The Draghi report and the Spanish economy
Spanish economy
Fecha: enero 2025
Raymond Torres and Miguel Ángel González Simón
SEFO, Spanish and International Economic & Financial Outlook, V. 14 N.º1 (January 2025)
Addressing the risk of a structural decline in the European economy, Mario Draghi’s report on competitiveness presents two complementary solutions, namely: (i) the rollout of a common economic policy along with public investment incentives; and (ii) completion of the Single European Market. While both solutions are particularly relevant for Spain, further European integration would bring greater benefits in the short-term and is also the more feasible solution, considering the state of much of the EU’s public finances. This is because, first of all, greater integration would provide Spain with better access to EU capital markets, thus addressing the current investment deficit, which stems largely from the private sector and a weak public-private investment multiplier. Secondly, more integration could help Spain further improve its competitive positioning within the EU, which has already seen significant gains, driven by relatively cheaper labour and energy costs. This could help offset the lost ground in global markets, particularly in the technology sector. While greater integration would channel European savings into Spain’s productive sector, the biggest risk remains fragmentation among Member States amid the rising tide of protectionism.