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

MADRID, 1 Oct. (EUROPA PRESS) -

The Governor of the Bank of Spain, Pablo Hernández de Cos, has 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 rise in prices and the war in Ukraine.

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

"Europe faces the double risk of high integration into global value chains and, at the same time, of 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 production of semiconductors and other products such as computers.

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, monitoring the flows of foreign direct investment coming from third countries and those destined also to limit 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 the competitive advantages that European Union companies could face due to less strict environmental and state aid policies by third countries.

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

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."