De Cos warns of the vulnerabilities of the EU in the face of inflationary spirals and geopolitical tensions

The Governor of the Bank of Spain, Pablo Hernandez de Koshas warned of the vulnerabilities of the European Union in the face of inflationary spirals and geopolitical tensions that the continent is currently experiencing with the rising prices and the war in Ukraine.

This was stated in his speech at the round table of the La Toja Forum this Saturday, in which he pointed out that the economic opening of Europe has been a “great advantage to gain productivity” on the continent, but right now “it has passed to become an element of vulnerability.

“Europe is facing double jeopardy coming from a high level of integration in global value chains and, at the same time, from this high dependence on certain imports and exports, financial investments and payment infrastructures”, added the Governor of the Bank of Spain.

Specifically, he pointed out the dependencies of the European Union in the energy field, since “Europe imports 60% of energy”, or in technology, with a shortage of energy production semiconductors and other products such as computers, according to Europe Press.

Proposals

To reduce the EU’s vulnerabilities, De Cos has listed three types of policies. A first set of measures would aim to assess dependencies and vulnerabilities to supply chains and increase the resilience of the European industrial system.

Secondly, De Cos has affirmed that the countries of the European Union must be protected from possible abusive behavior adopted by third economies, with measures such as, for example, monitor foreign investment flows from third countries and those also aimed at limiting the positive actions to which European companies may be subjected.

Lastly, the third policy would make it possible to preserve equal conditions at the international level, compensating for competitive advantages companies in the European Union could face due to less stringent environmental and state aid policies by third countries.

common stock

In this sense, the governor of the Bank of Spain has defended that in order to comply with this type of policy, “a common concerted action of the European Union” and greater European integration is “indispensable” and, in particular, in the economic and monetary union project.

Regarding current debates in Spain, De Cos clarified in his speech that he was not going to talk about the income pact, which “we have been defending since October 2021 as a necessity to avoid an inflationary spiral.”

In addition, on fiscal policy, he has requested that, as a consequence of inflationary spirals or difficulties due to high public debt, there should be “a budgetary policy for the most vulnerable.”