The INE sinks the propaganda of the ‘robust recovery’

“Home is where your hurt doesn’t have to run”. Neal Morse.

The Spanish economy did not grow robustly, as Calviño repeats, in the first half. In fact, Spain ranks as the EU’s economy lagging behind in recovery of the pandemic.

The national accounting published by the INE shows that GDP rebounded a paltry 0.4% in the first half of 2021 while the Government repeatedly repeated that Spain “leads European growth.”

The data is very worrying in every way. After more than a year of reopening and in the midst of the greatest fiscal and monetary stimulus in history:

GDP for the first half of 2021 stagnated at + 0.4% in full reopening, with the services sector at full capacity (expanding PMIs), with a European tailwind, massive public spending and maximum support from the ECB.

The wages show a year-on-year drop in the second quarter of -3.7%

It is also very worrying to see that investment in the first semester falls, registering a -1.1%.

Additionally, exports show a very poor performance, increasing only + 1.1%.

A poor rebound and, above all, massively indebted, inflated with public spending that has shot the debt to 122.1% of GDP.

A poor rebound and, above all, massively in debt, inflated with public spending that has triggered the debt

From an estimated + 2.8% the INE goes to + 1.1% and, beware, the data for the first quarter also worsens from -0.4% to -0.6%. Total, a hatchet of 1.9% of GDP! and a stagnant economy in the midst of what they call “robust recovery” … but the headline has already been sold with great fanfare.

Where did the second quarter hack come from?

The household consumption falls from + 6.6% to + 4.7%… more than 30%.

But it is not, as some socialist economists say, because of consumption – as if that were irrelevant. The biggest hack of the INE is in investment. From an estimate of -1.5% (already negative) to -3.5%, doubling the previous bad figure.

And be careful, because the consumption of Public Administrations goes from + 0.8% to + 0.9%

The government trusted its sci-fi estimates of recovery to “a happy 1920s” of skyrocketing consumption after increasing savings in 2020. Losses Spanish citizens have proven to be more serious than the Government, again, and they do not fall into imprudence to justify the propaganda estimates of Moncloa.

Assuming that the savings accumulated during the pandemic are going to be converted into spending is not knowing the reality of Spanish families, who suffer inflation, the drop in real wages and the difficulties of a work environment with more than 3 million unemployed and still 250,000 people in ERTE, in addition to the self-employed in cessation of activity.

The reality of Spain does not correspond to propaganda triumphalism of the government. The Bank of Spain placed the amount of accumulated “forced” savings at 2.5% of GDP, that is, about 28,000 million, less than half of what the government estimated.

Nor can it be thought that this saving will be converted into consumption with the economic uncertainty and the political risk that Spain is experiencingNor were the government’s forecasts realistic considering the history of other crises. The PSOE made the same mistake in the 2008 crisis with more than debatable savings estimates.

After suffering the biggest drop in the European Union, 10.8% in 2020, Spain is still 8% below the pre-Covid-19 level. Meanwhile, Germany, Italy and France are only three. Spain is much worse than Greece or Portugal as well.

After suffering the biggest drop in the European Union, 10.8% in 2020, Spain is still 8% below the pre-Covid-19 level

The hack carried out by the National Institute of Statistics to the GDP estimates for the first semester is important for two reasons: It denies the government propaganda and shows us that we are going to a stagnant environment that was already evident in 2019.

It is urgent to change this wrong and irresponsible policy that attacks investment, employment and companies, that triggers useless political spending and disguises the atrocious unemployment figures with unnecessary public contracts in a country that is going to have a deficit of more than 8% in 2021 and in which the Government has already recognized that it will violate the deficit rules until 2025.

This urgent, necessary and responsible revision of the INE brings out the colors of the triumphalism of the Government, but, above all, it shows that the macro box that supports the presentation of Budgets is invalid and, with it, the estimates of fiscal income and deficit.

Closing a Budget agreement with a macro table that is annulled by reality is more than irresponsible, it is harmful to credibility of a country that is damaged after the assault on the legal security of the imposition of the sun and the wind by those who criticized the non-existent tax on the sun and the counterproductive measures in employment and pensions.

None of the factors used by the government for its recovery estimates is trend or structural, but purely temporary. And that reminds us again that bouncing is not growing.

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