The economic crisis of 2023 is being the chronicle of a death foretold. Never before has a cycle change been announced so far in advance. Time and time again the experts proclaim that the wolf is coming. And even the International Monetary Fund has warned that "the worst is yet to come." This is one of the big differences with the Great Recession of 2008 and with the Great Running of the Bulls of 2020, which came suddenly, without warning.
But despite the announcements, the truth is that the crisis has not yet arrived. As the president of a large Spanish bank said in private, the landing is being so soft that it has us all baffled. In the financial sector, talk is beginning of a light crisis and it is assured that it will be the mildest in the last 40 years. This has been confirmed by the vice president of the European Central Bank, Luis de Guindos, warning that it will be a short crisis, very different from the last two. Vice President Nadia Calviño goes further and affirms that the economy will not enter a recession even if it slows down.
The truth is that no one knows what will happen. Nine months ago, the general conviction was that we were facing a short war; that the invasion of the Ukraine by Russia would be a real military parade... but now we have gone nine months without the slightest indication that this is going to end before the end of winter.
Everything will depend on how the price of energy evolves. If prices rebound again and continue to pull inflation, forcing central banks to lower interest rates, sooner or later everyone (including Spain) will enter a long, deep recession.
At least that is how the prestigious English weekly The Economist perceives it: "Europe is facing a lasting energy and geopolitical crisis." As he argues, one should not be fooled by the avalanche of good news in recent weeks. It is true that energy prices have dropped compared to summer and that the good weather has allowed gas tanks to overflow. However, they will be emptied again and will have to be refilled, but this time without the Russian gas.
But, as The Economist added, a 10% rise in gas prices could kill 100,000 people in Europe. A very harsh warning that is not being taken into account because we do not want to believe it. We prefer to think that it will be a short and smooth crisis.
Beyond the war in Ukraine, Europe is facing global energy restructuring and US economic populism, which in its struggle for hegemony with China is copying its protectionist policy.
It should not be forgotten that Joe Biden's Inflation Reduction Act provides for 400,000 million in aid to energy, industry and transportation, while requiring location in its territory. As an example, a button: Iberdrola invests in the United States twice as much as in the EU.
The combination of expensive energy with North American and Chinese corporate subsidies becomes a real risk for Europe to suffer a new wave of deindustrialization.
For these reasons, perhaps we should start to believe that now the wolf really is coming. A brutal contraction of the economy would not only seriously endanger the prosperity of the European continent but would also cause a weakening of the euro project, and consequently the bankruptcy of the values that it has defended against the US, China and other blocs. self-sufficient In this sense, it is true that the wolf is coming.
