The former Minister of Economy and Competitiveness and former Vice President of the European Central Bank (ECB), Luis de Guindos, has defended that immigration is "indispensable" both for Spain and for the whole of Europe, considering that it is at the origin of the advance of economic activity.
De Guindos has insisted that, according to his calculations, around two-thirds of the increase in GDP is explained by the arrival of immigrant population, which drives both employment and activity. "I know it is not popular in certain environments, but it is indispensable, but it has to be orderly, legal, and directed," he pointed out during his speech at the 41st Aecoc Congress of Large Consumption.
In relation to the residential market, the former minister has emphasized that it is "very important" to implement measures that favor the "rental supply." In his view, the mismatch between strong demand and the available housing stock translates into price increases, with adverse effects from a social and economic point of view.
Guindos has added that administrations must address the needs of vulnerable groups, but he has separated that specific protection from general policies aimed at increasing the housing supply. In this line, he has called for "being aware" that, according to his diagnosis, poorly designed intervention ends up harming precisely those groups with fewer resources.
On another note, the former head of Economy has advocated for moderating and reducing the tax burden on wages as a way to immediately improve the net income of workers. "It is necessary to incentivize work and make the salary after taxes more attractive," he stated.
At the same time, he has highlighted that another essential lever to advance in this direction is the increase in productivity, although he has acknowledged that it is a gradual process that does not yield results overnight.
On the other hand, the former Vice President of the ECB has warned that the continuation of high energy costs due to the war in Iran could provoke second-round effects on inflation and force the European Central Bank to apply "additional and more intense" interest rate hikes.
He pointed out that "for the moment, these effects have not occurred," as the evolution of wages does not reflect those tensions for now, with increases around 2.5%, practically in line with the central scenario forecast. "For the moment it has not happened, but the potential risk is there," he noted in reference to the possibility of a price spiral.
As Guindos has explained, the outcome will depend on how the conflict evolves and whether energy prices remain persistently at relatively high levels. In that case, he warned that the emergence of an inflationary spiral would be "very negative" due to the severity of the reaction it would require from monetary authorities.