Post-covid recovery

Giró criticises the State's eagerness to recentralise through NextGeneration Funds

Catalan government sees financial weakness of companies and structural unemployment as the major post-pandemic economic risks

2 min
Councillor Jaume Giró at the presentation of the Economy Note .

BarcelonaThe deterioration of the financial situation of companies and structural unemployment are two of the consequences of the covid-19 pandemic for the Catalan economy, according to the Nota d'Economia presented on Thursday by the Catalan Minister of Economy, Jaume Giró. This was a comprehensive review of the evolution of the economy in 2020, marked by the pandemic, from which we can also draw positive lessons.

Among the lessons learned from this pandemic, Giró highlighted the need to fight against inequalities, since the extensive study highlights how the most affected have been young people, women and the most vulnerable, since the gender gap, the digital divide and duality in the labor market have widened. Giró also stressed that in Catalonia health has been put before the economy and the need to further research policies, although he defended the Catalan health system and aid mechanisms for individuals and companies the Generalitat launched.

The Minister of Economy also highlighted the role of the European Union in the fight against the crisis. "The idea of Europe has been strengthened," he said, although he again called for the Generalitat de Catalunya to manage NextGeneration European funds. "The only but [to this European mechanism] is the State's lack of sensitivity when it comes to allowing us to make decisions as adults and to be able to allocate the funds that correspond to Catalonia", Giró indicated, who also criticised the State for "putting its recentralising vocation before Catalans' interests".

The Director General of Economic Analysis and Prospective, Marta Curto, was in charge of presenting issue 106 of Nota d'Economia, which contains the contribution of various aspects to analyse the impact of the pandemic on the economy and the outlook for the future.

Curto highlighted the fact that the Generalitat has been the administration that has allocated the most resources –in absolute numbers and in proportion– to direct aid. Nevertheless, the impact of the pandemic has been much stronger in Catalonia than in the Eurozone average. Catalonia lost 11.5% of its GDP in the second quarter of last year, while the average for the Eurozone countries was 6.6%. This is attributed, among other things, to the structure of the Catalan economy, especially the dependence on services and tourism, and the lower weight of stabilising sectors such as agriculture or public administrations.

Value of furlough and investment

Among the main conclusions drawn from this study is the role of furlough as a measure to prevent unchecked unemployment. According to one of the authors of the study, professor of applied economics at the University of Barcelona and researcher at the Institute of Economics of Barcelona Gemma Garcia Brosa, without furlough unemployment would have skyrocketed to 30%. Furlough, she said, "is here to stay". In the same sense, the secretary of Economy and European Funds of the Generalitat, Matilde Villaroya, has indicated that it is necessary to bring an end to the duality of the labour market –meaning the different rights enjoyed by workers on temporary and permanent contracts– and to promote internal flexibility in the companies, an aspect that furlough can facilitate.

Villaroya also pointed out the need to promote industrial policies in sectors where Catalonia may have opportunities, such as aeronautics or biotechnology. Another of the authors of the study, Joan Maria Mussons Olivella, responsible for the economic situation of the Generalitat, stressed the need to boost investment, both in companies and in public administrations. Mussons recalled that since the financial crisis, investment has suffered a significant drop and in the last decade has been 3.5 points below the average for the Eurozone.