The Spanish Government is not the only one that proclaimed that Christmas 2021 they were going to be much better than the previous ones. But things are getting complicated. First, due to the appearance of the new variant of the coronavirus that worries about its possible effects – some such as the closure of flights in Japan are already a reality – on new restrictions on travel and tourism. The omicron It already punished the stock markets last Friday and yesterday it sank them again. Thus, the Spanish Ibex, which in the year has tended to rise, has ended up losing in November no less than 8.3%. It has been the worst month since March 2020, when the big drop due to the start of the pandemic. And the Ibex has been accompanied with less intensity by the indices of the European stock markets.
However, as we said yesterday, the great danger is the triggering of inflation. In November, the Spanish rate reached 5.6%, but the most serious thing is that it is not an isolated phenomenon since inflation in the euro zone also rose to 4.9%, the highest since its creation 20 years ago. years of the single currency. There are countries like Belgium (7.1%) or Germany (6%), with a higher rise. And the main cause of this rebound is the brutal increase in energy and electricity, no less than 27.4%.
Faced with this inflation, governments and central banks – which until recently believed they were facing a temporary phenomenon – are becoming uneasy. First, because the price of energy -Europe depends on the Russian gas– has geopolitical causes and no one can assure that Putin he will shortly change his hostility to the EU. On the contrary, Russian troop movements on the Ukrainian border are concerned. And although Spain depends more on Algeria, This country has closed us, due to its conflict with Morocco, one of the two gas pipelines that supply us.
Geopolitical causes may not disappear in the short term and, furthermore, if they persist for a few months, an inflation of 4.9% can exert a logical upward pressure on wages and lead to a price-wage spiral that is ‘self-feeding’. That is why central banks recommend focusing on the so-called core inflation – without energy and without raw food – which is at 2.6%.
The most worrying thing is that if inflation continues at 4%, the ECB will be forced – to avoid the chaos of greater evils – to raise interest rates which would damage the incipient recovery by harming families, companies and the public and social spending of the states.
In a few days the alarm has grown and the reaction of Pedro Sanchez It has been to convene not one but two weekly meetings of the Government. It is good that he wants to finish the reforms agreed with the EU. But the solution is not ‘photo-reunionitis’, but work a sensible agreement on the labor reform to propose to the CEOE and the unions. We have been confused for too long and statements that sometimes reveal an excessive bad relationship between the two partners of the Government. That is the path of ineffectiveness and disaster.
What the economy needs to overcome the crisis is that investors, those who have to create jobs, have a modern framework – similar to Europeans – of labor relations. And that it respects two principles. One, it is difficult to require companies to comply overnight what public administrations have ignored for too many years. Two, do not forget that, ultimately, the worst precariousness is not having a job.