In 2025, the Spanish economy will once again lead the growth of the European Union (2.4%), with controlled inflation (2%) and with the creation of half a million new jobs, reaching the magic figure of 22 million employed people. . Why, if the economy is doing so well, do Spaniards not notice it in their pockets?
Growth is no longer a reference to measure the impact on the well-being of citizens. The president Biden has just lost the elections, because ordinary Americans suffer from growing inequality and do not perceive the improvement in the economy, due to skyrocketing consumer prices, despite the fact that the economy is growing at rates of 3.5% annually, much more than the European one.
Could the same be happening in Spain? It is difficult to make comparisons, but a recent report from the European Commission points us out as one of the countries with the greatest inequalities, a high percentage of the population on the poverty line, with great difficulties in accessing affordable housing, especially among younger, and with one of the highest unemployment rates in Europe.
And what is worse, the quality of employment did not improve in these boom years either. 60% of Spaniards have a temporary or permanent job, a modality introduced by the second vice president and Minister of Labor, Yolanda Diazto cover up unemployment. Now that the Three Wise Men of the East are on their way, these are the six great challenges that the Spanish economy will have to overcome in the new year.
GDP growth is no longer a reference to measure the well-being of citizens
1) The culprit for the low per capita income of Spaniards is called the productivity index, which has been stagnant for the last decade. We Spaniards are not productive because we work more or fewer hours than other Europeans, but because of the lack of resources of companies to invest in technologies that improve their production processes. Since 1995, with 12% below the European average, we have worsened to 18% below today.
The Minister of Economy, Carlos Bodyannounced the creation of a Productivity Council to reverse this trend, but there is still no news of its results. Among its first tasks is to analyze the opportunities that AI offers to companies and apply the report of the former Italian prime minister, Enrico Lettawhich blames the lack of a single market for the lack of competitiveness of the European economy. At the moment, everything is castles in the air.
2) Labor and unions sealed an agreement at the end of last December to reduce the working day, one of the Government’s goals for this year. Its application will depend on whether the law can be approved in the Congress of Deputies, because there is no parliamentary majority to move it forward, since, for the moment, the party of Puigdemont he stands out, just as he did with the extension of the energy tax.
The unions introduced a last-minute modification by which they postpone the hypothetical entry into force until the end of the year to give time to negotiate it with the rest of the political forces and with the employers, who until now have stood up. Business circles criticize the rigidity of the proposal, which provides for its unilateral application in all sectors, when their circumstances are very different, and without taking into account the agreements.
“If they were flexible and allowed the measure to be negotiated by agreement, we would be left without arguments to oppose it,” acknowledge business media, close to the negotiations. Therefore, it should not be ruled out that some type of agreement will be reached.
The average working hours is 38.5 hours a week and less than 37.5 within larger companies, according to Collective Agreement statistics until last November. In fact, the average full-time day is 37.3 hours.
Promoting the reduction of the working day without taking into account the production per hour worked is an error that causes a loss of competitiveness, aggravates the difficulty of incorporating added value into the productive fabric and widens the inequality and poverty gap denounced by the EU.
3) Along with a national pact for productivity, the other urgent measure is to expand the supply of affordable rental housing. The idea of creating a public rental housing stock, which until now has not existed, is a good idea. But that will take time to establish. The creation of a public company for the promotion and construction of housing, promised by the President of the Government, is insufficient to address the housing shortage, which the Bank of Spain estimates at 600,000, because it will absorb assets from other existing public companies such as Sepes. or Sareb, without streamlining the procedures.
The problem is the lack of developable land, because the complex regulatory tangle, in which three levels of administrations intervene: the local, the regional and the State, extends the deadlines from the granting of licenses by twenty years. I am very afraid that the solution will take a long time to bear fruit, despite the fact that the Government will approve new measures in the first council of ministers this year.
As in other large areas, a national housing agreement would be necessary between the main political forces and all the agents in the sector. Something impossible in the existing political polarization.
4) The great concern of the Spanish economy is called growing debt. The enormous debt accumulated by the State after the great crisis of 2008, followed by the measures adopted to combat the pandemic and to counteract the war in Ukraine, now amounts to 1.6 trillion euros, which represents 104.4% of the GDP. A great slab for the new generations. The Fiscal Responsibility Authority (AIReF), furthermore, predicts that from 2028 the debt will begin to skyrocket due to the retirements of employees. boomersif we don’t put remedies first.
Broadly speaking, it can be stated that the Government has not taken advantage of the post-pandemic economic boom and the money from European Next Generation funds to undertake the internal reforms that the economy needs or to address structural deficits. On the contrary, public spending grew 35% in the Sánchez era.
5) The year 2025 follows the trend of the previous one. Parliamentary weakness does not even guarantee that Sánchez will issue the Budgets. The absence of these and the adoption of tax measures by decree generate legal uncertainty and penalize business investments. Another pending task is the approval of a new path of public deficit, which opens the door to the general budgets of the State and provides political stability to the Government. Both the deficit path and the Budget seem very difficult, perhaps impossible, objectives for this year, which is just getting underway.
6) The in-depth reform of the Spanish tax system, including regional financing, is the last of the great challenges pending for 2025. At the end of this month a Fiscal and Financial Policy Council will be held in which it will be discussed that the State assume part of the indebtedness of the autonomies of the common regime, as announced with Catalonia. Meanwhile, the new unique financing system that Sanchez has promised to extend the autonomy of the PP, in exchange for increasing resources for its financing, it also seems an impossible mission due to the lack of sufficient funds. And the current model expired ten years ago.
Of the six challenges for the economy for 2025, there is no sign that any of them will be resolved this year
As can be seen, there is no sign that any of these six great challenges will be resolved in 2025. Meanwhile, the two great drivers of growth will be the same as last year: consumption, supported by the gain in purchasing power of salaries and pensions. , and the boom of exports and tourism, supported by the increase in immigration and job creation. Investment will also recover, boosted by Next Generation funds and by lower interest rates, which will reduce financing costs.
Finally, this year you have to be very vigilant on the outside flank. The scare may come from the uncertainties of the trade war, which donald trump He threatened to start with China and Europe after his inauguration on January 20, or with Europe itself. The elections in Germany, the European locomotive, will be key to the performance of the Old Continent in 2025, as well as if the blockade of French economic policy is consummated, before the third Executive that Macron premieres in less than a year. May the Kings be benign and not bring them coal!
#Letter #Kings #great #challenges #Spanish #economy
