The slowdown is clear and fears of a recession in much of the eurozone are spreading. Vice President Calviño rejects that possibility in Spain. However, the general perception is that domestic economies will not recover until 2024. And that will be an important factor in the upcoming elections
I read last August that when ordering in a restaurant it is advisable to take into account an old economic principle, that of diminishing marginal utility. It establishes that the consumption of a good yields less additional utility the more it is consumed. In other words, it is best to order multiple dishes with small quantities or tapas directly if possible. And there is no better sip of beer than the first or greater culinary delight than tasting a dish for the first time. From there, satisfaction may persist, but it always diminishes. Many Murcians, like the rest of the Spaniards, are feeling the difficulties ahead this autumn, overcrowded bars and restaurants during the summer and throwing away much of the savings of the Covid years. It would have been more if inflation wasn’t still rampant, with electricity at record highs, little fuel in August, and quite a lot of food with skyrocketing prices, like that of many goods and services. The economy is not out of our minds. Not even while eating. It has made a dent on almost all household budgets to a greater or lesser extent.
Adding to this series of setbacks is the rise in the price of money, which affects the cost of mortgages, and at the same time a gradual deterioration in the labor market. The delay is no longer discussed by anyone. Not even the government of Pedro Sánchez. The debate is whether we will also enter a period of recession, as predicted in many of the eurozone countries, and how long this deep recession will last.
Europe plunged into this crisis, accentuated by the war in Ukraine, from a relatively strong position, especially in the area of employment. But control over key indicators began to be lost after the EU’s decision to waive Russian gas, leading to strong tensions in the industry, already affected by a slowdown in international demand. In addition, it is quite possible that the monetary policy meeting of the European Central Bank, which is scheduled for September 8, will again decide on an additional rate hike. If we add the above to the impact of inflation and the uncontrollable rise in energy prices, everything predicts a noticeable drop in consumption among Europeans. It is possible that Germany, the big one hit by the energy consequences of the crisis with Russia, may end up in recession. And if the European locomotive does, other countries will follow in its footsteps, such as Italy. In an interview with LA VERDAD we’re publishing today, Vice President of Economic Affairs Nadia Calviño dismisses the possibility of Spain slipping into recession. He remains confident that the GDP growth targets (around 4% this year and 2% in 2023) will be met. That said, it will be difficult to recover citizens’ wallets before 2024. The fact that the president has opted for a measure previously requested by the PP to alleviate the suffocation of households (reducing the VAT on gas to 5%) shows that there are no signs that the inflationary trend will weaken in the short term. Certainly if the recommendations of Calviño are not followed, who argues for wage moderation and business benefits in an income pact between unions and employers.
The economic policy of the executive of Sánchez combines successes and mistakes in a series of measures that La Moncloa too often imposes by decree on the autonomous communities, an extreme that some rightly reproach, while others take the opportunity to stage political opposition, as is seen recently in the case of the energy saving plan. The excesses of each only end up undermining co-governance, diminishing the effectiveness of public policies and undermining citizens’ trust in their representatives at these delicate moments. The Miras government protests, with good reason, against this peculiar form of central executive co-operation, especially when it is worst financed, but it can’t get much carried away if the management of the European funds received is closely monitored, rather opaque by the way. Vice President Calviño made things ugly in Murcia by recalling that 35% of the more than 500 million received by the Community has not yet been processed. Too many resources are trapped in the bureaucratic labyrinth of the Community that do not reach the citizen. In the current circumstances, he has no pass.
The economy will mark the long pre-campaign of the regional and municipal elections, the battle leading up to general elections that are not looking too good for Pedro Sánchez, if demographic trends are consolidated. The final outcome will depend a lot on how the strong economic winds that will blow across Europe this autumn and winter are managed. A new course begins, which will not be easy for the region of Murcia. We’ll tell you soon.
Source: La Verdad
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