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The governor of the Bank of Spain foresees a decade of “absolutely inevitable” adjustment measures

The Governor of the Bank of Spain, Pablo Hernández de Cos, foresees “a decade” of adjustment measures in Spain to face the structural deficit dragged down and multiplied by the pandemic. During his speech at the Expansión International Economic Forum, Hernández de Cos has identified the sustainability of public accounts as one of the structural damages of the pandemic. “We were already starting from a fragile situation with a very high structural deficit and there will be a delay that will have to be undertaken“, said the governor. He believes that adjustment measures will be necessary with” an increase in income or a reduction in public spending in the next decade. which will have negative effects on growth but which are absolutely unavoidable“.

The governor has intervened in a discussion moderated by the president of Unidad Editorial -editora de Expansion and EL MUNDO, among others- Antonio Fernández-Galiano, and, without making direct allusion to the Budget project presented by the Government, has marked distances with current government policy. In addition to missing that the Executive exposes a path of adjustment in the medium term, he has asked “refocusing economic policy in the coming quarters” considering that the one launched in the pandemic of helping companies through loans guaranteed by the ICO is no longer so useful. “This crisis seems to be very persistent and we are going to leave with a business sector that is clearly more indebted.” Therefore, he believes that “replace borrowing with direct grants, equity participation, or corporate debt relief“. He has also warned against supporting companies that are no longer viable, due to the damage that zombie companies end up doing to the economy.

In the opinion of Hernandez de Cos, the reforms needed after the pandemic are so far-reaching that state pacts are required more than ever.

Aznar and the alliance of moderates

On that point, the former president of the Government, Josà © Maria Aznar, has assured that, “leaving radicalisms aside”, see “space to forge an alliance of moderates and modernizers in Spain under the umbrella of the Constitution and the European Union and not for a legislature, but for several decades. “But he also sees danger of emerging from the current pandemic with” more populism, authoritarian interventionism, dependency and less individual economic freedom. “” The liberal order is threatened “, in his opinion, and has highlighted the value of freedom with this criticism:”Six-month states of alarm and legal curfews are proclaimed, because someone who was passing by says so. ” “Spain has a complicated future, if it separates from the Constitution and the EU,” he declared.

Torres: reforms and investment

The president of BBVA, Carlos Torres, has agreed that it is necessary to build trust to get out of the crisis. “What is coming I would summarize it in reforms and investment (…) The focus should be on attracting investment and that requires generating confidence and reforms that can help investment take risks. “Among the reforms, education, the labor market and the digitization of the Public Administration and has underlined that private public collaboration is “essential” for economic recovery.

Galiano has put on the table of the colloquium that “the pandemic has come to complicate more the problems in which the world was already entangled”. The former minister Josep Piqué has agreed, but remembering that the world has overcome other pandemics and greater evils. The problem he sees is that “to eliminate uncertainty is correct in the diagnosis, but the current patient gives confusing and contradictory signsAt the moment, “the only way to combat this uncertainty is through messages from the political power, which must be clear, defined and based on the maximum possible consensus and thinking in the long term.”

By videoconference he has joined Valerio De Molli President of The European House-Ambrosetti, who has exposed with data how the world is experiencing the worst global socio-economic crisis in 20 years and how Spain is in the world “top ten” in bad health data and even leadership in the economic crash. It has also warned of the lack of confidence that causes the savings rate to skyrocket in Europe. For this reason, the governor of the Bank of Spain has stressed that “the only way for them to consume and invest is a certainty about what will happen in the future”, which in his opinion must be achieved with long-term visions in the ruling class.

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