As regards gross capital formation, investment in housing will be spurred by the generation of employment and the availability of low-cost financing. This latter factor will also be conducive to business investment, further to the far-reaching clean-up of corporate balance sheets in recent years. With respect to external demand, exports may be expected to continue outgrowing the rate of expansion of the very markets on which they are targeted, which reflects the gains in competitiveness I referred to earlier. But I believe mention should also be made of a structural change, namely the most notable growth in the number of Spanish companies permanently – not just occasionally – orienting their activity towards foreign markets, without forgetting the gains in market share in their domestic markets, as gains in competitiveness enable firms to compete better not only abroad but also, obviously, in the domestic market against imports. Risks The Spanish economy has moved into 2018 on the back, we may say, of significant expansionary inertia. On the external front, and in Europe as a whole, we do not yet know and it is not easy to estimate the impact that the United Kingdom’s exit from the European Union may have, the impulses that the protectionist policies in various countries are prompting and the effects that may stem from the re-balancing of the Chinese economy.
There are no insolvency laws or bankruptcy forum to address sovereign solvency problems, and IMF attempts to do so during the last decade failed, for several reasons. What is clear is that in the case of an insolvent sovereign, further official finance can only be provided when that sovereign restructures its debts and, at the same time, undertakes serious and credible domestic fiscal adjustment and structural economic reforms.5  3  See US Treasury Secretary Rubin, 1998. 4  The results of the simulations have to be viewed with caution since they are sensitive to the quality of the underlying data and the assumptions used in the exercise. 5  See, for instance, Roubini, 2002. 2  BIS central bankers’ speeches  The third feature that generally sets sovereign and corporate debt workouts apart is the externalities they may generate. A debt restructuring of a sovereign may have severe implications, both for the debtor’s and the creditor’s economies. Most of the experience in this area has involved less developed countries. In these cases private sector involvement has largely been a concern for foreign creditors. Taxpayers in creditor countries were affected, depending on the size of the exposure of their respective financial system and on whether the soundness of that system was jeopardised. Measures have been used in the past to try to reduce this impact, in particular through regulatory forbearance. One example is the prudential measures which, during the 1980s, permitted US banks to book Brady bonds at their nominal value.