BancaMarch | The European Commission warns that Spain is moving away from the adjustment path and asks for measures that compensate the alignment of pensions with prices.
According to data published by the Bank of Spain, the debt accumulated by all Spanish Public Administrations during 2018 increased by 26.536 billion euros, an increase of 2.3%, to reach a total of 1,170.961 billion euros by the end of the year, a new record in absolute terms. In relevant terms, however, the debt fell because the Spanish economy continues to grow.
Miguel Navascués | Still maintaining pensions reforms, given fairly benign assumptions on productivity, growth, employment and immigration, would have to result in the apparition of a significant systemic debt, but the no-reform is therefore today the least bad solution. A rigorous study by the Foundation FEDEA focuses on precisely this point.
Now “the waters appear to have calmed” in Italy, analysts at Intermoney, however, believe we will see more episodes of tension originating in Italy. The key moment is likely to come at the end of the summer or in the autumn. This situation should be seen as a scenario for tension rather than rupture, although contagion to other peripheral economies could be possible.
Concern about Italy is the order of the day and the situation in that coutry will continue to grab investors’ attention. To such an extent that a photograph of what’s going on there is required, starting with this key question: we are facing a problem of public, not private debt.
Lukas Daalder (Robeco) | Investors are making the mistake of focusing on 3%, believing the returns on US fixed income securities augur a decline in equities
For a long time, Spain has had a “debt pending” in terms of budgetary stability. And, for the time being, the current scenario leads us to think that balancing the public finances is a difficult objective to achieve in the medium-term. Added to that problem is the high level of government debt.
It’s almost certain that the Catalan crisis will prevent the Spanish budget from being approved, which will be a blow to political stability and the duration of the current legislature.
Francesco Saraceno | The crisis is supposedly over, as the European economy started growing again. But this matters little to those who, as soon as things got slightly better, turned to their old obsession: Debt. Bear in mind, not private debt, that seems to have disappeared from the radars. No, what seems to keep policy makers and pundits awake at night is ugly public debt, the source of all troubles (past, present and future).
With regard to Spain’s debt, there has been a Keynesian policy in place, of ECB monetary expansion and the expansion of government debt, call it what you like. And this policy has allowed Spain to grow at an annual rate of 3% in three years.