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Ciudad Real, 09-11 de Mayo de 2017

Ciudad Real, 09-11 de Mayo de 2017





"The Present and Future of the Spanish Economy: Potentialities of the Recuperation and Path of Progress", on debate at FENAVIN

This round table will be taking place on May 13th, with Ramón Tamames being in charge of its moderation and counting with the participation of outstanding professors of Economy such as Emilio Ontiveros, Juan Torres and Pedro Schwartz.

03.05.2015 | 

According to the latest Official Gazette of the Bank of Spain, the inter-annual rate of growth of the Spanish economy stands at 2.5%, and the bank regulator forecasts an advance of 2.8% by the end of the year. However, and despite these forecasts "Spain find"s itself in a rather delicate situation, which is the result of several factors: in the first place the impact of the foreign crisis, and in the second place because we have a domestic model plagued with weaknesses, and in the third place because we have an international European context, which seriously hinders taking the measures to resolve both of the mentioned impacts".

This is how Juan Torres, Professor of Applied Economy at the University of Seville understands it, and Emilio Ontiveros, Professor of Financing at the Autonomous University of Madrid also expresses himself along similar lines, highlighting that on the one hand we have the dependency of our economy with regards to Europe, and on the other hand the vulnerability before an international economy, in particular European, "which presents difficulties in that pertaining to definitive establishment of its own recuperation", underlining the lack of external support, "of support in the international economic conditions so that the Spanish economy can grow in a sustained way in the future".

However, in the opinion of Professor "Rafael del Pino" of the University Camilo José Cela and of Pedro Schwartz, "the current recuperation is "real", because in part it is based on greater savings on the part of families, which has led to the financing of greater private investment".

These three professors will be debating all these issues, along with the main problems and challenges of our economy, all this during a round table that will be moderated by the Professor of Economic Structure Ramón Tamames within the frame of FENAVIN, on the upcoming May 13th; a round table that will be called" The Present and Future of the Spanish Economy: Potentialities of the Recuperation and Path of Progress", and that is sponsored by Banco Sabadell.

Main Problems and Challenges

In the opinion of Juan Torres, currently the main problem is the loss of the sources that generate endogenous income, the economy itself, and in this sense he explains that "inequality is on the increase, salaries are losing weight in the total of incomes and this along with the loss of the industrial fabric, of companies, makes the domestic market and the demand, which are in fact the driving forces of the economy, to be highly weakened".

Hence he underlines "we find ourselves in a situation in which we have to decide whether we want to go along with a series of mechanisms that do not really benefit going forward, while on the contrary we are more than willing to change the sources of the strength of the Spanish economy", that is to say, "in Spain we have to basically decide if we want to continue determined in making the economy the driving force behind the benefits or if on the contrary if we want the economy to be the driving force behind the salaries".

In this sense he underlines how all econometric and scientific studies "indicate that in Europe and Spain, in particular, the driving force of the salaries is far more powerful and the driving force behind the benefits practically does not work as a boost to employment and the economy in general, because as experience has taught us, what the information is telling us is that the permanent deterioration of the salaries in the whole of the Spanish economy is hindering it, making thousands of companies disappear, deteriorating public finance, consumption and the economy". Hence he concludes "it will be very difficult to produce permanent recuperation in our economy if the focus does not change".

On his part Pedro Schwartz puts the emphasis on the institutional causes of unemployment, pointing out that the main cause is "a protectionist labor legislation, an excessive minimum wage", and in this sense he points out that "job insecurity would return to its fair terms if permanent employees were treated in the same way as part-time employees", while in turn highlighting that the age of retirement should not be mandatory, "as it is not at all in accordance with the improvement of the expectation of a healthy life".

On his part Ontiveros puts the attention on Europe and points out that "we cannot forget that the Spanish economy has indeed started its recuperation thanks to the decisions taken by the European Central Bank on the one hand", although on the other hand, he puts forward, "thanks to the exports, among others of wine, although for there to be exports our customer base must grow, in particular the European customer base".

The Path for Recuperation

In the opinion of Pedro Schwartz "the perspectives of the Spanish economy are positive and the clear economic improvement sees the light precisely because of the cuts in public spending and the legislative reforms that many economists feared would sink Spain in an endless depression". In this sense, he specifies that "those that do not understand the inverse relationship between the reduction of the public sector and the growth of prosperity in a country believe that, to leave the recession behind it is necessary to increase expenses and public investments, to the point of even financing them with debt. While it is really quite the contrary, as to leave behind a crisis one must create a niche in the private activity, while in turn a reduction in the expenses of the Autonomies and the State would allow a reduction in taxes".

From this perspective Schwartz highlights that the reforms should have included a greater transfer of the financing of the public services to those that are directly benefited by the same. "The national government should have reached even further in its cuts, to the point of reducing the public debt which, unlike the debt of families and companies, continues to grow without fail".

On his part in the opinion of Emilio Ontiveros the forecasts made by the Bank of Spain seem to be reasonable, "in great measure due to the comeback of the extremely negative situation in which we found ourselves, but also to the exceptional decisions that the European Central Bank is adopting". Ontiveros believes that the BCE has started to do as much as it can "because once it reduced the interest rates to zero it is injecting far more liquidity buying public debt, and that is the reason why the financial conditions of economies such as the Spanish one have notably improved". All this along with the drop in the price of oil "which represents savings for the Spanish economy of more than 15,000 million Euros, hence strengthening the decisions pertaining to spending and investment made by the Spanish people", he points out.

However, Ontiveros also puts special emphasis on the need to not leave the European Central Bank on its own, or on depending on the price of oil, and in this sense he underlines that "Europe needs to specify a series of common investment decisions such as those announced by the President of the Commission, this in areas that can benefit the whole, such as power connection networks, technological networks and that apart from stimulating the demand and benefiting a good part of the economies that have been damaged the most in this crisis, the idea of Europe itself must also be strengthened, the interior market of Europe", while in turn it must be pointed out "that the Spanish economy is not growing like it did in the past, and even if it grows somewhat less it must grow better".

In short, in relationship with the six long years of crisis, in the opinion of this professor, the situation is clearly far more favorable and, therefore, there is room for optimism, "or moderate optimism as long as Europe assumes the errors it has committed in economic policies during these years and gives priority to European cohesion, and of course to the intensification of investments".

Juan Torres seems to be more skeptical as in his opinion "the Bank of Spain and the Government of Spain are the institutions that have made the most mistakes in the last few years in that pertaining to forecasts", although "I hope they get it right for the first time so that increased economic activity can be achieved, along with more employment, which is something that all Spanish people, without exception, are hoping for".

From Torres" point of view "we are experiencing a typical pre-election cycle and the Government is loosening the reins that were hindering spending, and evidently this reflects some improvement", although he is not completely sure that it is as strong as they say, "as I consider that we are in a stage in which there are obviously some signs of recuperation in the activity, but the doubt is if whether they are of the magnitude that is being pointed out and if they will be permanent", while in turn he highlights the certainty that "the recuperation is really very asymmetrical, unequal and not based on a profound change in tendencies", he warns.

FENAVIN, meeting point of synergies

For Juan Torres these types of events such as FENAVIN "are very important because they create networks, empathies, synergies and common experiences" and, consequently, "links that are very important in the business world", apart from the fact that these events "have an outstanding exterior projection and even more so with a product such as wine, the wine industry, which is so important for the Spanish economy", he underlines.

This is how Emilio Ontiveros also understands it, as for him these types of trade fairs constitute "a way of making the exchange of experiences possible, and in short, a way of improving the quality and internationalization of sales", while in turn highlighting his respect and admiration for the effort made by the Spanish winemakers.

On his part, in the opinion of Pedro Schwartz, being present at FENAVIN "means participating in the development of an activity that is truly progressing in quality and in its good name", underlining that "Spanish wine is one of the stories of success of the Spanish world of agriculture and trade".