Inflation and ‘Feijóo effect’: Sánchez faces the most devilish course for his Government

At that time, Moncloa had set the cruising speed to arrive with a brilliant economic situation at the municipal and regional elections of 2023 and, later, at the general elections. Pedro Sánchez trusted his re-election to the recovery promoted by European funds and circumscribed the victory of Isabel Díaz Ayuso to a Madrid phenomenon that in no case did he attribute to a growth of the PP. Opposite was Pablo Casado, whom once stripped of power, the PSOE has come to claim. With him in Genoa, in the socialist ranks they breathed easy because he had an internally questioned leadership that did not finish emerging, leaving the way clear for the growth of the extreme right of Vox.

However, the situation has changed radically economically, but also politically, placing Sánchez at the worst moment of the legislature. In the Government they recognize that the winter is going to be hard. Although they take it for granted that Spain is in a better situation than other countries and that there will be no power cuts for families, they recognize that economic problems and, especially, inflation – the one known on Friday, referring to July, climbed to 10.8%, a maximum since 1984 – it will persist for months given that they already assume that the war in Ukraine is going to last and, with it, the economic consequences. However, Sánchez is confident that the rise in prices will begin to subside from September.

The government has already lowered economic growth prospects for next year several times. The calculations of the first vice president, Nadia Calviño, of an expansion of 7% in 2023 fell in April to 4.3% and in the figures presented together with the spending ceiling they fell to 2.7%. The person in charge of finances in Sánchez’s cabinet recognized that the “environment is very uncertain and turbulent”, but even so, she was confident that “in this context, everything continues to indicate strong growth in the Spanish economy.”

Spain will continue to grow in macroeconomic terms, but the rise in prices, which is the most obvious repercussion on a European scale, is what directly damages the pockets of voters. That is why the Executive is making an effort to make it clear that inflation is a global problem that affects all surrounding countries. “The harmonized CPI of Spain is in line with the European average”, Calviño asserted at the press conference of the last Council of Ministers in July in which he explained that it is separating somewhat more from the euro zone due to the entry into force of the averages in Germany; but he stressed that there are fourteen countries with a higher price rise than Spain, which two days after those words set a record again, standing at 10.8%. The message that Sánchez sends is that the Government will continue “protecting the working middle classes” and recalls that since prices began to rise, 30,000 million euros have been mobilized to try to alleviate the situation.

‘In addition to trusting that inflation will give a respite in the fall, the vice president insisted that there will be “strong growth” in the Spanish economy, “despite all the international uncertainties”, among which she pointed to a ” foreseeable slowdown for the euro zone and for economies such as the German one” avoiding at all times a possible recession that affects Spain.

A conflict that goes on for a long time

As soon as the Russian invasion of Ukraine took place, Sánchez was careful to warn that the war would trigger problems in the rest of the states. “This conflict and the sanctions that derive from it are going to have, without a doubt, an economic impact on our country and on the European Union, especially on the energy markets,” he said in an institutional statement in Moncloa hours after the first attacks in Ukrainian territory. The future of the conflict was still uncertain and now it threatens to become chronic as a war of attrition, although Sánchez is convinced that the sanctions are going to harm Russia and that Putin will not have the same power against Europe from an energy point of view in the following winters since by then it will have achieved greater strategic autonomy.

In the midst of this economic and social panorama – although for now the protests that took place from different sectors in the months of February and March have been appeased with aid and billions from public coffers – Sánchez has had a big problem with the arrival of Alberto Núñez Feijóo. For the first time in the legislature, the PP surpasses the PSOE in all the surveys, including that of the CIS. Although in Ferraz they make an effort to place the polls in a still photo of the moment, which does not include the mobilization of the left because there are no elections in sight and they assure that time will placate the ‘Feijóo effect’, the truth is that the head of the opposition, without having done practically anything, already wins in several relevant demographic data. He is the most valued leader, he inspires more confidence than Sánchez and he is not badly valued among socialist voters.

The transfer of votes from the PSOE to the PP took place in Andalusia less than two months ago and the absolute majority of Juanma Moreno Bonilla set off all the alarms in Moncloa. Sánchez’s movements in recent weeks, with an obvious turn to the left in his speech and the renewal of faces, also putting an end to an internal crisis that had what was his number twoAdriana Lastra, as one of the main protagonists, are looking for a revulsive for the devilish scenario in which the Government finds itself.

In the Executive there is still a certain frustration because the crisis is pressing all countries and measures are being taken to try to alleviate it, but they do not have any electoral gains, according to the different polls. One of the reasons they attribute the attrition is the constant noise in the coalition. The fear that internal conflicts will take their toll has led Sánchez to issue several warnings to United We Can. “What demobilizes the left is that we strive on some occasions more than we should to underline the differences and not the alliances in favor of those conquests,” he replied in one of his last appearances in Congress to the spokesman for the confederal group, Pablo Echenique, who had asked him to govern “bravely.”

The budgets and the municipal, litmus tests

Shortly after, Moncloa avoided giving the second vice president, Yolanda Díaz, a victory when she urged the PSOE to convene a meeting of the monitoring table of the coalition agreement to address the discrepancies, mainly in terms of increased military spending. The coup at the table of the leader of the minority partner within the Government occurred when Sánchez was still savoring the success of the NATO summit in Madrid. The Socialists have for now ignored the demand of Díaz, who for the first time acted as head of United We Can in the coalition.

Sánchez’s attitude on that occasion collides with the fears that they recognize in the PSOE regarding the possibility that what they have to their left will not end up standing out in the face of the increasingly evident struggle between Díaz and Podemos.

Sánchez has had to encourage the PSOE so that it does not fall into resignation before the new electoral cycle, but he finished the course with a good taste in his mouth feeling that he had changed the pace in the debate on the state of the nation in which he announced new taxes on banks and energy companies, which was followed by a dialogue table meeting and a packed international agenda with a high-level meeting in Poland and a tour of the Balkan countries.

Starting in September, he will face the first test with the General State Budgets, whose approval will give him oxygen until the end of the legislature, but if they choke him, they will pose a new problem in the already steep path that the coalition has in front. The next date marked in red is May 28, when Sánchez assumes that his survival in local and regional elections is at stake under the maxim that whoever wins the municipal ones does so later in the general ones. In Moncloa they trust everything to the mobilization capacity of the regional mayors and presidents, whose management has been watered by millions from the State, mainly through European funds.