Starting from the idea that we have to worry and take care mainly of those things in which we can influence -the rest, we consider that they are environment and that they are given to us-, this would be, in my opinion, the situation that the Spanish economy is going through . Undoubtedly, the assumption of 'rest of things constant' with which I will draw the following derivative is a strong assumption, however, to the extent that Spain cannot influence significantly (in geophysics, climate change, war and international politics), the most we can do is be realistic, open and flexible in adjusting.
1-Labor market: better than forecast. About to sign a social agreement when, given the inflation experienced, the deterioration of the purchasing power of workers and the rise in business surpluses would point to a general strike.
2-Foreign market: tourism, to the rescue, once again, as a result of the desire for travel of people from here and abroad who are emptying the savings bank for the monkey of spending and compensating for how they lived, badly, during the pandemic. A kind of restorative carpe diem. This boost from demand does not severely deteriorate the trade balance on the import side, given the lower specific drag on tourism demand.
3-Productivity: bad in the registered figures, coherent with the economic model that we have, and to which we are getting used to. But this poor situation is not sufficiently reflected, for the moment, in investor discouragement, since what does not focus on some future productive sectors does so on real assets; a part of the patrimony that is not only of this generation and that implies sacrificing the balance sheet for the income statement.
4-Prices: stagnation of increases that follow erratic patterns and are not always justified either by the evolution of energy costs or by the increase in logistics costs. Fishermen's earnings. In any case, workers' incomes are holding up due to increased employment, the support of the informal economy and other anomalies.
5-Financial profitability of entities and derived from other assets: the fact that interest rates have risen allows banks and many entities to return to profits. And outside of this sector, what happens in the Ibex is paid for by businesses abroad.
6-Public sector: installed in a type of total free, the treasury provided by European funds, directly or substituting current spending, allows public spending to be fed without too much difficulty. The need for a tax increase –or spending control– remains postponed for the moment under the idea that inflation makes it possible to make cash, and that the environment justifies the public deficit.
7-Social resilience: all these previous factors have quite diverse and heterogeneous direct and collateral effects by population groups, beyond the averages mentioned. Nothing, however, indicates sufficient solidarity between the workers who live from hand to hand and those who do not get ahead, so that electoral support for the most anti-system parties does not seem to jeopardize political stability and social cohesion.
In this sense, the current president of the central government is a lucky person. He already demonstrated it in the past by taking over the reins of his party. Europe has covered his shoulders by ignoring the necessary future conversions, which will surely be located fundamentally beyond his mandate. Even more: part of the business community and the status quo can begin to appreciate that, outside of the government of his party, the alternative is more than likely that he will not find such acquiescent unions; especially when you have to start cutting. Thus, new support can come to the socialists from the wealthy classes who see them as a lesser evil to preserve.
Having recognized that, it is fair to say that, for the rest of the constant things, the future does not look good.
First, because we will have lost – as it seems at this point – the golden bullet that the European funds for economic transformation represent, since the structural changes, truly basal, cannot be guessed at this point with sufficient magnitude.
Second, the low cost model, which corresponds to low productivity, at some point will not be able to maintain real welfare levels or surpluses like the current ones.
Here, in third place, we can add our banking sector, which, as we are seeing in other parts of the world, moves with anticipated pessimism.
Fourthly, we know that, in the long term, you can't spend what you don't earn; to consume, it has to be produced; throwing away savings has an end point.
Fifth, neither can public benefits be maintained at minimum levels when the general collection of the economy –not the tax burden of those who already pay– is below these minimum levels.
Sixthly, the type of external demand that we have, generated by the type of tourism that invades us, will foreseeably be somewhat elastic in prices when the incorporation of environmental costs due to the movement of travelers redirects the current madness.
Seventh, there cannot continue to be negative real interest, as an invitation to borrow. The ECB has to guarantee that, with the rate, inflation is controlled. Perhaps it will moderate the rate of growth, but the negative rates would have to pass away.
To confront this future, when they come badly given –if they come–, Spanish democracy does not have politicians, parties and institutions that work for consensus. They are all very patriotic, but the interests of the parties go before the homeland; and the mangers of the acolytes even go above ideologies. And it is not clear that, with a setback –not from the marginal drift of the model, but from new fundamental changes in the environment–, Spain will have the necessary politicians to understand the reality of a new situation, more hostile than the current one.
