You are not in the fashion of the current second, if you do not express concern about the impact that the Chinese economic slowdown is going to have on the world economy and that it could become the next setback that it suffers. The “covid zero” policy launched by the President Xi Jinping it is meaning that 400 million people in 45 cities are fully or partially confined, including Shanghai, 25 million inhabitants and the largest commercial port in the world.
This means that 40% of its GDP is affected by the restrictions which, together with the fact that for months it has seemed that signs of another real estate crisis have been perceived, is producing very downward revisions to its growth for this year, which It is accompanied by a fall in the stock market and the yen. The official data for April released this week indicate a decline, even greater than anticipated. And given that Chinese growth accounted for 25% of world growth last year, the Chinese slowdown will negatively affect all economies. This is also what globalization has.
With an added element: given that the re-election of Xi for a third term it has to take place this year at the twentieth congress of the Communist Party, it is difficult to think that he contemplates an alternative to his “zero covid”, whatever the cost. Therefore, the downward revisions of Spanish and European growth that are taking place these days may fall short and those of inflation, too optimistic. Eye.
On the other hand, the complicated situation suggests that the change in the productive model indicated by the Party and known as “dual circulation” will suffer a delay. Therefore, the idea of strengthening the internal market and gradually decoupling it from the foreign sector that marked official policy in recent months will be delayed. Some even begin to find similarities between the current confluence of crises in China with the turn that occurred in Japan, also of real estate origin, which put an end to its dreams of world economic power, in the mid-90s. cut off.
Around the structural deficit
These days I have seen estimates of the structural public deficit of the Spanish economy, which represents the mismatch between income and spending if there were no temporary cyclical movements, ranging from 3.4% of GDP to 5%.
But everyone, beyond tenths up or down, agreed on three facts: it has grown with the pandemic; the partial reform of pensions will make it grow even more and it is not found in any of the government documents, any sign that they are concerned or that they are preparing measures to reduce it, which can only be income increases or spending cuts, that yes, also with structural character.
The problem of not doing so is twofold: it increases the public debt necessary to finance it, the Airef calculates that up to 140% of GDP and dangerously raises the deficit threshold in public accounts, which will reduce room for maneuver in the face of future crises. . In both cases, the future is compromised, in order to gain political comfort in the short term, given that the recovery will indeed reduce the short-term deficit.
We already know that the promised tax reform, for which a White Paper was commissioned from a group of experts who submitted their proposals last March, is being postponed for the next legislature, as is the change in the regional financing model. And, in parallel, we also know that the law that links pensions with the CPI, given that the closing forecasts of the CPI for this year are in a range between 5.3% and 7.5% according to the organizations, It is going to inject some 11,000 million euros of additional spending in 2023 that will go directly to the deficit, as the European Commission has just warned.
Therefore, the concern is, in this case, justified and the Government should review this passive attitude, especially if it exhausts the legislature as it seems.
And, meanwhile, Europe debates its future
If the rebirth of the European project has been driven by the ‘Next Generation’ Funds and the embryo of a European Treasury, the Conference on the Future of Europe, launched a year ago by the Presidencies of Parliament, the Commission and the Council and which closed the May 9, has been a breath of fresh and refreshing air ready to vitalize the rebirth of the European Union from the impulse given by an interesting process of citizen participation, of participatory democracy. Citizens, NGOs, Universities, Professional Corporations, Associations and a diverse cast of members of European civil society have organized their debates and their proposals through electronic platforms and face-to-face events, favoring open debates.
The result, a Report of almost 250 pages, which includes 49 proposals and 350 specific measures on the various items in which the Conference was organized. With two common denominators: a review of the Treaties in a more federal sense is considered necessary and, in parallel, important changes are proposed in the institutional architecture of the European Union, giving greater weight to Parliament.
Among the ten topics that have been discussed, I want to point out some ideas that have seemed relevant to me to see how the Europeanist spirit of the participants has gone in the opposite direction to what the European extreme right proposes. Thus, a clear and open position is requested towards migration, reinforcing legal migration and the fight against irregular migration, maintaining respect for human rights. Likewise, greater protection of citizen rights is required in the processing of digital data, with greater control of the power of the large multinationals in the sector. Finally, the need to reduce the economic dependence of the Union in strategic sectors, mainly energy, is pointed out.
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Sufficient material to promote a citizen debate in Spain, before seeing it in Congress, since everything points to these materials ending up as part of a new attempt to draw up a European Constitution that, this time, is ratified by all.
Lastly, we get the will of the President of the Government to prioritize, in the remainder of the legislature, the explanation to the citizens of what has been and is being the economic management of the Executive, to the detriment of other more conflictive issues, driven by their partners. The problem is that, for that, he needs politicians at the head of the economic area and he has surrounded himself with managers. In other words, it will fall back on their shoulders like all the complex issues in these matters during the legislature. The loneliness of power, or so.