elpais– In its new World Economic Outlook for October 2021, the International Monetary Fund (IMF) partly coincides with the Spanish government’s own macroeconomic forecast for this year and the next, but disagrees with its long-term deficit projections.
The international organization has reduced Spain’s growth prospects for 2021 to 5.7%, five tenths of a point lower than what it said in its July update. And in 2022, the IMF is expecting Spain’s economic output to grow 6.4%, which is six tenths of a point higher than its previous estimate. In September, the Spanish government released its own projections of 6.5% growth for 2021 and 7% for 2022.
The IMF report also shows that Spain is expected to gradually reduce its debt and deficit levels this year and the next, but to make very little progress on these fronts from 2023 onwards, in contrast with the government’s own projections.
In June 2019, Spain was emerging from a decade of austerity following the deep crisis of 2008. Brussels responded to the good news by lifting corrective measures after certifying that the country’s deficit level had returned to below the EU target of 3% of gross domestic product (GDP).
The optimism was short-lived. Less than a year later, the economy had shrunk by a record 10.8% as a result of the Covid-19 pandemic, a figure unseen since the days of the Spanish Civil War in the 1930s. And the government was forced to roll out its fiscal artillery to deal with the crisis, including a job retention scheme and deferred tax payments. The combination immediately pushed up the national deficit to 10.9% of GDP for 2020.
Although Spain recently entered the coronavirus low-risk scenario through a drop in infections driven by high vaccination rates, the economic fallout remains considerable, and the Spanish Cabinet last week approved the blueprint for the 2022 budget, which it described as the largest public spending effort in Spain’s history.
Debt and deficit
The Spanish government – a center-left coalition of the Socialist Party (PSOE) and Unidas Podemos – is expecting to end 2021 with a budget deficit of 8,4%. After that, the goal is to bring the figure down to 5% in 2022, 4% in 2023 and 3.2% in 2024.
The IMF agrees with the first part of this diagnosis, but believes that between 2023 and 2026 the deficit will remain above 4% of GDP. More specifically, it is expected to be 4.4% in 2023 and 4.2% thereafter.
This means that for at least the next five years Spain would be in violation of the EU’s Stability and Growth Pact, which sets a ceiling of 3% for the deficit and 60% for debt. However, the Pact was suspended until 2023 due to the Covid-19 pandemic, and the EU Commission is expected to launch a review of its budget rules on October 19, Reuters reported.
As for government debt, the IMF also disagrees with the Spanish executive’s forecast. The latter said it plans to bring the figure down from 120% of GDP in 2020 to 119.5% in 2021 and 115.1% in 2022. The international organization thinks instead that it will be 120.2% in 2020, and that it will not experience any significant reduction until 2022. At that point, the figure would likely hover around 116% or 117% for several years.
Spain records historic fall in unemployment following end of state of alarm
The Spanish job market is steadily recovering from the economic fallout of the coronavirus crisis, according to data presented on Wednesday by the Labor and Social Security ministries. These figures showed that the number of people registered as unemployed in Spain fell to 3,781,250 in May – a drop of 129,378 since April. This is the largest monthly fall ever recorded in the statistical series, which dates back to 1996. The last time a similar drop was seen was in 2017.
The historic fall in jobless numbers coincided with the end of the state of alarm on May 9, which saw coronavirus restrictions, such as nighttime curfews and a ban on inter-regional travel, lifted. This in turn boosted activity in sectors such as tourism and the hospitality industry.
Spain is a long way from where it was in February, when unemployment numbers broke the four-million mark. This figure began to decline in April, and the fall was consolidated in May, as the Covid-19 vaccination campaign gathered speed and restrictions were eased.
“This historical and magnificent data point is not due to the success of the government or the [Labor] Ministry, but rather of the Spanish people, who together have been able to face down the biggest crisis in history while maintaining the productive process,” said Joaquín Pérez Rey, the secretary of state for employment and social economy, while presenting the figures.
The number of Social Security contributors, considered a sign of job creation, also continues to rise. In May, the average number of contributors was 19,267,221 – up 211,932 on the average in April, for a monthly rise of 1.11%. “The Spanish economy has entered a new phase, the recovery is underway, and that is what all economic indicators are telling us,” said Economy Minister Nadia Calviño on Wednesday at the opening of the 2021 Aslan Congress on digital transformation in Madrid.
But the number of people registered as jobless does not include those on the government’s ERTE job retention scheme, which allows employers to temporarily send staff home or reduce their working hours. According to Social Security figures released on Wednesday, there were 542,142 workers on the ERTE program in May – down from 638,283 in April. This is the lowest figure since May 2020, when 3.6 million people were on the furlough scheme – the highest figure of the statistical series. Since then, 85% of furloughed workers have been reincorporated into the workforce.
As the number of workers on an ERTE falls, so too has government spending on the job retention scheme. In May, €632 million went to the program, the lowest figure since the beginning of the pandemic. The total cost of the scheme since April 2020 stands at €17.74 billion.
The ERTE job retention scheme has been extended until September 30, but experts say it is likely the program will be extended again, although it is not yet known how or to what degree this will happen. “As long as it remains necessary and we are hit by the crisis, this support is going to be available. Businesses and workers need security,” said Labor Minister Yolanda Díaz during a radio interview with the Catalan station RAC1.
The recovery of the job market in May was seen across all sectors: agriculture recorded the biggest fall in unemployment, with a drop of 4.78%, followed by the services sector (-3.39%), industry (-3.05%) and construction (-2.71%). But the biggest improvement was recorded in the under-25 age group. In this demographic, the number of people unemployed fell by 32,990 in May, a drop of 9.27% and triple the overall fall. Meanwhile, the Spanish regions that saw the largest decline in jobless numbers were Andalusia (-28,561), Catalonia (-15,368) and Valencia (-12,385).
“There are indicators that are telling us that we are on a good path, but that we are not going fast enough,” said Florentino Felgueroso, an expert in economics at Oviedo University. According to Felgueroso, the number of Social Security contributors is yet to reach pre-pandemic levels. “This May there were two million contributors, but in the same month in 2019, there were 2.6 million, 600,000 more, which is nearly a fourth,” he said. “This warns us that the [economic] engine is still at half throttle.”
And it’s a similar story for new contracts, said Felgueroso, who pointed out that more than 1.5 million were signed last month, compared to 2.1 million in May 2019. “This is where an improvement in the trend is expected in the coming months, especially in June, which is when decisions will begin to be made about the summer season,” he explained.
A total of 1,545,308 new contracts were signed in May, up 694,691 from the same month in 2020. This represents a rise of 81.67%. But over-reliance on temporary contracts continues to be a problem – 84.9% of all contracts signed in May were temporary, while only 10.1% were permanent hires.
With respect to self-employed workers, who have been among those hardest hit by the pandemic, the latest data also shows gains since April. The number of self-employed rose to 3,307,938 in May, up 15,006 from the previous month. “The May figures on unemployment and Social Security contributors are very positive, and they are in accord with what traditionally happens in the month of May without a pandemic,” said Lorenzo Amor, the president of the National Federation of Self-Employed Workers (ATA).
But Eduardo Abad, the president of the Self-Employed Workers Union (UPTA), was less optimistic: “You have to take into account that the figures for self-employment have been very negative, so it is to be expected that this situation would slowly improve.”
Spanish minister and leftist leader receive letters with death threats and bullets
Two political leaders and the head of a law-enforcement agency in Spain have received letters containing death threats and bullets, according to reports to which EL PAÍS has had access and to information provided by the Interior Ministry.
The targets are María Gámez, head of the Civil Guard; Interior Minister Fernando Grande-Marlaska of the Socialist Party (PSOE) and Pablo Iglesias, head of the leftist party Unidas Podemos and a candidate in the upcoming Madrid regional election, a race that he joined after stepping down as a deputy prime minister from the PSOE-Unidas Podemos coalition government.
“You have 10 days to resign. The days of laughing at us are over. National Police. Civil Guard. Time is not on your side for the taponazos [very loud gunfire or explosion],” reads an anonymous letter postmarked April 19 and addressed to Grande-Marlaska. Inside the envelope were two 7.62x51mm bullets, according to the police report filed by the minister. An investigation is underway to identify the sender.
Civil Guard chief Gámez received a similar, handwritten message a day earlier, although it was also postmarked April 19. In this case, there was no mention of police forces although it used the term taponazo once more. There was one 7.62mm bullet inside the envelope.
Sources at Unidas Podemos on Thursday confirmed that Pablo Iglesias had received a letter containing “a serious death threat” but had not yet filed a formal complaint. The same sources added that this is not the first time that Iglesias has been sent messages of this nature.
“The Interior Ministry has received a letter addressed to me containing death threats against me and my family,” the political leader revealed later on Twitter. He included an image of the missive, which carried the following message written in capital letters and without punctuation marks: “Pablo Iglesias Turrión, you have let our parents and grandparents die. Your wife, your parents and you are sentenced to the death penalty. Your time is running out.” The party originally said that it contained two rounds of the type used with Spanish CETME rifles, but Iglesias himself said there were four.
“This is just another consequence of normalizing and whitewashing the hate speech of the far right. And it is also a consequence of impunity,” said Iglesias on Twitter, lamenting that there has been “not a single arrest” over the attack on his party’s headquarters in Cartagena (Murcia) with a Molotov cocktail in early April.
Iglesias also noted that a former member of La Legión, an elite military unit, “got off scot-free” after firing live ammunition at photographs of government members in front of a camera and laughing about it. He also mentioned the lack of legal consequences for the retired members of the military who talked about executing 26 million “red” Spaniards on a social media chat group. “How can they not feel absolute impunity to send us death threats with assault weapon bullets?”
Iglesias went on to say that the attacks are not just against him and his family but about “you, your right to vote for whomever you like and to exercise your freedom. They are threatening democracy.”
The PSOE candidate in the Madrid election, Ángel Gabilondo, turned to Twitter to show support for all three targets of the death threats. “Hate speech and divisiveness have very serious consequences for our democracy. Let’s avoid an escalation of cruelty.”
Mónica García, the contender for the small leftist party Más Madrid, wrote that “there is no room for hate and violence” in society.
Catalan regional election to be held on February 14, court confirms
Convicted leaders of the 2017 secession attempt in Catalonia who are serving time in regional prisons walked out on Friday after the Catalan government granted them a more open regime. Approval of the tercer grado, which allows prisoners to spend only nights in prison, coincided with the start of an election campaign in Spain’s northeastern region.
Also on Friday, the High Court of Catalonia (TSJC) confirmed that an upcoming regional election will take place on February 14, not on May 30, ending weeks of uncertainty over the date of the polls.
The Catalan government had sought to postpone the original date on the grounds that the coronavirus crisis would make it difficult for many people to vote while staying safe. Critics said the date change was politically motivated and unlawful.
The TSJC court had provisionally upheld an appeal against the change, and on Friday it confirmed this decision, which could still be challenged before the Supreme Court but would not alter the election date.
The separatist leaders on a more flexible regime will now be able to take part in their own parties’ campaign events if they wish to.
Dolors Bassa, who was a Cabinet member at the time of the unilateral independence declaration of October 2017, was the first of the group to walk out of prison on Friday. After leaving the women’s facility of Puig de les Basses in Figueres (Girona) at around 8.45am, she urged sympathizers to go vote on February 14 “to win again.”
At 10.30am, Lledoners prison in Barcelona released Jordi Sànchez and Jordi Cuixart, leaders of two civil society groups convicted of participating in the breakaway attempt, and the former Cabinet members Oriol Junqueras, Raül Romeva, Jordi Turull, Joaquim Forn and Josep Rull. The group emerged carrying a sign calling for “amnesty.” The only member of the group to remain in prison is former Catalan parliament speaker Carme Forcadell, who is still awaiting a decision.
All nine were convicted of sedition and misuse of public funds by Spain’s Supreme Court and are serving sentences ranging from nine to 13 years. The Catalan government granted them tercer grado status once before last year, but the move was struck down by the Supreme Court in December and the group returned to prison. However, eligibility for this regime undergoes review every six months, and the regional executive, which is headed by a separatist coalition, has again granted them this status.
Prosecutors are planning to appeal the decision, but the timing of legal procedures means that the separatist leaders will be on daytime prison leave for much of the election campaign, if not all of it. While none of them are running as candidates, their presence could help energize pro-independence voters. Inversely, if they were sent back to prison it would provide fuel to the movement’s claims of political repression.
Secessionists are also framing the legal tussle over the election date as further proof of alleged meddling in Catalonia’s political and institutional life.
In a rare agreement between separatist and conservative parties, the postponement to May had been backed by all political groups in the regional parliament except for the Catalan Socialists (PSC) – the Catalan branch of the Spanish Socialist Party (PSOE) – who had insisted on preserving the February date.
Salvador Illa, the Spanish health minister until this week, has stepped down to run for the regional premiership with the PSC, and a recent poll by the state-funded Center for Sociological Studies (CIS) research center suggested the possibility of a technical tie between the PSC and the Catalan Republican Left (ERC), one of the two partners in the Catalan government coalition.
Both ERC and its partner Together for Catalonia believe that the PSOE is behind the legal challenge to the May postponement, and that the real reason is a desire to make the most of the impact on public opinion from the news that the high-profile Illa will be the Socialist nominee to lead the region.
But a more recent poll by the Catalan government’s Center for Opinion Studies (CEO) shows ERC winning on February 14 with 34 to 35 seats in the regional parliament, followed by Together for Catalonia with 32 to 34. This would ensure the separatist bloc’s absolute majority in the 135-strong house with 51.2% of the vote.
The election will seek to bring stability to a government that’s been under an acting leader, Pere Aragonés, ever since September, when the Spanish Supreme Court upheld an 18-month ban from public office against Quim Torra in connection with violations of institutional neutrality during an earlier election campaign.
After Catalans go to the polls, Spaniards are expecting a two-year period of rest in a country that has been through four national elections, a European vote, regional and municipal polls, and two no-confidence motions in parliament since 2015.
Australia2 years ago
Button and Diane Powellpark the school bus after three decades
Australia2 years ago
Button and Diane Powellpark the school bus after three decades
Tech1 year ago
Search engine startup asks users to be the customer, not the product
Europe10 months ago
Covid: Flights shut down as EU discusses UK virus threat
Europe9 months ago
Post-Brexit trade: Is red tape chaos just ‘teething trouble’ as the UK government argues?
Health10 months ago
Spain ‘to register’ those who refuse to have Covid-19 vaccine
Australia9 months ago
Covid: Brisbane to enter three-day lockdown over single infection
Arts3 years ago
How a chain-link mosque at the Vancouver Biennale became a community hub