The Executive Committee of the Bank of Spain has met Thursday with extraordinary character, which is not usually done to counter criticism which, in the opinion stakeholders, suppose discredit supervisors, “after a crisis that has already suffered heavy wear”. In fact, the aim of the statement that was issued after is to defend the actions of the institution, both at the present time, with a governor appointed by the current government of PP-Luis Linde-as in the previous stage, Fernández Ordóñez front. And the Spanish financial sector is still difficult challenges ahead despite the consolidation process that has gone in recent times, following the European subtraction of 40,000 million euros that had to resort. The dreaded ‘black men’ have returned to remind Thursday and it is clear that domestic squabbles as triggered by Economy Minister did not help build confidence in the sector.
Rescue Supervisors conducted his last visit to Spain the past 6 and 10 October and have now published their findings. On the one hand, relate to circumstances that do not depend exclusively on the Spanish banking but that influence their profitability, as is the current setting of interest rates to zero, the ECB intends to extend long and involving a threat to business margins of banks.
As for what we do depends strictly on the Spanish financial system, the report misses the circular of the Bank of Spain on banking foundations must develop operation reserve fund required for excajas owning more than 50% of the capital of banks in which they turned their banking business. The approval of this circular “is key to the overall success of the reform of the savings bank sector,” says the report.
Third, the EC and the ECB admit that the bank continues to improve both its strength and its performance, so that the new credit has finally started to rise in some sectors, especially with regard to SMEs. But that was just the good news. Immediately after, warns that the total volume of credit continues to contract, which “puts a potential profitability prospects of banking stress”. Then there is the “challenge” posed to the bad bank, the SAREB achieve output the assets accumulated in his “significant” portfolio.
Therefore, the report states adds that “Spain it is still vulnerable to sudden changes in the confidence of international investors “and again cites the exposure that our financial sector has certain stakes abroad, as the current volatility of the markets for fear of what happens in Greece. The Community institutions emphasize that the economy is not immune to what happens in the rest of the eurozone, in full impairment. “It is important to remain vigilant, because large imbalances precrisis period and political challenges in the labor market and beyond are still substantial, and some important reforms have not yet been completed,” says the document.
While improving the Spanish economy to grow at a faster rate than the average for the eurozone next year, warns of the “risks” that continue to pose a high level of borrowing by the private sector and the public is recognized.
Inadequacies of labor reform and tax reform
Beyond the issues surrounding banking, EC and ECB warned that “the application measures for active employment policies more effective when its contribution to reducing unemployment is advancing only gradually “. Remember that you have not made progress in reforming services and professional associations, required long by Brussels, and consider the reforms of the electricity and gas market are helping to contain the hefty tariff deficit.
Among other things, the lack of ambition of the tax reform of the Spanish Government to consider is a “partially missed opportunity” to address the shortcomings of the tax system laments. “Tax reform focuses on cuts in income tax and corporation tax and is therefore not as extensive or ambitious as it could have been,” say the two institutions in the report and added that “it is a partially missed opportunity for significant way to simplify and improve deficiencies of the tax system, and to sustainably reduce the tax burden on labor. “
Brussels has insisted on numerous occasions the importance of Spain moved the tax burden from Work indirect taxes, such as consumption and environmental or property taxes, with the aim of encouraging job creation and growth. The Commission itself has already launched this message to Spain very simulator-terms in its recent opinion on the country’s budget request for 2015, which also detected the risk of defaulting to European standards of fiscal discipline.
In the report published today, the Commission and the ECB insist that further tax reform will not have a neutral impact on the Spanish coffers, which “makes the difficult budgetary consolidation.” Both institutions consider that the country be able to meet its target of reducing the deficit below 5.8% of GDP this year, although they doubt that the autonomous communities meet their goal of containing the deviation below 1% . However, caution that fiscal consolidation needs “remain substantial” for 2015 and 2016.
They insist that “some fiscal structural measures have not yet fully implemented” and return to target regions , noting that it has reduced the pressure on those who have not met or risk failing to meet fiscal targets, compared to last year.
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