The remission of part of the regional public debt – agreed between ERC and the PSOE in the investiture agreements – did not quite convince the regulators and supervisors. The vice-president of the European Central Bank (ECB), Luis de Guindos, said yesterday in a personal capacity that, instead of forgiving the debt, he would have preferred to make it perpetual and added that, "in the markets, this forgiveness of debt doesn't sound good". He gave his opinion as part of the opening conference of the XXVIII Economic Meeting in S'Agaró.
In another round table, the governor of the Bank of Spain, Pablo Hernández de Cos, repeated the position defended a few days ago that it is better to agree on a regional financing model than debt forgiveness, because otherwise, "any the solution that is designed will be temporary". De Cos added that the high indebtedness of the communities due to the lack of resources "ends up being pointed out as an indicator of underfunding".
During the previous debate with Guindos, the director of Fedea, Ángel de la Fuente, took part, who also criticized the forgiveness of the debt because he believed that "a remission without additional conditions is not a good idea". The director of the think tank added that "the problem with the FLA is that it has not been closed when it needed to be". In this same sense, Guindos defended that the FLA (Autonomous Liquidity Fund) had a role when it was created to help communities in a complicated time.
The economic day - organized by the Olof Palme International Foundation - revolved around "Recovery, growth and Spanish economic challenges". Guindos warned that one of the risks that could affect the economy in the short term is the increase in wages as a result of the galloping increase in inflation. In his opinion, an increase in salaries - which is on average 5% in Europe - plus low productivity can cause "labour costs to rise", which would have a negative impact on the economy. Among the sectors that could be behind this risk of so-called second-round inflation, he mentioned services. Guindos' warning took place just as the debate has begun in Spain on what the increase in the SMI (minimum interprofessional salary) should be for next year.
Guindos was also in favor of a "fiscal policy that guarantees sustainability, but with a reasonable and prudent adjustment plan". At the conference, the vice-president of the ECB warned that each European government must guarantee "the sustainability" of its finances so as not to contradict monetary policy. He said this after recalling that the battle against inflation has not been won, despite the fact that the measures put in place have reduced the level from 10% a year ago to below 3%. "We still can't sing victory", he clarified.
Guindos recalled that the effects of monetary policy on the economy "are felt with a delay of between 12 and 18 months". According to his opinion, the "tightening of economic conditions" by the ECB has been transferred. Pablo Hernández de Cos answered the question of why the Spanish bank was taking so long to remunerate customers and opined that this is due to an excess of liquidity. Both the governor and the president of the European Banking Authority (EBA), José Manuel Campa, who also participated in the conference, agreed that they would have preferred that the money earmarked for the payment of the extraordinary tax on banks be allocated to improve the solvency of entities in the face of possible problems.
In relation to the sector, Guindos warned of the risks regarding the "non-banks" which are the pension funds or also the insurance companies, because they have a very low assessment in the sector.
The president of the Olof Palme Foundation, Anna Balletbó, and the president of the Spanish Chamber of Commerce, José Luis Bonet, who criticized the fiscal pressure in Spain, were also present on the opening day. "If there is uncompensated inflation, it affects people's income," he said.
The day ended with two debate tables. One about artificial intelligence and the potential of this new technology. The last debate was about access to housing. Among others, Pompeu Fabra University professor José García Montalvo participated.
The session was closed by the leader of the PSC, Salvador Illa, who pointed out that it is more important to face the drought problem right now than that of a new autonomous financing model.
