Vaccines, Employment And Aid Management In Europe: The “Big” Challenges Facing The Spanish Economy In 2021
2021-02-10 | by CusiGO
Spain’s path to recovery will be more complex than that of other economies. This is highlighted in the latest ESADE economic and financial report released on Wednesday, which lists the expansion of ETS (temporary layoffs), the management of European aid and potential corporate bankruptcy as major challenges in 2021. Spain is heavily dependent on the service sector and a large number of difficult small businesses, It will not be easy to do so, and there are still difficulties in controlling the epidemic: vaccination is the first step, and clarification is needed on how to achieve adequate social immunization.
The study also warns that the impact of the crisis is uneven. While, on the whole, it can be pointed out that the impact on the Spanish economy is difficult, not all sectors are affected to the same extent. The report’s authors believe that this is led by Tony Roldan, director of esadeecpol, in cooperation with sabadel bank, which helps to widen the gap between northern and southern European countries. However, they warn that this is not the only gap that the epidemic has widened: it has also widened the gap with the labor, gender or education sectors, as well as the gap that separates big companies from small and medium-sized enterprises.
The report points out that due to the third wave, this year’s start is very bad, so it is expected that 600000 to 800000 people will stay in ete in the first half of 2021. The authors point out that this figure means expenditures not foreseen in the budget, and they also emphasize the important role of this figure in avoiding eventual layoffs and rising unemployment. However, they also believe that the measure cannot be extended indefinitely: “sooner or later, economic policy makers must allow some of the workers still working to be redistributed to other more active and job creating sectors.”.
The second challenge that the report calls “huge” is to promote the arrival of the European recovery fund. Through the next generation EU plan, Spain is expected to receive as much as 140 billion euros (the loss between loans and capital injections). For this reason, Spain must submit specific projects that meet the requirements of Brussels in order to obtain these assistance. The report’s authors stress that the money must go to small and medium-sized enterprises. It also helps to promote more inclusive and environmentally friendly growth and promote digitization, which is the main guideline for Europe to promote such aid.
Although aid is the basic pillar of economic recovery, Spain’s growth this year and in the future has played a much greater role. The authors of this study point out that the transition to a greener and digital economy will determine the future productivity of the Spanish economy, and thus its ability to compete globally, attract investment and create more, more qualified and higher income jobs. While Europe introduced stimulus measures, the report stressed the importance of fiscal measures to reduce public debt, which will provide more space for other economic policies in the future. All in all, not all recoveries depend on an increase in public debt and huge economic injections, and Europe is expected to recover in the medium term.
In the analysis of the latest macroeconomic data, the study emphasizes that the contraction rate of the whole euro area countries in 2020 will be 8.3% of GDP, which is higher than that of other economies due to the more stringent restrictive measures. But the decline has particularly affected Spain, as well as Portugal, France and Italy. The author recalls that the fight could have been greater if the exit clause of the government deficit ceiling in the European stability plan had not been activated, and because the European Central Bank had taken decisive action to avoid an increase in the risk premium of Member States.
The report predicts that these emergency measures will be diluted to make way for the next generation of EU planned stimulus measures. Reducing some indirect taxes and increasing public investment are the recipe for recovery, and the eurozone is expected to grow by 5.2% this year. Pandemic to mid-2022. Back to this year’s forecast, ESADE experts predict that Spain’s GDP will grow by 5.9%, Italy’s by 5.2% and France’s by 6%. Germany’s rebound (decline) is small, with an expected growth rate of 4.2% and the Netherlands of 4%.
Outside the EU, the US economy shrank by 4.3% in 2020 and will grow by 3.1% in 2021. The UK fell 9.8% and is expected to rebound 5.3%. Japan will go even slower, down 5.3% and up 2.3% this year. The forecast for all emerging economies is that they will grow by 6% this year, despite a more difficult and uncertain context, as many of them face greater challenges than developed economies in controlling the epidemic. In addition, the public accounts of these countries are under pressure from the contraction of tourism and its dependence on external financing, with deficits exceeding 10% of GDP. The sharp decline in GDP in most Latin American countries this year will be irreparable.
Only China, the only large economy to achieve positive growth in 2020, will resume growth at a faster rate than before the pandemic. An increase of 8.2% is expected this year, thanks to the relative control of the virus, although it originated in its territory, enabling it to resume normal activities and complete another very successful export activity in April last year.