2023-12-29 18:36:57
The new Minister of Economy, Trade and Enterprise will be the extremeny Carlos Body (Badajoz, 1980), until now Secretary General of the Treasury. Cuerpo replaces Nadia Calviño, who is leaving her position as First Vice-President of the Government and Minister of Economy, Trade and Enterprise to start a new phase abroad on January 1, 2024 as president of the European Investment Bank (BEI) and leave several open fronts to his successor.
The new first vice-president of the Executive will be Maria Jesus Montero who continues to occupy the position of Minister of Finance, but loses the responsibility of Public Function that assumes it José Luis EscriváMinister of Digital Transformation and Civil Service.
body is degree in Economics from the University of Extremadura in 2003master’s degree in Economics from the London School of Economics and doctorate in Economics from the Autonomous University of Madrid, entered the State’s Economist Technical Corps in 2008.
Since August 2021, he has been secretary general of the Treasury and International Financing, then for a year and a half he took charge of the General Directorate of Macroeconomic Analysis of the Ministry of Economic Affairs and Digital Transformation. Between 2014 and 2020, he worked for the AIndependent Fiscal Responsibility Authority (AiReF)first as deputy director general of Public Debt and later as director of the Economic Analysis Division.
L’Calviño’s legacy is plagued with hot spots‘: the entry of the Sociedad Estatal de Participacions Industriales (SEPI) into Telefónica’s shareholding, the reduction of the public debt and the deficit to adjust the figures to the new fiscal rules and the creation of the Defense Authority of Financial Client. But without a doubt, the main challenge is the management and, therefore, the channeling of European funds. These are the five challenges of the new Minister of EconomyCarlos Body:
European funds
A few days before the end of 2023, the Government formally requested the European Commission the fourth disbursement of the Recovery and Resilience Plan for a value of 10,021 million euros, linked to the fulfillment of 61 milestones and objectives. These European funds will be added to the 37,036 million euros already received to date, at the expense of the total of 77,000 million euros in European transfers allocated to Spain, the full execution of which must culminate in 2026.
Now the challenge is to manage the loans and credits that will later have to be repaid: in 2024 it is expected that a little more than 15.4 billion of the up to 83.000 million European loans that will be managed by the Official Credit Institute (ICO), the BEI and other public entities.
L’ICO will be the main manager: it will channel around 40,000 million in loans through five funds for companies and SMEs to invest in the ecological and digital transition, strengthen their competitiveness and contribute to access to new markets. Here will appear “the demand of the industry and of the sectors that theoretically were going to see the most benefit from the European funds, but which they have barely reached”, points out the economist Javier Santacruz. as of now, European funds “are not contributing to growth the 1.5% that was expected”completes Andrés Pedraza, president of the Financial Commission of the General Council of Economists.
Public debt and deficit
After three years of expansive policy marked by the pandemic, the year 2024 welcomes the reform of European tax rules. Although its full application will not be seen until 2025, the new year is seen as a transition exercise towards the model agreed by the Twenty-seven. From now on, the public deficit of the Member States must be below 3% of GDP and the debt must not exceed the limit of 60% of GDP. To these references is added a new one in the area of the deficit: the limit of 1.5% of GDP for those countries that already have it below 3%, but keep their debt above 60% of GDP. Based on these figures, countries will follow an individualized stability path that will be defined based on an annual spending ceiling. Spain closed 2022 with a debt of 113% and a public deficit of 4.8% of GDP, one of the highest in the EU, so it will have to present a four-year adjustment plan (or seven if ‘assume certain investment commitments) to guarantee their reduction.
Telefónica, SEPI and the Saudis
The announcement of the Saudi Telecom group (STC), 64% owned by the Saudi sovereign fund, to enter Telefónica at the beginning of September shook the Spanish telecommunications market and opened the debate about the entry of the State in companies considered strategic. With one investment of 2.1 billion eurosSTC became the first shareholder of the firm through the direct purchase of 4.9% and the possibility of accessing a further 5% in the form of derivatives.
The Government has countered the incursion of Saudi Arabia in Telefónica through the State Society of Industrial Participations (SEPI): in mid-December, the Council of Ministers agreed that SEPI acquire 10% of the capital of the Spanish multinational for 2,000 million euros. Thus, the State will be able to form a Spanish hard core alongside the other two major national investments in Telefónica: CaixaBank and BBVA.
Creation of the financial customer defense authority
Shortly before retiring from office, Calviño resumed the creation of the Financial Client Defense Authority that was forgotten due to the general elections last July. The text was approved by Congress last May, and after being submitted to a public hearing, the intention of the Ministry of Economy is to launch the institution in 2024. It is one of the mandatory milestones that the Government will have to meet before the European Commission as previous step to receive the 10,261 million euros in subsidies and the 16,632 million in loans of the seventh payment of European funds in the first half of 2025.
Relations with the EU
This is a fundamental year for the European Union for the convening of the European elections in the summer of 2024, but the economic issues will not be altered. The first issue to be discussed will be to reach an agreement on the review of the EU’s multiannual financial framework in the Council by the end of the year, only then will it be possible to expand some items at the beginning of next year through an amending budget that will have to be proposed by the European Commission. But there are more matters. In 2024 it will have to be dealt with”the reform of market of telecommunications, the adequacy of the State aid framework and competition rules”among other issues, points out Santacruz.
PRIMA: achieve full employment
Although the desired effective full employment belongs more to the responsibilities of the Ministry of Labor and Social Economy, Calviño stressed on numerous occasions that this would be one of the main objectives to be achieved during the current legislature. It is not at all easy to achieve this value in Spain it should be around 7%. Spain maintains the highest unemployment rate in the Eurozone with 11.84% and also tops the European list of unemployed young people (27.8%), while the average unemployment rate in the European Union remained at 6% in October and 6.5% in the euro zone. The last time effective full employment was obtained in Spain was in 2007, just before the outbreak of the real estate bubble.
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