Different recipes and rules

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Aided by the good performance of the economy, with the black spot of inflation, Pedro Sánchez intends to make one of his main electoral assets of the prescriptions his government uses to mitigate the effects of the pandemic and the war in Ukraine on textile productivity and employment, unlike that applied in the last term of the PP. His speech, drawn in broad brush strokes typical of slogans to win votes – including those of the opposition – is summed up as support for the most deprived and demands greater effort from the wealthy despite draconian austerity at the expense of the vulnerable citizens. A contrast with which he tries to reactivate the fear on the right in the face of a possible worsening of the situation. There is no denying that the Executive has moved to give a strong social emphasis to its response to these two interlinked crises. The notable increase in government spending in the form of generous aid, special taxes on banks and electricity companies to partially finance these additional costs, and the Iberian gas exception – which involves market intervention – have an ideological imprint that has left the coalition in power noted with a dual purpose: to show that there is a “progressive” alternative to those put forward in the recent past and to deny the mantra that ascribes to conservatives greater managerial capacity in times of economic turbulence. The resistance of the employment and the good tone of the activity speak in its favor. On the contrary, Spain is still the only EU country whose GDP has not yet recovered to pre-COVID-19 levels. The government has coped with extremely complex scenarios with relative success, although they are very different in origin and treatment from the financial and debt crisis that Spain was about to bail out, which must be taken into account when drawing parallels. Unlike what happened then, when the European institutions imposed counterproductive austerity with a hammer, they have now suspended the application of fiscal rules. An open bar in government spending that has helped reactivate the economy and, together with the record tax collection enabled by inflation, has enabled the social policies that Sánchez rightly prides himself on at the cost of raising a debt that will have to be reduced with the restoration of the Stability Pact.
Source: La Verdad

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