Pamplona, October 22 (.) – Carlos Ocaña, economist and general director of Funcas, announced this Tuesday that from 2025 the European Central Bank (ECB) will stop purchasing euro area government bonds.
Speaking at a conference on “Spain’s economic outlook” organized by Institución Futuro, Ocaña said that debt is not a problem if it can be financed at 0% cost, but the new situation that will arise in 2025 will be He pointed out that this would mean fiscal instability. Finance is the main economic problem that Spain will face.
He said the problem would be particularly acute for Europe as a whole because while Spain was growing “incredibly” strongly, the eurozone was not. The reason for this, he said, is that “there is no single market in practice, and the funds that can be used to lend to companies cannot move freely between countries.”
And, he added, the big tech companies are Asian or American, not European.
In that sense, he questions the feasibility of elevating these large companies from the public sector. He said Airbus (EPA:) works well because it came from something that already existed, especially French and British companies, but “if we don’t know how to make Micho chips,” even “a million” Even if injected, he said. , it will be difficult to create a powerful industry “out of nothing.”
immense global uncertainty
He admitted that he “blushes a little” when making economic predictions. Because “at a time when there is so much global uncertainty, it seems like we can somehow predict the future, even though all we can do is point out trends.” ”
In this sense, he emphasized that Spain’s GDP growth rate this year was strong, at around 3%, and “surprisingly high” despite the stagnation in the euro area. However, Funkas said it will slow to 2.1% by 2025. The government’s forecast is 2.7% this year and 2.4% next year.
As one of the reasons for this growth, he pointed out that public spending in Spain increased by 28.9% from 2019 to 2023, a trend that is expected to continue in 2024. and significant growth in exports of both tourism and non-tourism services, an increase in the latter that he considers “remarkable.”
He added that consumer spending was “flat” and investment was falling further, which “should worry us”. This is because, despite “huge financial injections” into Europe’s public sector, it has not recovered. The sector is at its lowest and is actually “below the level it was five years ago.”
“In short, public consumption and the overseas sector are and will continue to be the drivers of growth,” he stressed.
A quarter of new jobs are published
Ocaña considered several economic variables and found that Funkas’ 2024 projections show that 10 communities will have unemployment rates below 10%, but in all of them the unemployment rate will still be above the European average of 6.5%. The outlook is that
The report highlights that a quarter of new jobs created are in the public sector, with an increase of around 500,000 workers since 2019.
Regarding interest rates, he said, “What the market expects is that there will be further cuts because the European economy is not growing.” He expects it to be 2.5% by the end of 2025, which remains a “very low” level, which means “we will return to a more prudent position”.
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