The former Secretary of State for the Economy, José Manuel Campa, opened the 14th Congress of the Spanish Association of Private Equity Institutions (ASCRI) last Friday with a striking message about Spain's exit from the crisis. His speech, "Economic outlook for Spain and Europe", was not the more or less bleak review of Spain's situation that we are used to, but rather it awakened the conviction of the audience that this is a competitive country with real possibilities of recovery and leadership.
It comes as no surprise, therefore, that the Business Council for Competitiveness intends to "use" him as a heavyweight to sell "our brand" outside Spain. Thus, with trained professionals (Campa holds a PhD from Harvard University and has been a consultant to the World Bank and the IMF) with intellectual solvency and a discourse far removed from generalised and credible negativity, it is possible to make a brand.
Campa started from an indisputable premise: Spain has very high and damaging debt ratios and the government's fundamental objective must be to try to put an end to them. However, according to the professor of economics and finance at IESE, debt has not been the origin of the particularly virulent crisis that Spain is suffering. Nor was it the non-compliance with the fiscal pacts imposed by Brussels (here the wayward ones have been Portugal, Italy and, surprisingly, Germany). The problem has been disinvestment. According to their data, in 2011, 250 billion euros or 20% of GDP went out of the country.
Campa is in line with those who argue that we will not achieve deleveraging by cutting spending, but that we need to get investment flowing again. How? Here are some of his ideas:
In the public sector through structural revenue reform. Spain currently has one of the lowest public sector expenditure to GDP ratios in Western economies (public works investment, for example, has fallen to 75%). Structural reforms of the public sector are needed, notably to clarify responsibilities and improve efficiency, but not further spending cuts. He even advocated a tax hike, in particular IBI: "Housing must cease to be an investment asset".
And in the private sector, through venture capital. Our business fabric, contrary to what is claimed, is and was highly competitive four years ago. In fact, we are the country in Europe after Germany where exports have grown the most since 2007. But we have the highest rate of leverage in our environment and no access to bank credit (a sector that in turn cannot afford to go further into debt). Alternative channels for financing, i.e. venture capital.
Campa sent a message of support and confidence in the fundamental work of this industry to unblock the situation. It is, in his opinion, a sector at a crossroads that must (without waiting for fiscal or any other type of incentive) demonstrate its capacity. Especially because of the three indicators of a possible economic recovery (improvement in the stock market, investment in machinery and equipment and influx of credit) the latter is the one that, according to Campa, does not show any sign of improvement.
In the field of employment, the professor defended another reform, but in a very different direction to the one that has already taken place. His would try to tackle the two problems that the Spanish market is dragging along: the stagnation of the vast majority of professionals (permanent employees do not move from one company to another so as not to lose their acquired advantages and temporary employees are chained to endless cycles of work and unemployment); and the large number of unemployed in the construction sector, for whom active and costly employment policies would have to be used to relocate them.
Cecilia Díaz