Recession. A word from which every ruler flees. Anathema to the self-styled “Most Progressive Government in History.” The PSOE has always lost power in adverse economic situations, and the current one is not good. Added to the impact of the pandemic is the severe setback to the incipient recovery caused by the war in Ukraine. The increase in prices threatens to absorb the improvements of measures such as the increase in the Interprofessional Minimum Wage. A cocktail that the leader of the opposition, Alberto Núñez Feijóo, wants to take advantage of. The leader of the PP has given his obvious strategy a twist: anticipate that recession that would give Pedro Sánchez the last straw, but not all economists are clear that it will come.
The PP wants to install as something inevitable that the current bad economic situation is the prelude to a drop in GDP. Feijóo wants to reach Moncloa on the back of social discontent due to the increase in prices. He said so at the end of June at an event organized by the newspaper The reason, owned by Grupo Planeta. There, before dozens of Madrid businessmen, he drew a parallel between the current situation and 15M. “There is a new weariness not of indignation, but serene and reasonable that has no turning back either because it is supported by convincing facts,” he said. “The PP has the immense responsibility of responding to this weariness,” he settled.
In the PP they are aware that said “fed up” does have a way back: stop the inflationary spiral. An interruption of the war between Russia and Ukraine, or concerted action by the EU, could achieve this. But the more the recession is invoked, the more the gum of an economic crisis that goes beyond the CPI is stretched, even at the cost of twisting the unemployment data, lying about the European funds or suspecting an electoral rigging, the closer will be the self-fulfilling prophecy.
That 15M, which the PP denounces with Feijóo and Mariano Rajoy at the head, emerged “as a sequel to the great recession that began in 2008,” said the Galician leader before his audience. A few days later Feijóo placed the next rung on the ladder of social discontent that should take him to Moncloa heaven. “We are heading towards a very deep economic crisis,” he sentenced before the addresses of the parliamentary groups in Congress and the Senate. This Friday, in Zaragoza, he completed the work: “The situation of 2022 is similar to that of 2008, which was to deny economic reality, to speak of green shoots that converge in one of the great economic recessions.”
Is Spain going to the inevitable recession? The future cannot be predicted, and the bitterness of the war could underpin the energy crisis, which all experts point to as the cause of the sharp rise in prices that has changed the economic outlook. But with the current data, there are organizations and economists, some not very far from Feijóo’s own theses, who do not see it as clearly as the opposition leader.
Luis de Guindos is one of the people who calls for caution. In a recent interview on the Cope chain, Mariano Rajoy’s former Minister of Economy, responsible for the bank rescue and the restructuring process of the Spanish financial system, pointed out that the worst scenario will occur if Russia cuts gas supplies to Germany next winter . In that case, pointed out today the vice president of the European Central Bank, the main European economy if it could enter a recession and, later, drag the rest of Europe.
But that is not the approach of Feijóo, who insists on saying that Spain has been in crisis for months before Putin ordered his army to invade Ukraine. The leader of the PP does not miss the opportunity to brandish the great successes of the Spanish right: the problem is taxes, public spending and debt. The manual with which Rajoy arrived at Moncloa and which he kept in a drawer as soon as he launched a government that increased taxation and asked for a rescue from Europe of tens of billions that has never been recovered by the taxpayer.
Feijóo, who has championed his past management in Galicia and applied common sense, has sometimes resorted to reports from the AIReF (Independent Authority for Fiscal Responsibility) to justify the existence of superfluous public spending, but perhaps he did not listen to the president of the organization, Cristina Herrero, who this week settled in an informative breakfast of which almost no one is lost in political and economic Madrid: “We do not contemplate a recession”.
Blacksmith went further. He said that “the year 2022 is going to have significant growth”, which the Government places around 4.5%. Like De Guindos, the president of the supervisory body was cautious when talking about what could happen in 2023 and the impact that a winter without gas could have in Germany.
Because the problem in Spain, and in Europe, is inflation, caused by the increase in the cost of energy. “The fundamentals of the economy are all good,” he points out in a conversation with elDiario.es, the member of Economists Facing the Crisis, Antonio González. In his opinion, the prediction of a recession in 2022 “has no consistency.” At least “for now”. González also marks the winter of next year as key in the evolution of inflation, aware that an increase in prices above 7% “means a fundamental cut in the family budget”, which is transferred to “the national accounting” because “it supposes a drop in disposable income that affects consumption”.
“If consumption falls, economic growth slows down,” warns González, who maintains that the government must take measures “to cut inflation and give confidence.” In his opinion, there are prices “that have nothing to do with fuel” that are also “rising” despite the fact that “unit labor costs” are not increasing. That is to say, some are taking the opportunity to do a good deal before a citizenry resigned to the fact that everything is rising in price. González is not the only economist who sees it this way.
The Government has room to act, considers González, who is confident that the massive distribution to European fund companies will arrive, scheduled for the second half of the year and the beginning of next. “It will increase investment and overall spending in the economy,” he says. He adds that the summer season “is also going to help.”
But none of this will mitigate the rise in the CPI. It may even contribute to increasing it, as it is expected to happen with the inflation figure for this month of July.
“The government has to do something with inflation very soon,” he told this medium in a telephone conversation. Measures that go beyond the subsidy of 20 cents on fuel, which González considers “worthless” because it is “badly focused” and, furthermore, it is “regressive”. In his opinion, everything that does not go through putting a cap on the price of electricity will not work.
In that case, González does not rule out a future recession. But not now, as the PP raises. “Whoever has the data should put it on the table,” concludes the economist.
Feijóo does not. Even so, the Government has been offered to agree on new “Emergency General Budgets”, as the businessman and former minister of José María Aznar Josep Piqué recalled this Thursday in another act with economists. “Alberto doesn’t lie,” he said. The opposition leader, who presents himself as the only alternative to the government, picked up the baton and said in his speech: “I don’t know what revenge the ignored reality is preparing for the government, although we can all sense it.” Again, the unavoidable recession. That “that Spain falls, that we will raise it up” that still persecutes Cristóbal Montoro.
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