As you are all aware, particularly notable in Spain have been the furlough schemes (ERTEs) in respect of employment and the public guarantees for financing granted by credit institutions to firms. These were forceful measures, aimed at mitigating the impact of the crisis on employment and on households’ and firms’ income and liquidity. In the monetary policy realm, where the Banco de España plays an active role as a member of the Eurosystem, the action of the ECB, through a wide range of measures, has been pivotal. It has stabilised financial markets throughout the euro area, avoiding financial fragmentation across countries, and supported the flow of bank lending, which is so important for financing households, SMEs and the self-employed. The ECB response has thus exerted a significant stabilising effect on economic activity in Spain and in the euro area as a whole. 12  Looking ahead, the Spanish and global economic outlook will hinge crucially on how these policies can be adapted to an extremely uncertain and changing environment, so a balance may be struck between their effectiveness and the efficient use of public funds. In the specific area of budgetary policy, and within the time horizon covered by the Draft Budget for 2021, efforts should continue to be geared, as was the case throughout 2020, to combating both the health crisis and the adverse economic consequences of the lockdown measures introduced to alleviate it.
However, in this respect I wish to refer to two aspects from a purely technical standpoint. The first is that, as I have mentioned, in a scenario of already low price dynamics, the risks to inflation forecasts in the short and medium-term are clearly on the downside. In recent months, the headline inflation rate in Spain has been broadly negative (-0.9% in October according to the leading indicator of the CPI published by the INE last week), while core inflation, which is less volatile, has also consistently surprised on the downside and remains at levels close to 0%. In this setting, as it has been the case in 2020 with pensions and public sector wages indexed at 0.9%, which will be above observed inflation (-0.3%, on Banco de España projections), the proposals to raise public sector wages and pensions envisaged in the Draft Budget could give rise to an increase in real terms in compensation for those groups, at the same time as the economy overall is witnessing large-scale destruction of employment and public finances a highly acute deterioration, unprecedented in recent times. That said, in my opinion, rather than adopting widespread wage increases for public sector workers, it would be more appropriate to assess the possibility of introducing more specific increases within that group, for example, for health sector workers, based on objective criteria.