“Don’t go away mad, just go away”. Nikki Sixx.
This week, AIReF has warned of the risk of a recession and the Government continues to deny it despite the fact that all the advanced indicators published by the Ministry of Economy (October 24) reflect the contraction. Both the manufacturing and services indices published by SP Global are in contraction and so are the OECD’s leading indicators.
The Círculo de Empresarios has requested that the Budgets be returned due to the lack of credibility of the figures, something that is of great concern since the macro table is simply an exercise in fantasy. But above all because the spiral of increase in current and consolidated spending, counting on short-term income due to inflation, continues to raise the structural deficit.
The data published by the INE of the Active Population Survey clearly reflect the slowdown. for months Spain has entered a spiral of worsening employment which reflects that the recovery was simply circumstantial and the poverty of the economic rebound.
[El paro sube al 12,6% y la creación de empleo se ralentiza en verano]
After having increased public debt by more than 329,000 million eurosSpain closes the third quarter of 2022 with the highest unemployment rate in the OECD and unemployment data that masks the fact that there are many more unemployed than are officially published.
The slowdown in economic activity it is already evident in the labor market and it is difficult to think that a trend in which the labor market has only improved due to a temporary effect of insufficient economic rebound will change.
The slowdown in economic activity is already evident in the labor market”
Why should we worry? Because occupancy falls by 0.06% in seasonally adjusted terms after two bad data in the middle of the summer campaign. Unemployment, in addition, rises for the first time since the financial crisis of 2011.
Two out of three jobs in the quarter have been created in the public sector. Job creation in the private sector is 28% lower than in 2019.
The unemployment in the quarter rises by 61,000 people. It is the first time that unemployment has risen in the third quarter after the financial crisis of 2011. In 2011, for example, unemployment fell by 16,000 people. The unemployment rate rises to 12.7%.
[El paro es el talón de Aquiles de Sánchez para 2023. Por María Vega]
One piece of information that is often ignored in analyzes is the importance of the activity rate. In Spain, according to the EPA, it stands at 58.86%, when it was 59.14% in the third quarter of 2021, showing that the slowdown is evident. This rate was 58.72% in the third quarter of 2019.
The average length of contracts has decreased from 61 days in September 2021 to 49.2 days according to official data.
Fewer people enter the labor market and more leave. The total flow of entry into employment in the third quarter of 2022 is 1,393,200 people, 225,500 people less than in the same quarter of the previous year. Also, the outflow of the occupation is 1,259,600, which is 3,500 more than in the same quarter of 2021.
With such an increase in public spending (more than 21% 2018-2022 according to IGAE) and debt (more than 329,000 million euros), such a poor performance of the labor market cannot be defended by anyone who keeps the ideas Keynesian of spending and debt “to grow”.
“With such an increase in public spending and debt, such a poor performance of the labor market cannot be defended”
We are facing a harsh winter. AIReF estimates point to a drop in GDP in the last quarter of 2022 and the first of 2023. According to its estimates for the third quarter, Spain will still be 2.8% away from recovering GDP in 2019.
The The Sánchez government has had the largest fiscal and monetary stimulus in recent history. No government had had a license from Brussels to trigger the deficit and the debt in a similar way and none has found a European Central Bank that has bought 100% of the Treasury’s net emissions, disguising the risk.
“That huge fiscal and monetary boost has been squandered”
That enormous fiscal and monetary impulse has been wasted and the results are that Spain is the only country of its peers that does not recover the GDP of 2019, with the worst unemployment rate in the OECD and the largest primary structural deficit in Europe.
These EPA data show the failure of the labor reformwhich was announced as an accelerator of job creation and has become a brake, but the general situation in Spain does not invite the euphoria displayed by the government.
All the structural imbalances have worsened and the policy of boosting spending and raising taxes has led us to an economy that is less dynamic and delayed compared to our peers.
This week, Vice President Calviño ironized in the Senate about the proposals for tax cuts, using the United Kingdom as an example, which has an unemployment rate of 3.5%. Curiously, he forgets the £150bn increase in spending from Liz Truss’s disastrous budget that we discuss here.
[Opinión: El Presupuesto de Truss no era liberal. Por Daniel Lacalle]
It is fascinating that you think that any tax cut is bad when the Community of Madrid has less debt and better public services while maintaining attractive taxes and contributing 75% of the funds of the common solidarity fund.
But it is much more curious that he does not understand that Spain, with the highest unemployment rate in the OECDis a global example of what not to do in employment.
Every government that has increased the fiscal pressure on companies and families and perpetuated political spending has left the same result: An economy far from its potential and an intolerable fiscal and labor hole.
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