now though the increase in the deficit and the debt have been very strong, Brussels believes that the uncertainty created by the war in Ukraine advises maintaining the exception for another year. For Spain this is good news because it will allow the spending adjustment to be less abrupt, but the government will be wrong if you take it as a license to continue the same. Because it is not convenient to leave the hard subjects for the last minute, and for other reasons.
The first is that -Lagarde reconfirmed it yesterday- this summer the ECB will stop buying debt and will raise interest rates. Thus, not lowering the deficit –although allowed– will cost more. Spain financed itself in January at 0.4%, and now the 10-year Spanish bond is already at 2.14%.
Second, because the European wind is that of a certain return to fiscal rigor. The German Economy Minister, the liberal Christian Lindner, has said that Germany will do it already in 2023. And that Berlin is opposed to increasing the European debt – like the current regeneration plan – to alleviate the effects of the war in Ukraine, finance the increase in military spending or the energy transition: “It was a one-time decision, and when the figures are analyzed it is clear that End expansionary fiscal policy and stop intervening in the economy with large public programs. There is a danger of stagflation and we must act urgently & rdquor ;.
TRUE, Lindner is maybe a falcon nor is it the highest European authority, but Germany is the strongest economy and everything indicates that the years of great fiscal relaxation and negative interest rates they are coming to an end. And the government that ignores it will take great risks.
The proof is that Portugal, with a socialist government with an absolute majority, fiscal discipline is targeted. Fernando Medina, the Minister of the Economy, has just stated that “when rates rise and debt spreads in the euro zone widen, reducing the deficit and public debt It is a priority objective & rdquor ;.
And the governor of the Bank of Portugal, Mario Centeno, former president of Ecofin, has riveted that Portugal must achieve that the “ratio & rdquor; of public debt over GDP, which is already below that of Italy and Greece, is also lower than that of Spain and France. The IMF guarantees that it will fall from the current 127% of GDP to 104% in 2027, a substantial reduction and much higher than that forecast for Spain, which is today at 118%.
And rigor is not going to punish Portugal, because the Commission It is expected that this year it will grow by 5.4%, compared to 4% in Spain. The Sánchez Government does not have a majority and depends, among others, on Podemos, which is how it is. But Pedro Sánchez and Nadia Calviño are not deluded and they must know no less than the Portuguese socialists. Many times they have put Antonio Costas, the Portuguese prime minister, as an example. Now you should hear it too.
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