Now is not the time to be afraid of debt, it is time to fight the crisis
The spectre of deficit, and the consequent spending cuts that embrace it, hovers over the severe economic crisis that the pandemic is causing. It is, however, an oddity that nobody wants to mention right now despite the bitter experience of the 2008 crisis and the effects on the countries of Southern Europe of the strict anti-deficit policy promoted by the North. Now is not the time for this, and the response of the European Union and the Central Bank has been to provide a great deal of money via debt and subsidies, totally the opposite of what was given then. But many are worried, and debt, which is absolutely essential to help sectors that have had to close or have been severely restricted by the pandemic, is being managed carefully for fear of what may happen in the future; in other words, what the medium and long-term consequences of this deficit on the economy of the states will be. We have asked five experts for their views on this subject and the response is unanimous: the situation of the economy is extremely serious, and debt must be raised even further in order to inject money into the crisis to save businesses and the self-employed. The coincidence of these experts is overwhelming. Now is the time to spend as much as possible to support the sectors most affected by the crisis, to help them withstand the forced closure of activity and also to prevent the post-pandemic period from becoming an economic desert.
The problem, however, and this is also highlighted by everyone, is that the ones who can do this (creating even more debt) is the Spanish government, because the Catalan government cannot reach all sectors and, unfortunately, does not have the mechanism or the budget to cover for what is needed.
Right now there is a consensus, on the right and left, on the need to maintain and increase direct aid to the companies and workers most affected. The furlough scheme, which is now being negotiated so that it can be extended until 31 May, has been an essential element, but support for companies, especially small and medium-sized ones, which are at high risk of disappearing, must be improved (and in a bit way). However, and there is also consensus on this, part of this money from European aid or from the debt that will now come must be managed intelligently, and with strict public and citizen control in order to avoid both corruption and waste.
Without forgetting direct aid, it is important that the historical indebtedness that we will experience during this period serves to redirect the country's economy by adapting it to technological and environmental challenges, so that we are prepared for economic transition in the future. We will surely have to work to reduce the excessive weight of the service sector, improve the training of workers, reindustrialise the country and make a clear commitment to research, knowledge and the sectors that provide added value in the country.