Is the objective of recovering the size of the economy to the level of 2019, just before the pandemic, enough? European economic policy – and the Spanish one – have been designed according to that purpose. So tasks such as the consolidation of public finances, the approach to the orthodox deficit and debt levels (3% of GDP and 60% of GDP), have been temporarily interrupted, postponed until the return of the economy “to the precovid level” .
Some voices have raised their criticism of this objective, as insufficient. An early warning was launched by Professor Emeritus of the Treasury Antoni Castells, on May 10, at a seminar of the European ideas laboratory. “The most appropriate reference should be when the level that we would have reached recovers had the pre-pandemic growth trend continued,” he warned. Because otherwise, we consecrate “permanent damage” inflicted on the economy, at least during the triennium 2020-21-22 “And who pays for it?”, He added.
In other words, to pursue only the strict recovery of GDP in 2019 is to write off the next three years in terms of growth: of collective wealth and its consequent ability to maneuver to direct new income to reduce debt and / or increase welfare.
The Italian leader, Mario Draghi, gave a political letter to the matter on June 18, before the Cercle d’Economia: “Our objective must be to return economic activity at least to the trajectory it exhibited before the pandemic, even to overcome it” , he applied. A level “to which we will not reach without additional stimuli”.
To what end? “Compensate for the increase in public debt that we undertook during the health crisis” and project “faster job growth.” If in 2020 the supply was acted upon (protecting companies and jobs at risk) “now we must ensure that demand increases to those supply levels.”
And the governor of the Bank of Spain, Pablo Hernández de Cos, picked up the torch at the annual seminar for economic journalists, on the 25th, in Santander. Limiting itself to returning to 2019, which is forecast for the end of 2022, except for unforeseen health issues – later than our best neighbors – “is not a very ambitious goal”; It is necessary to propose the level “at which we would be if the crisis had not existed”, since this “gap” could last too long.
It is about the recovery being “solid” and “fully settled”. For what it is urgent to maintain (or increase), the fiscal and monetary stimuli, and to undertake the pending reforms. And this will not be achieved in Spain before 2024, calculates the Bank of Spain.
In the colloquial words of Castells, this indicates that “the instruction to spend, spend, spend, has not been exhausted”, as the US reveals. The professor figures for Spain that gap between the precovid trend growth for the 2020-2022 triennium, following the trajectory of the 2017-2019 triennium and the expected one (according to the IMF, OECD, World Bank and Eurostat average), in a work to be published. At the end of 2022, it will lack 7.4 points of GDP to reach the level that it would have achieved had it followed the pattern of progress of the triennium prior to 2020. It would therefore be seven long points less rich with respect to itself than accumulated without the crisis.
And as or more worrisome as that (despite the coming quarters, which will be brilliant), it will have lost ground with respect to its partners and competitors, who as a whole would fare better, because although now Spain’s rebound is greater, its fall was still worse. The eurozone would beat him at the end of 2022 by 3 points; Italy, at 3.5; Germany, at 5, and the US at 6.5. So the country would not only lose size relative to itself. Also relative power with respect to the others.