With the new shoots, concerns arise about a new restriction for autumn or spring. Of course, health is a priority, but to be honest Spain wouldn’t face any further restriction. Tourism has suffered a lot. The summer was lost. And new urges don’t instill a lot of self-confidence. The impact of the coronavirus in Spain has been greater compared to other European economies. It is precisely because of its dependence on tourism. The restrictions on mobility and the closing of borders were a severe blow to Spain.
The gross domestic product (GDP) of the euro zone expects a decline of 12.1% for this year. This is the worst number in the club’s history. But Spain leads the collapse with a whopping -18.5%. In June, the national debt hit a record of 1.29 trillion euros, exceeding 100% of the national GDP. Of course the situation is not easy. Politics is very radicalized. The retired King Juan Carlos fled his indiscretions to Abu Dhabi. And Catalonia continues its separatist dreams. Obviously, we are facing a deep leadership crisis at a time when a lot of leadership is required.
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Spain currently has no choice but to borrow. Public debt continues to rise during the pandemic and is sure to continue to rise in the coming months. In June, The debt rose compared to the previous month by 32 billion euros to a total of 1.29 trillion euros. This is clear from data released by the Bank of Spain this Tuesday. The International Monetary Fund predicts that debt will rise to 120% of GDP this year.
The big question here is whether this debt is “good debt” or “bad debt”. There is no doubt that this crisis requires government intervention. Liquidity injections are necessary. And above all, support is necessary. However, the future burden of debt lies in the use of this money. Is the money wasted and invested? Money always helps revitalize the economy, but sustainable growth requires vision. Does Spain have a plan? How will the economy reinvent itself? The challenge for Spain is re-industrialization.
The big problem with this generation is the fragmentation of everything. The European Union is not at its best. Of course, it’s not just a Brexit. There is also constant friction between the countries of the north and those of the south. That is, the economical and the Mediterranean. The Mediterranean wants the money, but without ties. And the frugal simply refuse to sign a blank check. In this case, the populists blame the European Union for all evils and want to divide the Union.. There was always friction between the different temperaments in Europe. The warm but lavish southerners and the cold but hardworking people of the north. That’s not new
While the European Union has grown too fast in terms of complexity and size, the Union is better for its parts than it is for dismantlingn. Of course, sovereignty had to be foregone in many ways. However, the advantages outweigh the disadvantages. One example of this is the European Recovery Fund. We are talking about an economic package to save the economy of 750 billion euros (loans and subsidies).
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It was not easy to approve this fund, but eventually the miracle was achieved. Funding is done through the issuance of bonds and is paid for through the creation of new taxes. It’s not a blank check. It is conditional money that requires structural changes. Spain receives 140 billion euros, of which 72.7 billion are direct aid and the rest is loans. Spain is only the second beneficiary after Italy.
Economic measures have been taken to recover, but the increase in infections is still a major obstacle. The bad truth is that the pandemic has not been fully controlled. Why are there so many cases? Well, apparently, it is all thanks to nightlife, family gatherings, and working on the farm. That means the Spaniards are Spaniards. The economy will not fully recover with a half opening. Closing borders and restricting mobility in a country dependent on tourism are simply fatal. We are facing a really complicated situation.
However, What happened to the vaccines?? The Russian vaccine, the Chinese vaccine, the Trump vaccine, the Bill Gates vaccine, and the anti-vaccines. Now everything is so confusing that no one knows what is really going to happen to the blessed vaccine. I got the impression that when the vaccine came out it was going to be the beginning of the end of this pandemic nightmare, but it turns out that several vaccines have been announced and nothing happens. There is so much distrust that nobody trusts anything anymore. In summary, we are in the same.
All economic estimates made for Spain do not include the vagaries of the virus. That said, the numbers we’ve seen are actually optimistic. To add insult to the injury, it’s back to school now. Which means new shoots. And new setbacks. It is already evident that the refinement was a complete failure. The economy had to be opened. That wasn’t a mistake. The mistake was that it opened and “irresponsibility” made a party. The idea was to open up, but with caution and with the appropriate care.
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And now that? Well, it is clear that we have a leadership problem in Spain. The government doesn’t lead. At first glance, Sánchez seems more confused than the citizens. It all seems like a great improvisation. And there is no clear vision for Spain. We know that a transformation has to take place. But how is the way?
In Spain it leaves no political spectacle and citizens have fled into apathy from exhaustion. Debates in Parliament are silly and irrelevant. And it seems they are more eager to be the next government than to build a future as a nation. In this case we have a threefold problem. The uncontrollable pandemic, the terrible crisis and the pathetic political situation.
What can citizens do now? The solution to any crisis is to work harder. It’s one thing to do an analysis and quite another to sit down and cry. Crises are full of opportunities and opportunities in Spain can lie in non-tourist sectors. The digital economy, industry and agriculture, for example. Work harder. Don’t party so much. Eat less tapas. Don’t spend so much. Invest more. And be alert to opportunities.