From crisis to development Athens, 29th of April 2014 José Moisés Martín Carretero

 Not aimed at promoting growth but at facing macroeconomic imbalances in absence of monetary policy: ◦ Reduction of public deficit ◦ Internal wage devaluation: labour market reform ◦ Fiscal devaluation ◦ Financial reform and deleveraging ◦ Liberalization of markets  Two phases: ◦ Between 2008 and 2010: Keynesian fiscal stimulus and automatic stabilizers ◦ Since 2010: structural adjustment

Leverage Deleverage Gross private savings

-8,2%

-2,52%

-23%

Competitiveness worsening No change

Imports increased Imports frozen

Imports as % of national demand % of national demand

 Capital and investment  Innovation  Human Capital  Total factor productivity

Europe 2020 TargetLast data Employment rate75%59,3% R+D Investment3% of GDP1,3% of GDP Greenhouse emissions-20% from % from 1990 Renewable energy20% of total energy16,05% Energy efficiency20%- School early leaving10%24,9% years old with tertiary qualifications 40%40,6% Poverty and social exclussion -1,5 million people in poverty. growing

 Internal devaluation has led to a wage reduction and worsening income distribution. Internal demand has been strongly depressed.  In spite of efforts, Public deficit and debt still being far away from Stability Pact target.  Deleveraging of economy is being too slow due to the low inflation.  International competitiveness gain is almost purely cyclical.  Decrease of household disponsable income, and higher inequality of income, led to an increase of poverty and social exclusion.

 Due to those reasons, foundations for long- term growth are weak: ◦ Financial impediments for a higher level of investment. ◦ Lack of investment in R+D ◦ Long term unemployment to become structural. ◦ “Lost generation” of young people ◦ Weak social cohesion and political mistrust.

 Conditions to increase growth and social development: ◦ ECB should act more agressively in order to tackle low inflation, euro appreciation and debt burden: QE. ◦ Growth friendly tax reform. ◦ Public expenditure to be focused on child poverty. ◦ Increase the quantity and effectiveness of R+D investment. Reform of universities. ◦ Bold policies towards qualification of not-qualified workers and unemployed. ◦ Bring people back to the employment as soon as possible. Specially those in long term unemployment.