Vice President of the Bank of Spain, margaret fineruled out the possibility recession Spain “instant on horizon”despite acknowledging that some quarters may not be entirely positive for the economy.
“We don’t see a recession on the horizon in Spain not far from it. We will grow 4% this year and rates are expected to be around 2% for 2023.point up, point down”, drew attention in an interview published in ‘Telva’ magazine.
In any case, Delgado conceded: zero risk does not exist and there is this uncertainty, so they can’t ignore that some quarters were “not so positive” and that the potential shutdown of Russian gas supplies to Europe, mainly to Germany, could have a negative impact on economic growth.
While Spain’s exit point is better than other countries, the deputy governor explained that the rise in energy prices was the cause, given that energy shortages are not expected. most inflation It also rises in Spain.
“Revenue Agreement”
In this scenario, the Bank of Spain considers the most effective thing to be “an income agreement for both public and private salaries, the broader the better for all social agents”. As Delgado pointed outwages should rise ‘slightly below inflation’ and companies should avoid fully reflecting cost increases, which means a temporary decrease in their margins, into final prices.
“This pact should avoid triggering an inflationary spiral that leads to prices and costs. In short,We should all tighten our belts. If we fail, we will enter a spiral of inflation with detrimental consequences for future economic growth,” he warned.
In addition, with the aim of starting negotiations on the 2023 Budget, the Bank of Spain is advocating a fiscal consolidation plan that offers “a degree of certainty” about what will happen as a percentage of public debt to GDP in the medium term. It reaches 115%. “Our levels are higher than expected for the European Union’s fourth largest economy, and I want us to return to a more moderate path in terms of spending and income in both.”
On the other hand, he judged second-quarter unemployment data to be “good,” with a good performance in industry and services, although he believes we should wait to analyze the impact of the cut in energy supply. Coming from Russia in some European countries and how this affected the Spanish economy.
asked by increase in interest rates European Central Bank (BC) Deputy Governor declared that the negative rate normalization of monetary policy after years will not have a negative impact on the economy as long as it is done progressively, moderately and in line with its effects. the need to control the economy and inflation.
Regarding the parity between the dollar and the euro, the vice-governor stressed that Spain has a “strong export sector”. “Spanish companies have expanded abroad a lot and are more competitive with the cheap euro. Of course, there is the tourism sector that benefits from this situation,” he said.
Bank’s solvency will not compromise tax
In another turn, the vice-president of the Bank of Spain, the new provisional tax on bank profits, which will tax the interest margin and commissions charged by corporations at a rate of 4.8%, It should not compromise the solvency of the Spanish banking sector.
In any case, he stressed that while the bank’s income statements could be bolstered by a gradual increase in interest rates, it is also necessary to be cautious about the impact on the Spanish economy of all the uncertainties to which it is currently subject.
“The banking business, essential for the economy. “We supervisors want banks to make money because if they don’t, they won’t be able to adequately function in channeling finance into the economy, so investment will flow where it’s needed most,” he warned.