The war leaves its mark on high interest rates and low growth until 2024.

1. Inflation, the source of all evil

The channel of contagion of the Russian war in Ukraine to the European economy in general and Spanish activities in particular was expressed by the rise in oil prices. energy And raw materialsgradually permeated the entire economic fabric. The rapid rise of inflation led to the greatest disasters. loss of purchasing power It has forced governments to allocate substantial public money to mitigate the effects of rising wages and rising prices over the past 40 years. The measures taken by governments against inflation and Europe’s ability to cope with the blockade of Russia’s energy supply have made this possible. Quick fix for inflation after breaking the records of the last 40 years. Inflation in Spain increased from 10.8% in July to 5.9% in January. In the euro area, it rose from 10.6% in October to 8.5% in January. The Bank of Spain predicts that Spanish inflation will fall to an average of 4.9% in 2023 and to 3.6% in 2024. According to these estimates, we will have to wait until 2025 for inflation to drop below 1.8%.

There is general agreement to point out that inflation has already reached its ceiling, the question being how long some rates will persist above 2%. stability goal for central banks. The risk that persistent inflation will become the argument for a spiral of increases in wages, prices and interest rates (runoff effects) is planned as the main threat to Spain and the euro area.

2. ‘Spicy’ rise in interest rates

In order to rein in the development of inflation, the central banks of the euro area made a decisive increase in the US and UK interest rates. in the eurozone, official price of money went from 0% to 3% in just seven months. One-year Euribor – main reference variable rate mortgage– It increased from -0.56 in December to +3.34 in January, resulting in the fastest increase in mortgage prices in history. The biggest increases in mortgage payments, which started in November, are expected to continue intensely in the first half of this year. Analysts predict that both the official price of the coin and Euribor could reach a ceiling of about 4% by mid-year. ECB President, Christine Lagardepredicted that once interest rates hit the ceiling, they will remain at their peak for a long time; in any case uncertain. For states, most over-indebted The increase in interest rates after the pandemic is perceived as an additional risk to your finances.

3. Public accounts: expenses and additional income

It is estimated that the six anti-inflationary measures adopted by the government between March and December 2022 could create around 20,000 million impacts last year, with another one to be added in 2023.

Conversely, according to the latest calculations Independent Institution for Financial Responsibility (Airef), The weight of government revenue over GDP increased by 2 percentage points in 2022, which is like saying the central government achieved. approximately 26,000 million extra collectibles, with the help of inflation. This revenue injection will allow the State to balance its accounts slightly better than expected in 2022, despite the extra spending from measures to counter inflation.

An extra injection of collections like in 2022 is hard to repeat in 2023. three new provisional taxes About energy, banking and assets approved by the government. If the Treasury’s expectations are met, these three new figures could add 4,000 to 5,000 million this year and reach the same number in 2024, with them funding relief measures for economic agents.

4. Escaping a recession

Despite the impact of the Ukrainian occupation on the economy, Spain’s gross domestic product (GDP) managed to grow by 5.5% in 2022, a similar rate to that in 2021. The battle for the Spanish economy concluded that GDP grew slightly less (5.5% instead of the 7% predicted before the Russian invasion). The euro zone also managed to improve its economic data at the end of the year and managed to avoid some risks. recession forecasts by the beginning of autumn they almost agreed. In any case, the actual slowdown in economic activity is projected for 2023. In the case of Spain, the consensus of analysts shows that growth will increase from 5.5% in 2022 to 1.3% in 2023. The IMF forecast for the euro area will fall from 3.5% to 0.7% in 2022, before growth will pick up to 1.6% in 2024.

5. Business surprise

Despite the outbreak of the war and its economic consequences, employment in Spain managed to develop better than expected before the Russian invasion of Ukraine. Before the war, the Government had predicted that the number of full-time equivalent jobs would increase by 2.7% in 2022. Ultimately, despite low economic growth, growth was 3.8%, making the average unemployment rate 12.9% for 2022 (instead of the expected 14.1%). The positive surprise of the labor market in 2022 was also sustained in the eurozone and the US. In Spain, however, the Government attributes this improvement to the labor reform enacted at the beginning of 2022, against all employment forecasts.