The elections of the past 23-J had a winner in votes and seats, the PP, which will not have sufficient support to articulate a majority in the Congress of Deputies that will allow it to form a Government. This is the logic of all parliamentary democracies except those with majority electoral systems that lead to a two-party model.
Consequently, an Executive elected by Parliament, even if it is articulated around a formation that has lost the elections, enjoys perfect legitimacy of origin. This is essential to remember.
The electoral results have been a surprise since a wide victory for the PP was discounted and, therefore, its possibility of governing, as well as a resounding defeat for the coalition that has led the country for the last five years. This has not happened and, a priori, the current President of the Executive could obtain the necessary support to continue in power. The alternative option is a new call to the polls. Those are the two alternatives because there are no others available.
The economy has had little relevance in the citizens' decision to vote, either because the opposition has failed to convey the seriousness of the moment and, above all, its evolution in the short-medium term, or because the Cabinet has managed to transfer to broad layers of society that the economic situation is improving and the crisis is well behind us because the polarization of the country gives priority to ideological considerations over any other. At this point, that is already irrelevant and you have to look to the future.
Once the heat of the battle is over, the facts will prevail even if there is a temptation to deny them. The slowdown in the Spanish economy is already underway and will worsen over the next few quarters; the deficit-public debt pairing is at very large and dangerous levels for the economic and financial stability of Spain; core inflation is high, higher than the euro zone average; the unemployment rate doubles the existing average for the EU; the percentage of Spaniards at risk of poverty and social exclusion is the third highest in the EU, a position shared with Greece; productivity is stagnant etc, etc, etc.
This scenario is part of a context defined by the reintroduction of fiscal rules in the Eurozone, the rise in interest rates carried out by the ECB and the disappearance of public debt programs by the institution led by Ms.. Lagarde and the probable extension of the recession in the monetary union. This set of circumstances, along with those mentioned above, define quite clearly the context that the economic policy of the leftist government will face if the PSOE leader wins the inauguration. In this case, he will have to address the situation with a Cabinet whose support will depend on parties with little interest in macro discipline, with a considerable allergy to structural reforms and confronted with each other in their respective territories.
The reintroduction of budgetary rules in the euro zone will force the implementation of a budgetary consolidation plan that is incompatible with the spending promises made during the campaign, and with a non-existent real margin to redirect public finances to a sustainable path through new tax increases that have a significant tax collection impact without making them fall on the middle classes or on companies. This would exacerbate the downward trend in consumption and private investment, intensifying the slowdown in the economy and the increase in interest rates.
On the other hand, many or some of the structural spending measures adopted and tax increases, read Social Security contributions, have not had an immediate impact but will begin to show their budgetary and employment consequences throughout the present. Legislature. The first translates into additional pressure on public spending; the second in an increase in labor costs borne by companies that will make hiring more expensive and therefore reduce the demand for labor.
The declining trajectory of employment will not be reversed, no matter how much statistical engineering and work distribution, in a context of slowdown in the rate of GDP growth and with a labor market whose pre-existing rigidities were strengthened by the counter-reform of Mrs.. Diaz. It is always forgotten that a regulatory change manifests its full positive or negative effects two to three years after its implementation.. In other words, the negative impact of the counter-reform has not yet been full.
The only variable to alleviate this dynamic, given the philosophy of the Government, would be the NextGeneration Funds whose implementation to date has been scarce, deficient and not very transparent, as multiple national and international organizations have pointed out.. Hopefully this drift is corrected and the resources provided by the EU serve to mitigate the decline of the economy and help modernize the Spanish productive fabric. This would be fundamental and a very important countercyclical mechanism.
Spain needed and needs a radically different policy from the one applied by the government coalition. The citizens with their vote have opted for continuity and have given their confidence to the parties championing the expansion of spending, taxes, regulations. In turn, the opposition has not been able or has not wanted to put forward an attractive program for real economic change, perhaps for fear of losing. It does not matter, the results are what they are and we hope that the national economy does not enter into a process of Argentineization. Ultimately, the prosperity of a country is not maintained or increased when more and more people live from the State and less from the market.