2023-07-09 10:00:37
The Spanish economy has suffered serious underlying problems for many years: it has the highest unemployment rate in the Euro zone (twice the average), accumulates a high volume of public debt (above 110% of GDP) and shows low levels of productivity. However, in recent quarters these endemic ills, aggravated by the pandemic and the war in Ukraine, have evolved positively. The Spanish economy grows well above that of its partners in the euro zone; half of the excess debt caused by the pandemic has already been cut; employment improves decisively in quantity and quality (with the help of the labor reform); the inflation rate has fallen to the lowest levels in the euro zone; foreign investment is growing and Spanish companies are becoming more competitive abroad.
The question is how this can influence macroeconomic cocktail in the voting decisions ahead of the next 23-J and the answer is that, possibly, when it comes to going to the polls, the voters let themselves be carried away more by their microeconomic impressions (not data).
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When it comes to ‘the micro’, the variables that most influence the perceptions of economic agents are surely employment and prices. The improvement in employment, in quantity and quality, has contributed to families seeing their income level grow and that could help government formations. However, inflation and the rise in interest rates have severely eroded family income, leading thousands of them to the point of not being able to make ends meet. According to the Bank of Spain, the number of households in this situation has been able to increase by almost 400,000, to close to 1.7 million families. In addition, the current inflationary process -of food and energy- weighs more the lower level of income there is in a household.
The Government has reacted with a wide deployment of public aid (47,000 million euros in two years), but the difficulties to reach the end of the month weigh heavily.
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