Four years of economic policy reforms in Spain: An analysis of results from an EU perspective (Xifré, R.)
Ramon Xifré, ESCI-UPF and PPSRC-IESE
Spain´s policy response to the crisis seems to have brought about an improvement in competitiveness, with export performance among the best in the EU. Nevertheless, fiscal consolidation efforts are below expectations and worse than EU peers, resulting in an ever-increasing public debt stock and raising questions about future debt sustainability.
The policy response to the 2008 economic and financial crisis in Spain, and elsewhere in the EU, consisted of three main elements: fiscal discipline, structural reforms to improve competitiveness and reforms to stabilize the financial system. In Spain, economic reformism really gained traction in 2010 and this note briefly analyzes how the main country indicators do, or do not, reflect the expected outcome from policy reform since then. This article analyses the first two policy priorities (fiscal discipline and competitiveness) and in relative terms to the other three largest euro area economies (Germany, France and Italy). In terms of fiscal adjustment, the performance of Spain is very disappointing in several respects and therefore the outlook is worrisome. On the competitiveness front, the picture is more mixed. There has been some progress in regaining internal competitiveness and Spain´s high export growth is only comparable to Germany's, but the country still suffers a chronic deficit in merchandise trade.
SEFO - Spanish Economic and Financial Outlook Vol. 3, N.º 5 (September 2014)