De Cos urges to reach an income pact to avoid an inflationary spiral

MADRID, 22 Jul. (EUROPA PRESS) -

The Governor of the Bank of Spain and member of the Governing Council of the European Central Bank (ECB), Pablo Hernández de Cos, has underlined the need to reach an income pact to jointly address the impoverishment derived from the sharp increase in inflation and He has warned that trying to avoid it can lead to an inflationary spiral that will make the economy less competitive.

In an interview with RTVE, collected by Europa Press, the Spanish central banker explained that the need for this income pact derives from recognizing that for the eurozone and Spain a good part of the disturbances have to do with the rise in energy prices , whose importation is indispensable and which is causing a general impoverishment.

"This recognition makes it necessary to share that loss and, if all economic agents try to avoid the loss, we will enter an inflationary spiral with a loss of competitiveness," he warned.

For this reason, De Cos has argued that an income pact means "agreeing on a distribution of that loss" between companies, with a reduction in margins, as well as among workers, with wage increases below inflation, and also in the public sector.

Regarding yesterday's meeting of the Governing Council of the ECB, De Cos has argued that the institution is "in a better position" to combat fragmentation in the eurozone after approving the creation of a new 'shield', called the Instrument for the Transmission Protection (TPI).

For the Spanish central banker, the importance of the creation of this new tool is due to the fact that "it means recognizing that maintaining homogeneous conditions is a prerequisite for financial stability and, therefore, is the concern and occupation of the ECB".