2023-07-25 01:57:06
Of all the scenarios that could come out of the general elections held last Sunday, the one that the polls have finally lit up is the worst of all. And not only from a political point of view, but also from an economic one. If there’s one thing money hates, it’s uncertainty. Capital is fearful, it needs certainty and security. And the result of the elections has completely left the governability of Spain up in the air, with the only certainty that months of difficult negotiations are ahead that could even lead to a repetition of the elections. A scenario of uncertainty that, according to different economic actors, comes at a bad time for the Spanish economy.
European funds
Both S&P and Barclays warned yesterday that a hypothetical repetition of the elections would delay the execution of the European funds that Spain so badly needs and some reforms. The risk rating agency assured in an analysis that, in principle, a scenario of electoral repetition does not have to interfere in the preparation of the General State Budget for 2024 or in the Spanish Presidency of the EU. However, he warned that the implicit campaign with this electoral repetition could reduce the attention paid to addressing some of Spain’s long-term economic challenges, such as those reforms of the Recovery Plan or the structural deficits of the Social Security system.
Barclays also warns in another analysis of the risk of delays in the disbursements of the Next Generation funds – a point on which it also coincides with the financial intermediation company Admirals Spain – and of “prolonged uncertainty” in the economic sphere in a scenario of electoral repetition.
Uncertainty
That same uncertainty, so harmful for any economy since it puts many investment decisions into quarantine while waiting to see the direction that the economic policy of the country in question takes, is what both Moody’s and Scope Ratings and the CEOE itself also fear. In the case of Moody’s, because, as its analyst Luis Enrique Silvia Yanez warns, the Spanish economy is “already weak”. And in that of Scope Ratings, because as Jakob Suwalski, director of public and sovereign ratings of this agency, warns, maintaining political stability and making public investments are vital for economies, “particularly for the Spanish one, which depends on foreign capital inflows to stimulate investment due to its structurally negative net international investment position.”
necessary reforms
Businessmen are also concerned that more curves are coming that require immediate reforms, as added by the business association. CEOE and Cepyme warned yesterday that the Spanish economy “envisions a slowdown scenario, which will foreseeably become more apparent after the summer”, since geopolitical tensions persist, the origin of which is the war in Ukraine, as well as the impact of restrictive monetary policy and high inflation, on consumption and investment by Spanish families and companies.
In this context, both organizations reiterated that, in order to strengthen the capacity to face uncertain economic situations, Spain needs to address a series of challenges that cannot be delayed over time, such as the rebalancing of public accounts; the configuration of a tax system that helps to improve the competitiveness of companies; the promotion of the industry within the framework of the green transition and digitization; or the inexcusable promotion of professional training linked to the needs of companies derived from these processes.
The self-employed also showed their concern about the distribution of deputies that came out of the polls. And it is that, as the main organization of the sector, ATA, assured, “we must not forget that for there to be economic growth, hiring, new investments… the self-employed and companies need legal, economic and social stability”.
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