Spaniards will not regain purchasing power lost due to inflation until 2025, according to the Bank of England

This is what he referred to Pablo Hernandez de CosGovernor of the Bank of Spain, in his speech at the Fourth Financial Observatory of EL ESPAÑOL and Invertia, in which he raised the entity-managed perspective on Spain's short-term economic future.

In his speech, he insisted on this “Inflation is expected to continue to slow in the coming quarters.”. Overall, the moderation in 2024 “will be slower due to upward base effects, gradual withdrawal of fiscal measures adopted during the energy crisis and continued inflation in services, in line with historical patterns.”

Despite this slowdown… Inflation is expected to moderate on average to 2.3% this year and to 2% in 2025 and 2026.This is part of the price control goals set by the European Central Bank.

In this scenario, the Governor of the Bank of Spain sees it The resurrection of the purchasing power of the Spaniards will arrives. “This gradual decline in inflation will be consistent with strong, though low, growth in wages, which… They will regain their purchasing power before the bout of inflation in 2025given that a recovery in labor productivity and a moderate development in business margins are expected.

In general, it is worth noting that both the Bank of Spain and the European Central Bank (ECB) have placed the productivity of the economy as one of the main challenges for the future, since it has not yet risen in Spain or in Europe. Europe.

What's more: Hernandez de Cos warned that the private sector is maintaining employment despite declining sales and potential turnover. All this is due to the lack of workers in the labor market. Which leads to deterioration of productivity.

“In the case of productivity, it is understood that part of the positive development of employment in recent quarters is due to Companies' desire to retain their workers despite weak demand“Confirm.

All this “in a context where there is a noticeable and expected labor shortage Negative shocks that weigh on the economy are temporary in nature“.

[Guindos ve margen para subir los sueldos en España y cree que “no sería bueno” rebajar por ley la jornada laboral]

With these issues on the table, the facility expects to increase salaries by agreement in 2024 will be at 2.8% In line with what is set out in the V Employment and Collective Bargaining (AENC) Agreement agreed between employers and unions.

Although this amount represents a slowdown compared to 3.5% in 2023, however The reality is that the agreed salary increase will still be much higher than the inflation rate. We must add to this that the facility expects the general remuneration for workers to be higher than the 2.8% mentioned above.

Hence, the Bank of Spain expects that in 2025 the Spaniards will regain the purchasing power that the price crisis took away from them. In any case, There are always risks for this not to happenSuch as geopolitical crises (due to the war in Ukraine and the conflict in the Middle East) and “further weakening of the global economy.”