A significant shift – highlighted by several Spanish media outlets – in the view that the Bank of Spain has held until now regarding the scale of the challenges facing the Spanish economy. In the first report with former minister José Luis Escrivá as governor of the Bank, the entity’s constant concerns about the sustainability of the pension system have disappeared.
As the newspaper El Mundo explains, “After the warning issued by De Cos (the previous governor of the Bank) last year that Escrivá’s own reform in the government was insufficient and had counterproductive effects on employment, the problem of sustainability is now practically considered resolved, and no uncertainty is perceived. It’s as if the system’s problem was that the previous governor was a doom-monger.”
The report dispatches the matter in one page of the 199-page document and focuses on a supposed validation of the accounts of the Independent Authority for Fiscal Responsibility (AIReF) and on the fact that the picture for 2024 was not bad. “In 2024, pension expenditure stood at 12.9% of GDP. A level that, thanks mainly to the strength of economic activity, is close to 1% below what the Aging Report, AIReF, or the Ministry of Inclusion, Social Security and Migration estimated a few quarters ago that pension expenditure as a percentage of GDP would reach,” the Bank of Spain points out.
This statement is a far cry from the one in 2023, which stated that in the long term, new reforms would be necessary. “It will be necessary to continuously and rigorously evaluate the financial sustainability of the public pension system, given that the joint analysis of the main regulatory changes introduced in it since 2021 points to greater long-term spending obligations, which have not been fully compensated on the revenue side.” The new report no longer sees this need.