As we close the first quarter of 2024, politics once again looms large, affecting many aspects of our lives. This has been the case for many quarters, or rather, years. It’s not an issue exclusive to Spain; few countries escape political turmoil. Global geopolitics, too, is fraught with conflicts resulting in numerous human and economic losses. In the 21st century, amidst various events and shocks, we seem to have become accustomed to managing crises, perhaps better than before. Nonetheless, this environment hampers the coherence needed for long-term growth-promoting stability.
In our country, we’ve been far from the political normalcy that fosters consensus and roadmaps for growth and increased well-being. While the macroeconomy has held up well since the pandemic, with a labor market showing greater resilience than expected given the challenges, and an economic activity (GDP) bringing more cheer than in most of the EU, and far from the technical recession seen elsewhere, structural problems persist. These issues don’t seem to have garnered enough political priority in a tumultuous context spanning years. Major challenges persist, such as the negative differential situation in the labor market, characterized by significantly higher unemployment, lower productivity, and low relative wages. These are structural problems that require bold reforms achievable only through broad political and social consensus. The lack of sustainability in public accounts —especially the public pension system— is another enormous challenge. Grave inadequacies like the lack of affordable housing supply, an urgent national priority, require immediate action now and for many years to come. Lastly, the evaluation of public policies appears to be significantly improvable, which could lead to better-designed government actions with numerous favorable effects. This weak scrutiny has been evident, among other cases, in the implementation of the sizable Next Generation EU funds, which, despite having positive impacts, seem not to have achieved the expected efficacy thus far.
As a culmination, two weeks ago, with political dissent —and several crucial electoral calls ahead— the extension of the State budgets, a fundamental tool for a country’s economy, was announced. There have been several extensions in the past eight years, so to meet the economic needs of 2024, another somewhat outdated extension is being used. While some instruments (via royal decrees) may allow for some of the actions planned for 2024, some emergencies, like the housing plan, probably won’t be implemented to the same extent as planned. Moreover, resorting to partial actions instead of having the completeness and decisiveness of a General State Budget for 2024 doesn’t allow for achieving the major economic objectives. It’s a disappointing economic outcome for a very tumultuous quarter.