Luis de Guindos, Spain’s Minister for the Economy, has told European governments that they shoud be focusing on improving banking and trade in order to improve growth in the Eurozone.
Sr de Guindos has argued that it would be extremely difficult to have a real recover in Europe if free trade is limited and the health of the European banking sector is still in question. He continued to maintain that “that kind of recovery is the ideal landscape for populism”.
His comments are in contrast to recent calls from Brussels for some EU governments to increase their spending in order to boost demand. Just last week, the EU’s budget commissioner, Pierre Moscovici, asked goverments that “have budgetary room for manoeuvre to spend and invest more, both in their own interest and in the interest of everyone”.
Sr de Guindos said that “loosening might be the correct policy in countries that have the fiscal space”, but that other policies such as free trade, structural reforms, and improving the banking situation in Europe were more important to stimulate economic growth.
Mr de Guindos is beginning his second term as the Minister of the Economy for Spain under Mariano Rajoy who has recenty won the backing of the Spanish parliament to lead another government. The 56-year-old economist played a crucial role in designing Spain’s response to the banking collapse and debt crisis of 2012.
Spain is currently on track to publish a deficit of 3.6% of GDP, 0.5% more than has been agreed with Brussels. Since 2007 corporate tax revenues have dropped from around €40 billion to just €20 billion in 2016 due to the crisis. Despite that, Sr de Guindos has said that Madrid is committed to reaching its target of around €5.5 billion with a focus on “closing loopholes and deductions” and improving corporate tax revenues.