speech he referred to the need for Europe to face together the challenges posed by the new international scenario. Regarding Europe, he was critical of the slow pace at which the Next Generation recovery funds are being applied in Spain: "What is evident is that there has been a delay in execution compared to what was planned."
The governor's intervention brought together a hundred people in an event held in the Pedrera building in Barcelona. Among others, Carlos Godó, CEO of Grupo Godó, and the president of Banco Sabadell, Josep Oliu, attended. Also the presidents of the employers' associations Foment (Josep Sánchez Llibre) and Pimec (Antoni Cañete) and the president of the Cercle d'Economia, Jaume Guardiola.
Despite his warnings about the situation, in a relaxed tone, the governor pointed out that, although there are important challenges to overcome, it is possible to face a few months of vacation without too many scares in the economy.
