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Spain’s delay in recovery: the cause of the eurozone’s economic crisis

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As the EU’s largest economy returns to the coronavirus crisis, one is far behind: Spain.

The world, and bad hit in Europe due to the financial crisis that occurred last year, is progressing slightly further than other members of the eurozone in restoring what happened in the past.

“Right now there is reason to be concerned,” said Alicia Coronil, an economist at Singular Bank, a commercial bank in Madrid. “Compared with the eurozone average, the economy has slowed sharply over the past year, rising inflation [at a three decade peak of 5.5 per cent] and growth is slow. ”

By the end of the third quarter, household goods in Italy were 1.4 percent lower by the end of 2019. Germany reduced the gap by 1.1% and France by only 0.1%. But in Spain there is a big difference. Its GDP remains 6.6 percent below the pandemic. The economy has just returned in 2016.

Pablo Casado, leader of the People’s Party to the right of the country, has criticized the left-wing government for “the worst recovery in the developed world”.

After 18 months of international economic recovery, the Spanish crisis represents a national crisis. Spain has some European ones the lowest risk of disease, but this does not seem to provide economic encouragement compared to its neighbors.

“Recovery has been slow compared with other countries compared with expectations,” said Raymond Torres, a financial analyst at a Spanish savings bank.

He mentions three things – malnutrition; rising electricity prices that have contributed significantly to inflation; and delays in using the EU € 800bn fund. Spain is one of the largest beneficiaries of the fund, with €140bn about aid and loans over the next six years.

The big question is how such delays could undermine the country’s long-term prospects.

Torres said Spanish families were reluctant to spend the € 55bn they allegedly made on the epidemic. He attributed those fears to the instability of workers – about a quarter of the work and temporary – and the consequences of electricity prices. Even before the recent history, the Spaniards spent more money than anywhere else in Europe on electricity – on average 8 percent of all lost money in 2019.

Antoni Cañete, chief executive of Pimec, a small and medium-sized business organization in Catalonia, also highlights the impact of market growth. message problem In areas such as the main car companies in Spain, as well as the challenges of the tourist season, it started well, though he urged in late summer.

Torres adds that the delay in EU funding may have not only curtailed not only government but also business sector spending, which, such as domestic spending, dropped by a third.

Many union leaders want to move forward with the demonstration activities, but are secretly complaining about the gradual release of funds – which is probably due to negotiations between Madrid and Brussels on government support and some highlighting the difficulties in setting more jobs.

According to a recent report by AIReF, Spain’s finance minister, the government received about € 5bn in cash back at the end of August – based on proceeds – but only spent € 104m. Although economists agree that the money is better spent than it used to be, the observer said the delay could delay their growth.

Such developments have affected the prospects for recovery. About a year ago, the government prediction that the economy will grow in 2021 by 9.8 per cent – including the 2.6 per cent increase that comes from inflation.

But Madrid’s prediction for 2021 has dropped to 6.5 percent – and the deal today is that growth will be much lower. The third growth was below expectations and the second number was modified floor from 2.8 percent to only 1.1 percent. AIReF is now waiting growth this year 5.5 percent – making less than half of the 2020 losses.

The government insists that the recovery is strong and not just a result of unfinished GDP figures. The number of people paying for social security – which is widely used in the labor market – reached an average of about 20m last month. For the first time in 46 years, unemployment did not increase in October, traditionally the most difficult month for the global economic climate.

“These statistics are very encouraging,” said Isabel Rodríguez, a spokeswoman for the government this month. “All indications are that the economy is growing.”

Some observers have suggested that for years the Spanish economy was on the verge of collapse and that Europe was in a shambles.

Of course, part of the concern is financial experts like Coronil and Torres. Next year’s major financial operators – private spending, finance, EU funding and tourism – could all accelerate. It’s the price of electricity that can’t go down, and the price hike has already gone up, which can increase the pressure of prices.

It’s a challenge that is shared by the business. “There are a few things that are hindering growth,” said Cañete of Catalan’s small business organization. But worse still, inflation continues to rise, and we may lose our competitiveness. . . This is the biggest problem we have. ”

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