Carlos Segovia explains in El Mundo that “Since Thursday a powerful threat of impoverishment has been looming in the EU, particularly in the countries that were already lagging furthest behind in the recovery, with double the unemployment and higher inflation. That is Spain, unfortunately, which had already been slowing down in recent weeks.
It was symbolic that Pedro Sánchez cancelled his participation in the Spain Capital Markets forum organised by Bloomberg in Madrid on Thursday. It was logical given the complexity of the day, but it also spared him a difficult speech. The Prime Minister had planned to insist that the Spanish economy would be the fastest growing in the Eurozone in 2022 after failing to do so in 2021. As well as releasing a stream of positive data on employment and acceleration with European funds. Everything remains in quarantine.
At another forum in Madrid, the new US ambassador to Spain, Julissa Reynoso, did not mince her words. “Let’s be clear,” she told the audience of the American Chamber of Commerce in Spain, chaired by Jaime Malet. “We are facing a land war in Europe and Putin is the only one responsible,” she said in the presence of the chairman of Iberdrola, Ignacio Galán, of the Damm group, Demetrio Carceller, and the former minister Trinidad Jiménez.
The ambassador and until now chief of staff to Jill Biden – the US President’s wife – spoke of a “brutal conflict” looming if dialogue does not work. With her information from the White House she sowed pessimism in the room. “If what she says comes true, we can throw our strategic plans in the wastebasket,” commented one of the business leaders in attendance.
Even if it is a contained conflict, fuel and gas prices are already pointing to a tough 2022, damaging Spanish economic growth. On the first day of the invasion, oil prices exceeded 100 dollars per barrel, a level not seen since the Russian annexation of Crimea in 2014. Gas prices rose by 60% and futures point to similar prices throughout the first half of this year.
Spain is better positioned in gas than most of the EU. “Russia supplies 25% of our domestic customers,” Naturgy chairman Francisco Reynés told the Bloomberg forum. That is to say, limited damage, because in the market as a whole it does not reach 10%. The problem is that all gas will become more expensive wherever it comes from.
Other damage is indirect, because large commercial customers of Spain, such as the German market, do have a worse supply, with the consequent impact on their economic growth and consumption. Another damage will be the reciprocal sanctions, according to CEOE, because “companies will suffer”. And the Spanish risk premium? Already installed sine die at more than 100 points”.