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Margallo maintains

Acting Spanish foreign minister asks for changes to EU austerity policy

Just like in Antonio Tabucchi’s novel, Pereira Maintains (set in Portugal in 1938, under the fascist regime of Antonio Salazar), Spain’s acting Foreign Minister José Manuel García Margallo appears to have perceived the excesses of a government (in this case, the European Union) with regard to its citizens, and he is asking for changes in its policy of budget austerity.

Margallo maintains that “while nobody can indefinitely spend more than what they make, it is no less true that we have gone way overboard with the issue of austerity.”

If it were not for the fact that the speaker is a salient minister of the Mariano Rajoy administration (that champion of fiscal rigor), the story would have gone unnoticed – just one more statement from another international expert asking for greater budget flexibility in the EU to stimulate economic growth and create jobs.

Podemos proposes embarking on a public spending spree with no thought to the consequences

Although the foreign minister is very prone to extemporaneous statements, this time his words could mean a number of things. The first (and least likely) option is that it is simply something he said off the top of his head during a television interview.

The second possibility is that the minister repeated something he heard back home, and that a theory is gaining traction within the Spanish government that Madrid needs to ask the European Commission for more fiscal flexibility.

But there is a third option (and chances are good that this is the right one): this is the same type of message that we will soon be hearing during the upcoming campaign race. Margallo has already said: “Yes to austerity, but no to killing the goose that lays the golden eggs.”

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Whatever the case may be, the foreign minister’s words resonate with a good portion of European social-democratic politicians, and his view is in line with the latest recommendations by the International Monetary Fund.

As Margallo notes, the thesis is quite simple: the euro zone has to analyze why it is growing less than its competitors and it also needs to acknowledge that monetary policy has nothing more to offer, because it is not possible to lower interest rates any further. Consequently, it is necessary to loosen the reins a bit on fiscal policy in order to grow and create jobs.

This line of reasoning was laid out in the Socialist Party’s platform for the December 20 election, and it will surely be included once more on its list of proposals for June 26. It was also there in the investiture deal that the Socialists signed with Ciudadanos.

As recently as this week, the Popular Party (PP) continued to defend the kind of fiscal austerity imposed by the German government, while at the other end of the spectrum, Podemos is proposing ending austerity altogether and embarking on a public-spending spree with no thought to the consequences.

Meanwhile, the government continues to await possible sanctions after the European Commission opened proceedings against Spain for its continuous public deficit excesses. At the same time, Madrid is negotiating the macroeconomic scenarios for the coming years. Perhaps this would be the right time to, as Margallo maintains, insist on greater fiscal flexibility to better address Spain’s main problem: unemployment.

English version by Susana Urra.


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