2023-11-24 16:09:51
The Vice President of the European Central Bank (ECB), Luis de Guindos, warned this Friday that you cannot “sing victory over inflation”. In a speech at the economic conference in s’Agaró, De Guindos said that there are several elements of “uncertainty” in the economy, and that the effects of the rate increases of recent months have not yet been fully transferred to the real economy. “Monetary policy leaves its effects felt with a delay of between 12 and 18 months, and there are elements of uncertainty here”, he said. In fact, he has not ruled out occasional increases in inflation. The Vice President of the ECB has reiterated that rates will remain at current levels for as long as necessary.
Luis de Guindos also recalled that the states will have to start applying a more prudent fiscal policy.
In this sense, De Guindos has recalled that this 2024 the objectives of the Stability Pactand that “the free bar of recent years” will not continue.
“We are guilty of many things but in fiscal policy no fault, it is the governments that must do it“, said the vice-president of the ECB.
According to him, it is necessary to guarantee “sustainability” in the medium term of the public accounts, but with an adjustment plan that is “reasonable, prudent, with an adjustment that is not brutal”. According to de Guindos, it is also necessary to avoid “problems” between fiscal and monetary policy.
Scratchs
According to the vice-president of the ECB, there are a number of risks in financial stability, among which he highlighted the fact that although the banks’ profitability increases, their assessment in the financial markets does not. He also referred to the fact that banking intermediaries such as various funds have a very “benign” perception of the state of the economy and any “negative surprise” can be a shock.
In the same way, De Guindos has admitted that the fact that rates remain high “for longer” than expected may end up affecting families, companies and governments, although for now he said that the impact “is moderate “.
Finally, he also referred to “regulatory uncertainty”, such as banking taxes, which he said without referring to Spain, have been made “in some European countries”.
About removing the FLA
Luis de Guindos questioned this Friday the agreement of the PSOE and ERC to forgive part of the debt of the Autonomous Liquidity Fund (FLA). The former Minister of Economy of the Popular Party government has assured that “in the markets, normally, this debt forgiveness does not usually sound good to them”. According to De Guindos, who has remarked that he was speaking in his personal capacity and not as a representative of the ECB, it would have been “much smarter” to convert the debt into “perpetual” with “a very low interest rate”. Regarding Spain, he asked for “more consensus and less confrontation and frontism” because otherwise “the only thing that thrives is rancor”.
De Guindos said that by converting the debt of the FLA in perpetuity, many problems had been “minimized”, from “grievances” between communities to the possible reaction of the markets.
According to the former popular minister, in any case, the forgiveness of the debt of the FLA will have a “zero” impact on the accounts of the public administrations, because it will lower the debt of Catalonia and that of the central administration.
De Guindos has said that it is “very important” to have a government “with the capacity to act” and has asked for “broad consensus”.
Bonet charges against the retirement model
The president of the Chamber of Commerce of Spain, Jose Luis Bonet, has charged against the retirement model in the State. “When a person does not want to retire, and is able, to retire is to embezzle resources”, he said at the XXVIII Economic Conference in S’Agaró. Bonet has claimed that, taking into account that life expectancy is advancing, all this “must be reviewed”. The president of the Chamber has criticized that the revision of pensions has been “charged only to the companies”. Likewise, he has sent a message to the Sánchez government: “If we start harassing the business world, this will continue to be withdrawn, if it is encouraged, it will go further. The policy of the new government must be pro-business”.
“Let’s be clear that the protagonist of the well-being of the Spanish is the business world, it is the main social shield”, said Bonet.
The president of the Spanish Chamber of Commerce has also said that governments must be “very attentive” to the drought, and invest more in desalination plants. “There will be problems in key sectors, such as agri-food, or tourism, which live on water”, he warned.
In his speech, Bonet also referred to the need to reform the educational model and promote the “values” of work and effort.
“Essential things are missing, people’s orientation, their purpose. It’s very strange that people don’t have a purpose in life, where do they go? Education must provide it”, he said.
“A real revolution would be needed in this field”, he remarked, calling for a consensus that he criticized as not currently existing.
De Cos does not rule out entering “a technical recession”
The Governor of the Bank of Spain, Pablo Hernández de Cos, has called for “prudence” from the bank in the face of the economic slowdown and does not rule out that, even, the euro ends up entering “a technical recession”. Both he and the president of the European Banking Authority, Jose Manuel Campa, have also warned that in those economies “where variable interest loans predominate” – such as the Spanish one – the rise in rates “will have a greater impact” on delinquencies, which banks must take into account . During his speech, the governor also said that he would prefer the money from the banking tax, which Sánchez will make permanent, to stay in the sector “to accumulate reserves”.
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