The Governor of the Bank of Spain, Pablo Hernandez de Cos, has openly questioned the draft Government Budgets for 2021 for its lack of realism and for including measures that it considers erroneous, such as the generalized increase in salary for public employees in the midst of the crisis.
The governor, who is himself a civil servant, has positioned himself in his appearance in the Congress of Deputies against the “generalized growth” of 0.9% in the remuneration of public workers in “a situation of significant job destruction and a marked deterioration of public accounts “. He has supported his criticism that this rise not only protects their purchasing power, but also makes them earn more, which he has presented as wrong in a stage of suffering in the private sector and serious risks of deviation upward from the dà © ficit and public debt.
“That said, in my opinion, it would be more convenient if, instead of adopting generalized wage increases for public workers,
assess the possibility of implementing, according to objective criteria, more focused increases within this group, for example, in health personnel“, has underlined.
He has also called into question the recovery forecasts of the economic vice president, Nadia Calvio, for “optimistic” given “the wide range of leading indicators” that already point to a “stagnation” in the recovery of employment and “a loss of momentum” from the hand of the new confinements.
The governor has questioned that the expenses, despite the strong increase in the Budgets, are undervalued as they do not reflect the needs to purchase sanitary material and the extension of the ERTE. And, at the same time, he sees income overvalued, particularly with the 27,000 million euros of European funds in 2021. The governor considers it risky to bet, as the Government does, that they will reinforce the recovery by the “historical and empirical evidence” difficulties in executing the funds and ensuring that they serve to multiply the economic growth of the country.
Although he has insisted on the need to adjust public accounts in the medium term, once the pandemic is over, has criticized the introduction of tax increases in 2021, because they can be counterproductive for the necessary economic recovery. “It would have been preferable”, he said, to delay some tax increases, because “a rise in the generalized fiscal pressure” is not convenient now.
He took the opportunity to recall that the revaluation of pensions with the CPI agreed in the Toledo Pact make the system more expensive in a structural way and that this requires taking adjustment measures to compensate for the decision.
The socialist spokesman, Pedro Casares placeholder image, has asked him to underline the need for budgets for 2021, but Hernández de Cos has put more emphasis on what he sees as essential is “a political pact on the principle of the need for fiscal consolidation to medium term”. He has insisted that adjustment measures will be inevitable throughout the decade and considers it necessary for the parties that can participate in government these years to agree on the need for an adjustment path.
The PP spokesperson, Elvira RodrÃguez, has emphasized precisely that this path must be set in motion, because, otherwise, it sees the risk of an “explosion” in public accounts after the pandemic. The spokesperson for Ciudadanos, MarÃa Muñoz, has agreed with the governor’s criticism. “They are budgets out of date in forecasts, too optimistic and lacking a plan for the management of European funds.” “They are not what we would have prepared in Ciudadanos,” Muà ± oz said, leaving his party’s support in the air.
The Catalan nationalist Ferran Bel, has agreed with the governor that it is not the time to rise for public employees. “Being prudent is almost a necessity. This is not the time for public employees to regain purchasing power,” stressed Hernández de Cos.
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