Confidence in the economic situation and in the situation of households has fallen with the same intensity in 2022 as in 2020, during the confinement, and in 2008, after the bankruptcy of Lehman Brothers. However, confidence in employment has receded much less than in the two previous crises. This past year, almost half a million jobs have been created in Spain and in the two previous crises there was massive destruction of employment.
The cause of the malaise of the Spanish is inflation. Inflation is a phenomenon that impoverishes us all but with greater intensity to the lowest incomes. It has the same effects as a regressive tax and also the income goes abroad, this time mainly to the countries that sell us the gas.
Therefore, the priority of economic policy must be to contain inflation. The ECB has finished its purchases of public debt, has raised interest rates and has already begun to reduce the money it injected in 2020. This will have a contractive effect on consumption, investment and employment in 2023 and will help contain the inflation.
The greater weight of our imports, the high Spanish unemployment rate, the strong increase in immigration, together with our belonging to the euro help to explain why inflation in services in Spain is at 4%, below Germany and very far from the levels of 1977 during the Moncloa Pacts.
But the drought together with the energy crisis have caused food inflation that continues to rise to 15%. All the great revolutions, from the French to communism in China or the Esquilache Mutiny, were preceded by food inflation. It is logical that the Government has announced a plan on Tuesday to try to contain it.
The plan is undoubtedly the best that has been approved since the inflation crisis began in the spring of 2021. Taking advantage of the sharp drop in the price of oil and the appreciation of the euro, the gasoline subsidy is eliminated. Aid with a strong impact on the deficit and public debt that mainly benefits high incomes who do not need it and that goes against the recommendations to favor electric mobility, subsidizing the consumption of polluting fossil fuels.
That money is replaced by a check to the four million most vulnerable households that suffer the most from food inflation. These households will also benefit from the agreement with the bank to minimize the impact of the rate hike on their mortgages. And the VAT reduction on electricity, gas and now food continues, saving families billions in tax payments.
2023 will be a difficult year but, finally, the economic policy is correct to contain inflation and minimize its impact on the most vulnerable.
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