professor of Applied Economics at the University of Alcalá de Henares Alvaro Anchuelo He was one of the speakers of XXXVIII Alicante Spanish Economy Conference organized by UA Institute of International Economics in collaboration with Association for Free Economics (ALdE). An appointment to discuss the “winds for and against” that are currently blowing.
Copying the title of your presentation, I ask you: What do Next Generation EU funds mean for the European integration process?
As I explained at the conference, we always tend to look at this issue from the Spanish perspective, but it is interesting to also see it from the perspective of the Union as a whole. Because there was a lot of transfer of sovereignty, and this made it possible to solve a number of long-established problems. The first was the issuance of the common European debt, which many countries opposed. The second is resource transfer. The program will not be implemented in the same way throughout the Union, but will be particularly concentrated in southern and eastern European countries such as Spain. Germany or France barely get anything. The third is that new own resources, the resources that finance the Union budget, must be created in order to pay this debt in the future.
In this sense, one of the most remarkable achievements is the common response.
Yes, of course, thanks to the lessons learned from the previous crisis, because the Monetary Fund realized that it is not a good idea to impose restrictive policies in the middle of a recession, plus Brexit has happened and there are populist parties in the key countries. This questions the Union. The EU could not afford to be the bad cop this time. It was supposed to be part of the solution, and in fact this more generous response worked much better than the financial crisis.
Are Next Generation funds used well?
This is a very important question because of course this is a long-term program to transform the economy, promote digitalization and sustainability, but it also has short-term components. It was brought forward quite hastily to respond to a particular event such as the pandemic, and the challenge was significant because there was so much haste in the selection, there are difficulties in implementation… Even so, it is a 6-year programme, coming up to 2026, and what has not been spent before will have to be spent between now and 2026. These delays can be resolved with . And it might make more sense to spend carefully rather than spend hastily.
«This time the EU could not afford to be the bad cop. “It had to be part of the solution, and the answer worked better.”
Companies complain that they do not perceive that this money reaches the real economy.
I think it’s coming. In addition to the difficulty of choosing a project and some of the steps that need to be taken from selection to implementation, these are time-consuming issues. However, I insist that the program last for 6 years, until 2026. It was thought that the expenditure would be more intense at the beginning, but if it goes towards the end and is thus better selected and executed, a better choice can be made. perception.
Was the creation of this PERTE figure successful? Because there are people who think it’s complicated.
I think it’s successful because it’s a way to concentrate resources on actions that require a lot of volume and prevent them from spreading. I also think that the European Commission should support similar pan-European programs because economies of scale are important in these technological activities. In the past, great success has been achieved in Europe with integrated operations such as Airbus, which produces planes whose wings are produced in Andalusia and whose engines are produced in Germany…
Will funds really be the engine of the economy?
If used well, they can be. Because the biggest problem of the Spanish economy is low growth in productivity, which is closely related to such reforms and expenditures. In the long term, which is the fund’s idea, if these resources are used well, the impact can be significant.
How do you see the Spanish economy in general at the moment?
After all, the Spanish economy is very integrated with the rest of the European Union, and when the European economy goes bad, it is very difficult for ours not to go bad too. There were some exceptional years when this was not true, because the crisis hit Spain hardest and the recovery, albeit later, was stronger as tourism returned. This means that Spain has grown more than Europe in recent years. However, after this temporary effect passes, we see that the European Union will slow down and there will probably be a slight recession.
«The EC should have supported pan-European programmes. “There have been great successes in the past, such as Airbus.”
He was quite critical of the creation of the bad bank at the time, and I would like to know what he thinks about banks no longer increasing deposit rates after socializing the losses during that period.
Yes, I was very critical of the bad bank when I was an MP and I believe that time has proven me right. There was no need to be an economic genius, either, because it was patently absurd to think that if bad banks were buying property that no one wanted, it would be a good deal in the long run. But when we talk about banks we will have to differentiate, because the crisis in Spain was not about banking in general, but rather about savings banks, which are rather peculiar institutions in which public administrations have a certain capacity for influence. However, to answer the second part of the question, it is very surprising that bank savings are not paid back in Spain despite the strong interest rate increases. Moreover, this is not the case in other EU countries, which shows the lack of competition and the concentration of power in a very small number of institutions. Because this is not normal. When interest increases, the normal thing is that everyone’s assets and debts increase. This is a very clear indication of lack of competition. Otherwise, beings will emerge that will get excited and push others away.