The adjustment of costs and relative prices, albeit with some delay compared with what would have been desirable, has ultimately placed the Spanish economy in a much more competitive position. The reduction in unit labour costs has allowed virtually all of the losses in competitiveness that had built up in the first ten years of the euro to be absorbed. The process has not, however, been free from difficulties, since it was initially based, as I stated earlier, almost exclusively on job destruction. From 2010, the contribution of the adjustment in wages progressively became more prominent, a trajectory which stepped up following the 2012 labour market reform. The gains in competitiveness and Spanish firms’ greater export-geared thrust are providing for the growing penetration of our products in foreign markets, against a background of increased geographical diversification and higher goods and services exports. The marked decline in imports during these years also reflects the gains in competitiveness, although the weakness of domestic demand has likewise helped contain purchases from the rest of the world. Set against these developments, the least favourable aspect of our foreign trade continues to be the high dependence on imported energy. As a result of the foregoing, our economy posted – for the first time since 1997 – a balance of payments surplus, i.e. net external lending, of 1.5% of GDP. This trajectory will foreseeably continue over the coming years, meaning that Spain’s high level of foreign debt will be declining.
Luis M Linde: Exiting the economic crisis Speech by Mr Luis M Linde, Governor of the Bank of Spain, at a conference at the Colegio de Ingenieros de Caminos, Canales y Puertos, (School of Civil Engineers), Madrid, 18 February 2014. *  *  *  Let me first thank the School of Civil Engineers, their Governing Board and its President for inviting me to participate in this conference. Civil engineers are one of the most prestigious professional groups in our country, and their contribution over many years to the development of our economy and society has been most important. Currently, they are moreover participating decisively in the expansion abroad of our construction and engineering companies, raising them to the ranks of the international first division. In my address today I shall discuss our view at the Banco de España of recent developments in the Spanish economy and the prospects open to us to emerge from the crisis that began seven years back. I shall begin by recalling the severity of this crisis, moving next to discussing the discernible signs of recovery. Finally, I shall refer to the complexity of the current situation and the challenges ahead for us. The crisis has been of a depth and seriousness unprecedented in our economic history.