On the production economy

Until then, the Spanish economy was typically characterised by: consumption, government debt, imports, an overvalued peseta and high interest rates.

These five aspects formed part of a logical sequence: public debt forced the country to seek money abroad, and this required an overvalued peseta and high interest rates to attract foreign lenders. From industry to agriculture this situation had severe effects on our production economy, as these sectors found it difficult to export, whereas foreign goods entered the country easily. Even the tourist industry began to feel nervous. And consumption was high. Until 1991 this system more or less worked. They were golden years for some economic sectors, mainly in the areas of finance and speculation, yet they harmed the country’s overall economy. They were especially detrimental, I repeat, to the production sector.

Things began to change from 1993. The public debt was reduced and investment rather than spending was encouraged. The government devalued the peseta (this would not have been necessary with the euro) and cut interest rates. These measures boosted our exports and slowed down our imports (and, consequently, reduced the current account deficit). The result was a virtuous circle as opposed to the previous vicious circle. Namely, it transformed our economic model.

This virtuous circle worked well for years. But later Spain, yet again, fell into the easy money trap. Not through financial speculation this time, but through real estate. And the advantages of mass immigration.

Indeed, for years economic growth soared, with all its resulting benefits. Yet this has had notable drawbacks due to the basis on which it was sustained: consumption, construction, real estate, immigration and tourism. Though consumption and real estate are motors of growth they do not further future productivity and competitiveness. The mass influx of immigrants provides workforce, increases consumption, and freezes salary increases. Yet it leads the economy towards a model of low productivity and, in the middle term, makes it uncompetitive.

The economic boom years produced a euphoria that silenced all manner of criticism or warnings. The call for a return to a production economy – industry, agriculture, stockbreeding, logistics, and transport – rather than one based on speculation went unheeded by society and by the Spanish government. Until recently Spain enjoyed one of the Europe highest GDPs, while in production terms the country remained at the bottom of the ladder. This fact also explains its highly negative foreign trade balance.

All this bodes badly for Spain as a whole, but even more so for Catalonia, a country that relies heavily on its means of production to sustain its economy.

Luckily Catalonia has taken steps to protect her production industries, and in large part she has achieved this goal. And at a time when it is evident that growth based on bricks is no longer enough, Catalonia can benefit. The country must once again call for a policy to foster productivity and competitiveness, and everything that can help this happen, from the Universities to infrastructures and from the international projection of our businesses to the maximum use of new technologies.

The Spanish government currently does not appear to be headed in this direction. However, the Generalitat and all the Catalan political and social forces as well as our business and economic sector do have the possibility of guiding our country in this direction.