2021 leaves big questions, by Joan Tapia

With a vaccination rate that has already reached 90%, Spain has had a better 2021. The pandemic is still there – and the omicron variant is making our holidays bitter – but its effects on life and the economy are much less serious. In 2020, the Spanish economy collapsed by 10% -the biggest drop in Europe- and in 2021 we will not have grown by 6.5%, as shown by the unreasonable optimism of the Government, but by 4.5%, as predicted by the Bank of Spain and the IMF.

But triumphalism creates disenchantment. The economy has thrown less than promised, there is delays and confusion regarding European funds and inflation, which in February was at a rate of 0%, has rushed to nothing less than 6.7% in December. The worst in 30 years. It is a threat to social stability and, being a global phenomenon, it can tighten the monetary policy of the ECB (purchase of bonds, interest rates), which raises concern. It is true that the social shield against the crisis has worked and that is where Pedro Sánchez took refuge in his last press conference: Spain today has more than 20 million jobs, which had not happened since the distant 2008. A relevant fact.

Rising inflation to 6.7% is a serious threat to social stability and may tighten the ECB’s monetary policy

But added to the economic uncertainty is the fact that the stability that Sánchez presumes is very relative and some weeks it seems non-existent. True, the government has endured, but the fights between the two partners – and the fact that together they do not have a majority either – cause mistrust. If we add the climate of verbal civil war between the left and the right and the absence of any hint of rapprochement between the PSOE and the PP, we find ourselves before a hellish noise and an eternal institutional blockade.

It cannot be that the fourth country of the EU has already three years with the governing body of the judges expired and without probable fix before the next general elections. It cannot be that in Brussels the first opposition party continually denounces the government’s action. It is inconceivable that the Constitutional Court (with a right-wing majority) has declared unconstitutional the state of alarm with which we are facing the first wave of the pandemic. Seeing in the Cortes Sánchez and Casado – let’s forget who is right – the indisputable thing is that the country is thus far below its legitimate ambitions.

Sánchez boasts of stability. Yes, despite everything it has managed to approve for the second year the Budgets, although he had to negotiate with more than ten parties. But lack of coherence in government -and in the majority that sustains it in fits and starts- and the country is unlikely to be able to advance much in such a tense political climate.

On Tuesday, the Government had great success in reaching an agreement on the reform (not the repeal) of the Rajoy reform, which made the labor market more flexible and allowed a painful and forced internal devaluation because we could no longer devalue the currency. Except leaving the euro, which not even the Greece of Tsipras dared.

That the liberal Luis Garicano (Cs), and even Aznar’s FAES, have deemed acceptable a pact in which the realism of the PSOE, with an eye on Brussels, has been imposed, with the help of pragmatics Yolanda Diaz, to Podemos, and has managed to drag the unions is positive. For this reason, the CEOE, led by a Garamendi who is showing character, he has signed it. Despite some miarramiaus.

Yes, some flexibility is lost (bad), but an agreed labor framework is achieved (good) and perhaps precariousness and temporality will be reduced. When the threat was to repeal the Rajoy reform -and make the bosses angry-, the result is not outstanding, but it is remarkable. The Government had many numbers to crash into a square of the circle.

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