The big company puts the brake

The big company puts the brake

The big Spanish companies have put the brakes on abruptly. According to the latest data from the Bank of Spain and the European Central Bank (ECB), the new credit to Spanish companies that bill more than one million euros fell last December more than 16%. A true collapse, without nuances, that could announce problems in the immediate future.

A first objective symptom that the cooling of the world economy, which international markets have anticipated since last summer, is already paralyzing new investments in Spain? The alternative explanation would be that the climate of political uncertainty about the future Spanish government, or the possible convocation of new elections, would have had an immediate dissuasive effect, almost on line. Well, the elections were held at the end of December, at the doors of Christmas, with all the wheat already sold. If there was concern, it would be preventative. However, during the months leading up to 20-D, the demand for new credit was always growing. In September it reached 22%.

In truth, the atmosphere among the heads of the big companies is one of deep political concern. In Madrid there are dinners and private meetings in which possible future situations are discussed and few common points are gathered.

Among the largest of the Ibex 35, the reference index of large companies in the Spanish stock market, a consensus has already been reached in favor of a government pact between the PSOE of Pedro Sánchez and Ciudadanos, which, here is the problem, requires to be viable the abstention of the PP. But the indirect requests of the great ones of the Spanish company are not taken care of by the Moncloa, where a Mariano Rajoy resides who they see politically very clumsy. In fact, after the elections, the wound that the support of these companies gave to the party of Albert Rivera is still alive. This explains in part that both move with extreme caution. From the Business Council for Competitiveness (CEC), headed by César Alierta, the president of Telefónica, and which has already suspended two meetings to avoid public readings and private misunderstandings, even the CEOE, the large employers, which presides over the Catalan Juan Rosell, who maintains a discreet profile, beyond marking distances with Podemos. The most active, among the big lobbies, is the Cercle d’Economia of Anton Costas, who has already expressed his preference for a grand coalition, without making an ugly PSOE-Citizens agreement that does not confront the PP.

Mariano Rajoy with the president of the CEC and of Telefónica, César Alierta
Mariano Rajoy with the president of the CEC and of Telefónica, César Alierta (Emilia Gutiérrez)

Even so, the business elite speaks a little each on its own, but increasingly coincidentally, the need for Rajoy step aside and leave the position to a new leader who can reach pacts from a Popular Party in the opposition with a government of the PSOE actively supported by Citizens.

But the economy circulates on its own, beyond the political compromises, and some days it shows a very disturbing profile. At the moment, the inertia is maintained, especially by the good tone of internal consumption. In fact, in contrast to what happens in the big company, in that same month of December, the new credit to households has grown by 19%, and SMEs up to one million euros have asked for 5.7% more. Something that is explained in part by the creation of jobs during the past year and the effects of the tax rebate of Cristóbal Montoro, the finance minister. But the validity of this trend will be limited if the investment falls.

In fact, in the rest of the euro zone, December was not a month to shoot rockets. If all the new loans (companies and households) are taken into account, the fall in Spain was 12%, in the euro zone growth was registered, but very shy, of 4%, the lowest in more than a year. And in the case of large companies, only 1%.

And all this with the ECB deploying its monetary expansion, with liquidity injections and negative interest rates. So far, with limited results. The data of new credits are understood as the words of Mario Draghi, its president, asking this week to end the austerity policy in the eurozone, by asking Angela Merkel that Germany, and other surplus countries, spend more, financing bridges and roads and raising wages, to generate a demand that in another part of the world, China especially, is evaporating at times.

Austerity, understood as the reduction of public spending to ensure the solvency of a bank in the reckless past, is dead and buried. In the south of the eurozone, from Portugal to Greece through Italy and Spain, political exhaustion is an electorally quantifiable phenomenon. In the center and the north, because if they continue like this they should consider allocating new public resources to support large banks, such as Deutsche Bank, which is also unacceptable. Again, at the crossroads.