If the Spanish economy breaks down, Europe and the US will follow, says the CEO of 'la Caixa'
Juan María Nin lectured at the London School of Economics about the current economical situation in Spain. He argued that Spain will recover if the markets continue to trust in the country’s capacity to meet its debt.
London (ACN).- The Chief Executive Officer of the Catalan savings bank 'la Caixa', Juan María Nin, said this Tuesday in London that if the Spanish economy breaks down, Europe and the United States will also go down. Nin argued that Spain “is not Greece nor Portugal nor Ireland” and rejected the inclusion of the country in the group of so-called PIGS, an acronym used to refer to the weakest economies in Europe by Anglo-Saxon media. “If we have severe problems, you will have severe problems”, he said, during the conference in the London School of Economics (LSE) organised by the Catalan Observatory of the LSE.
The CEO of 'la Caixa' said that the Spanish economy is on its way to recovery, but he acknowledged that pressure from international markets could hit the country again and provoke new problems. “Spain is not recovering, but bottoming. We are not deteriorating anymore. However, if we go into a situation similar to the one we had in the months of May-June -which were characterised by a lack of confidence and trust, with credit no longer coming into the country-, we will break down, and with us, Europe will come down and the United States will come down as well”, he said.
During his conference, Nin regretted that the 'market perceptions' about the situation of the Spanish economy are putting pressure into accessing credit. The Catalan banker said that Spain has a debt similar to the United Kingdom, and lower than Belgium or Ireland. According to his figures, the Spanish total debt accounts for 289% of the GDP, while the British represents 286%. The public debt in Spain is 62% of GDP, Nin stated, a “very similar” level to the UK.
Nin argued that Spain does not have a solvency problem, but a liquidity problem due to the difficulties in obtaining credit. The director of 'la Caixa' said that discussions about liquidity usually provoke 'irrational' responses that 'seriously' affect the economy. Nin urged markets to consider the balance of their actions, especially if closing a country’s credit can provoke its bankruptcy. Nin said that despite all the doubts regarding the Spanish economy, Spain has 'never' left any external debt unpaid –something that other European countries cannot say.
The banker also referred to the process of mergers taking place in the Spanish banking system. Nin said that there has been a “very nice reduction” in the number of banks, from 45 to 18 savings banks. He said that he expects “further restructuring” in the future.
The conference was also an opportunity for Nin to present the activities of 'la Caixa' in the United Kingdom. The event was organised by the Catalan Observatory of the London School of Economics and chaired by Professor Paul Preston.