Miguel Fernández Ordóñez: The biggest risk - complacency Address by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, delivered to the Círculo de Economía, Barcelona, 31 January 2007. * * * I very much appreciate the opportunity provided to me by the Círculo de Economía to deliver this address at this time, just as the figures for last year have been released. In terms of the Spanish economy's performance, the figures speak for themselves and confirm a favourable short-term outlook. Against this background, I think it is very important to reflect on the underpinnings of the economy’s trajectory, in order to identify those factors that are genuinely relevant for projecting ahead the progress that has been achieved in recent decades. I have therefore thought it best to adopt a long-term approach for this speech, going beyond conjunctural analysis. And with the title I have chosen, I have sought precisely to stress that when things are going well and the outlook is favourable, the biggest risk is complacency. The year 2006 ended in Spain with growth at around 3.8%, outperforming the seven biggest industrialised countries. This is the first time in many years that this has happened. Not only has growth in Spain been higher than in the euro area countries, but it has also been higher than in the United Kingdom, Japan and the United States, which in recent years had been growing at a rate above Spain.
This indigenous population growth has been reinforced in recent years by the phenomenon of immigration, and has been an essential explanatory factor of our recent growth. In addition to the foregoing causes, which can be quantified, there are others that are more difficult to measure since they refer to qualitative aspects, but which are equally relevant. Thus, for instance, Spanish trade unions have progressively adopted a bargaining strategy more in keeping with the requirements stemming from Spanish euro area membership and with the challenges posed by globalisation, and that has been conducive to employment generation and the growth of the Spanish economy in recent years. 2  BIS Review 32/2007  Something similar may be said of the substantial continuity over time of the broad thrust of economic policy, irrespective of the different governments that have successively been in power. Such continuity has also impregnated the natural debate under democracy between the various policy options. Underpinning this debate has been a degree of agreement on the importance of stability-oriented macroeconomic (fiscal and monetary) policies and the microeconomic policies geared to improving the workings of markets. And this is not something that is found in all developed countries. Specifically, continuity in privatisation and market liberalisation policies, which has placed Spain in a leading position in continental Europe and has contributed significantly to the growth in the past 20 years, would not have been possible without this underlying agreement.