That the economy is not doing well, all Spaniards know. They are still not able to accurately recite the indicator that measures inflation or the rate of economic growth, but that the thing is black is an open secret. Another very different matter is that knowing that there is a crisis just around the corner, we pretend that nothing is happening. Otherwise, it is difficult to explain why tourism and hospitality are breaking records or, according to surveys, the populist measures of the Government of Pedro Sánchez once morest banking and energy companies have been received with fuss. The psychology of economic behavior has called it the ‘Titanic effect’. We trust that everything will always work out, but sometimes, as with the famous cruise, that does not happen. The ship sank and some passengers opted, instead of saving themselves, to pretend that nothing was happening and continue raising their glass to toast the orchestra.
I don’t want to make summer bitter for anyone, but last week the European Central Bank (ECB) announced the biggest interest rate hike in 22 years, a very clear sign that something very big is happening in our continent. The rise of fifty basic points in the price of money is a very high dose of the medicine with which we want to cure the disease of inflation that has attacked us with great force. the monetary authorities rates rise so we don’t spend. They raise the rates so that we do not ask for loans. Rates rise so that companies do not invest. Rates rise, in short, to cool down the economy and with that manage to stop the escalation of prices that has been in the two-digit environment all year.
It is a very high dose of the medicine with which you want to cure inflation
But the ECB’s decision will not only make the desire to consume retract, but the mortgages of the Spaniards rise, that the credits of many companies are not refinanced and have to close. At the same time, our government, which has been riding the Titanic for four years, with a runaway debt that did not worry it because interest rates were laughable, will see how the tables have turned. Now it won’t be so cheap finance what we owe as a State and we will have to pay more and more to cover our deficit. In other words, public spending cannot be devoted to hospitals, roads or education, but rather to pay interest, to compensate those who have financed these years in which the Government has spent beyond our means, ignoring the economic authorities. that they had been warning us.
This is what comes with the monetary policy decision made in Frankfurt last Thursday. A high dosage of 0.5 of the anti-inflation drug Hopefully it doesn’t cause diarrhea but heal us. Just in case, we will have to pay attention to the prospect and practice a normal life without excesses.
