Keeping faith in a resilient economy, Antonio Garrigues

Spain has been hit particularly hard by the global economic collapse but the current difficulties will not stop either its continuing economic or social evolution, says Antonio Garrigues

España ha sido duramente golpeada por la crisis económica global pero las dificultades actuales no van a detener su evolución económica y social. El desarrollo democrático, económico y social del paí­s en las íºltimas décadas ha sido sin duda muy positivo, se ha modernizado e internacionalizado considerablemente. Los íºnicos obstáculos que aparecen son los polí­ticos, dice Antonio Garrigues, Presidente de Garrigues.

Spain’s democratic, economic and social development in the past 30 years has undoubtedly been positive.

It has modernised and internationalised admirably. In no other country in the world have so many decisive social changes taken place in so short a time, including in the roles of women and religion in public life, and the assimilation of democratic values.

We have every right to feel satisfied and, indeed, proud. Spain’s rates of growth and job creation comfortably outstripped even those of other European economies. Spain lived through a period of national euphoria that has translated into unprecedented artistic, culinary and sporting success.

The global financial crisis has, however, abruptly ended this process. The desire to get rich as quickly as possible without effort or sacrifice became an overriding human ambition. All bounds of prudence and common sense were exceeded. If we want to come out of the crisis with a minimum of dignity, we will have to do two things: first, create a climate of public morality radically different from that which has prevailed until now; and, second, punish with imprisonment those responsible for this global catastrophe.

Nonetheless, some carry on as if nothing had happened and a year on from the demise of Lehman Brothers, are again behaving in the same ways as those that brought upon us the greatest financial crisis in history. And what of Spain? Many commentators are now magnifying the country’s problems and predicting even graver and more lasting woes. Few are free from blame but criticism must be measured and fair.

What sets the crisis in Spain apart from elsewhere in Europe, making it more comparable to the situation in the US, is the downfall of a massive real estate industry. Corruption in the sector scaled deplorable heights with the collaboration – conscious or otherwise – of the public sector and of financial institutions that sought to inflate the bubble.

Spain continues to require a dynamic real estate sector, but one that is less fragmented, more international and, especially, much more transparent. If all of this is achieved the sector will – eventually – again be a decisive factor in our economy.

And I have faith in the resilience of the Spanish economy as a whole. We have demonstrated an exceptional ability to confront and overcome challenges considerably more difficult and complicated than those we currently face. Potential foreign investors should not take the dire warnings too seriously. Moody’s has stated that Spain is undoubtedly a ‘solvent country’.

We have a well-regulated and fundamentally strong banking industry and a moderate level of public debt, which remains lower than many other European nations. There remains an assured potential for growth. Let us not forget the international praise given to the Bank of Spain – as a financial regulator – since those dark days of last year.

Family networks in Spain remain very active and offer an important social and economic safety net, especially in poorer communities. We also have a level of social security support well above the European average and, above all, a citizenry willing to work to make the country a success.

Our main problem is neither economic nor social. As the economist Paul Krugman said of the US economy: ‘Is there anything to worry about? Yes, but the dangers are political, not economic.’

The radicalisation of Spanish political life has become a deplorable spectacle that is not only adversely affecting public sentiment, but also delays the restorative measures that need to be taken. Without social or political dialogue, things become even more difficult.

But I remain optimistic. Agreement will have to be reached, at all levels, because there is simply no alternative. As soon as politicians accept that public interest clearly outweighs party interest, then superficial disagreements will disappear.

Once this understanding is reached, it will mark the beginning of a new era of stronger and more sustainable growth.

Antonio Garrigues is chairman of Garrigues. This is an abstract of an article which first appeared in the Financial Times (see