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NEWS

FOCUS ON FINANCE

THE EURO ZONE

MARK NAYLER

STATING THE OBVIOUS

April 22nd to 28th 2016 ed., p.13

The second part, with its vague reference to economic reform, is almost as unhelpful if not quite as tautologous. The finance minister agrees with Brussels that maintaining economic growth is crucial for Spain (it would be pretty hard not to); but he disagrees with EU economists on what “consolidation efforts” will best achieve this and whether “reform efforts” are necessary to do so.

     De Guindos has rejected the EU’s demands for further austerity measures, saying they would damage rather than improve the Spanish economy. In responding to the Commission’s latest report, the finance minister pointed to Spain’s steady GDP expansion - currently the best in the eurozone - and slightly-reduced unemployment as proof that a change of economic direction is not needed. His argument has some weight and supports the broader case that Brussels’ advice to Spain is frequently unhelpful, almost always self-interested, and very often both.

t seems that anyone who has kept reasonably abreast of economic developments in


               


   

Spain over the last year - and who doesn’t mind stating the obvious for a living - is qualified to advise Luis de Guindos on how to run the Spanish economy. On Tuesday, the EU Commission and European Central Bank published a report in which Spain was, once again, admonished for missing some of Brussels’ supposedly crucial fiscal targets.

     Once translated from the boring and convoluted language apparently mandatory for the writing of such documents, the Commission’s advice to Spain is essentially: keep on growing your economy (which will, of course, ensure EU targets are met). You don’t say! The vacuity of Brussels’ latest ‘report’ on the Spanish economy prompts a serious question: would Luis de Guindos be better off just ignoring the EU’s advice and running Spain’s fiscal affairs as he thinks fit?

      Spain, says the document, requires “additional consolidation efforts to ensure a durable reduction of the general government deficit, and strong reform efforts remain paramount to further rebalance the economy”.

      Translated from report-speak, the first part states that Spain should maintain economic growth in order to reduce its budget deficit, which currently hovers at around 5% of GDP. De Guindos, of course, knows this already. So far, so obvious.

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