euronews: “Mr Ninyo Betherra, what credibility should be given to this austerity plan that the Spanish government is going to present to parliament on Wednesday?
Is it really possible to cut the budget deficit from 11 per cent to 3 per cent, that is to say, make savings of an extra 15 billion euros in barely 3 years?
Santiago Ninyo Betherra:
Well, the automatic answer is no. It is absolutely impossible, unless colossal cuts are made. I have the feeling that plans and adjustments are being made a little hastily, to see what happens, because there is no clear idea of what should be done. Spain can cut the deficit but the basic problem, the fundamental problem, namely productivity, the economic system, is not going to be resolved.
Where can cuts be made in a country like Spain where the public adminstration includes 17 autonomous regions? Where can the scissors be put to slash public spending?
Santiago Ninyo Betherra:
I think that before putting the scissors anywhere, we have to look at whether what is being spent, is being spent correctly. I am convinced that if we make this analysis, we could identify areas where cuts can be made.
euronews: Which areas for example?
Santiago Ninyo Betherra: A lot of public investments have to be cut, that is to say state investment must be frozen, but they are not going to touch spending on unemployent benefits. But as the unemployment rate is going to increase – in 2012 it could rise to 30 per cent in Spain – that signifies that these benefits will have to be maintained to prevent these people falling into absolute poverty.
euronews: Do you think, all the same, that growth could produce a miracle and enable Spain to pay its debt?
Santiago Ninyo Betherra: No. Spain has two problems which are very different but strongly linked. Spain has a total debt, not only public but also in the private sphere – that is to say, households, firms, and banks, of almost 400 per cent of GDP. That is on the one hand.
And on the other hand, Spain has a growth model which is based nearly 50 per cent on car exports, tourism and property, building. Combining the two is practically impossible.
euronews: In your book, you predicted a financial crash this summer. Is such a stark assertion still valid? Because on Monday we saw a spectacular rise in stocks, and a consolidation on Tuesday. Do you still think we are going to see a bloodbath on the financial markets this summer?
Santiago Ninyo Betherra: Yes, because I continue to say that the problem of European economies, and notably those in southern Europe, is debt, total debt, not just a problem for the financial markets. The total debt including households’ debt is exorbitant. I insist: around summer, in the middle of the year, when the economic revival plans fizzle out, the economic and financial problems are going to increase enormously.”