We may not want the instruments of torture, but if the Spanish government doesn’t do something to change course and restore growth to the economy, they will be applied. This post is just to draw the attention of anyone who might be interested to my new blog on the Spanish newspaper ExpansiÃ³n (in Spanish). The latest post is about why it would be better for Spain’s political parties to get together and take the decisions themselves, rather than wait for the European Monetary Fund to wheel out Herr SchÃ¤uble’s “Instruments of Torture”.
I also deal with the arguments the Spanish government presents about growth, and foreshadow today’s ruling by the EU Commission that the forecasts for 2011 and 2012 are way too optimistic.
According to the Commission, the Spanish government forecast that it will be able to slash its budget deficit to 3 per cent of GDP in 2013 from 11.4 per cent last year is based on excessively optimistic growth forecasts for growth of 1.8 per cent next year, 2.9 per cent in 2012 and 3.1 per cent in 2013.
The Commission also pointed to the slow pace of public sector bank restructuring in Spain. It said Spain should take action to improve the long-term sustainability of its public finances, notably by means of a pensions system reform (a point I have addressed separately in this post).
The Stability Programme update of Spain reflects that the current crisis is severely affecting its public finances, with an estimated deficit of 11.4% of GDP for 2009 and a rapidly-rising government debt ratio. The Spanish update aims at sizeable continued fiscal consolidation from 2010 on, with a view to gradually reducing the government deficit to 3% of GDP by 2013 in line with the Council recommendation of 2 December 2009. However, the favourable macroeconomic assumptions after 2010 may imply a lower contribution of economic growth to fiscal consolidation than envisaged and the adjustment path after 2010 would still need to be backed up with measures. Public debt, which stood at below 40% of GDP in 2008, is expected to grow to 55% of GDP in 2009 and swell further to 74% of GDP by 2013. Based on this assessment, the invitations to Spain refer to the specification of the budgetary strategy to correct the excessive deficit and reduce debt, improvements to long-term sustainability and the old-age pension scheme, the fiscal framework and the quality of public finances.
Â¿Pacto Nacional o herramientas de tortura?
Una de las cosas mÃ¡s curiosas que he observado Ãºltimamente mirando la televisiÃ³n, es que mientras ha habido muchos comentarios relacionados a propÃ³sito de poner en marcha un Fondo Monetario Europeo, parece que nadie ha sentido la necesidad de explicar cuÃ¡les serÃ¡n los primeros clientes de esta entidad, ni mucho menos se ha atrevido a nombrar el paÃs que tiene muchos nÃºmeros de encabezar la lista de invitados a la fiesta: el Reino de EspaÃ±a.
Semejante lapsos ya lo voy a corregir yo, en este espacio. Es evidente que el nombre de Grecia estÃ¡ en la mente de todos, pero el de EspaÃ±a no queda demasiado atrÃ¡s, ni tiene razones de sentir ningÃºn tipo de envidia por el tratamiento especial que Grecia estÃ¡ recibiendo en estos momentos.