Europe learned a lesson from the mistakes of the previous crisis and its management of the impact of the pandemic has been similar to that of the United States. The ECB nipped the financial instability in the bud and has made it possible to finance the largest increase in public debt in a year in the euro area. And an unprecedented fiscal plan financed with European public debt was approved, to alleviate the pressure on the public debts of the countries, especially the most indebted ones.
The conditionality to receive these European funds is to make reforms and not a fiscal adjustment, as happened in 2010. The Government of Spain has presented its plan, which the European Commission has valued positively as it is very well oriented to the required digitization and sustainability objectives. . A reform that the Government has initiated and that is having little impact on the media is to pass several laws to facilitate the increase in business size. This would mitigate a pathology in the Spanish economy, which is low productivity growth, the main cause of our precarious wages and the social disaffection of Spaniards.
Spanish companies with more than 50 workers that compete in international markets have levels of productivity and efficiency similar to their counterparts in other countries. But Spain has a very high number of micro-SMEs with less than 10 workers who have very low productivity and explain most of the precarious wages in Spain.
There were two main causes that explained the small size of Spanish companies: poor business quality and a financial system that channels most of the savings to the brick and that invests very little money in capital and debt in innovative companies with the greatest growth potential . Since the 2008 crisis, a new generation of innovative entrepreneurs with a global vision and ambition to grow and create jobs has emerged. Now the Government is taking measures that will facilitate their growth by developing the capital market so that they do not have to go outside of Spain to finance themselves and end up creating jobs in another country. Tax incentives, a visa for digital nomads, a very ambitious plan by the ICO to invest capital in these companies, and so on.
The ICO is the main investor in innovative capital, which indicates that we have a problem. Our private institutional investors who channel Spanish savings invest a tenth of the US share in these companies and a third of our European partners.
The last measure has been to lower the investment limit to 10,000 euros, from the previous 100,000. This democratizes investment and offers savers an alternative to investing in public debt at negative rates with inflation at 4%. Without being aware they will be contributing to increase GDP, employment and wages, which will allow generating more public income to pay back mortgages from the last two crises and the State will have more money to finance health, education and pensions.