Improved confidence has also benefited from the changes in certain external conditioning factors, such as those linked to the ECB’s monetary policy and to the progress in economic and monetary union, which have prompted an easing in financing conditions. On top of these are other more transitory effects, such as those linked to the low level of oil prices or to the depreciation of the euro. I shall continue with the analysis contained in the Annual Report, briefly reviewing the key factors behind the recovery. Budgetary consolidation Firstly, regarding public finances, the general government deficit met the objective set by the European Council (5.8% of GDP) for the third year running. In 2014, fiscal policy had a less restrictive impact than in the preceding years and was a less prominent conditioning factor of macroeconomic developments. The reduction in the deficit in 2014 came about as a result of the greater adjustment made at the central and local government levels, since most of the regional governments exceeded the targets set. The budgetary improvement was also the consequence of a similar-sized contribution by revenue and public spending (once the impact of the financial assistance to the banking system is stripped out of spending). The tax take progressively picked up during the year, in step with the cyclical improvement and the change in the composition of GDP.
Nonetheless, the correction of the International Investment Position (IIP), a debtor position equivalent to 93.5% of GDP at the close of 2014, is proving very gradual, which denotes the need to maintain the gains in competitiveness achieved, so as to improve the current account balance and reduce our still-high level of external debt. The role of external conditioning factors Let me now refer to the external conditioning factors in the recovery of the Spanish economy. The world economy lost momentum in 2014, particularly so in the euro area. Euro area growth was very weak in the second and third quarters of the year and only thereafter did it begin to show somewhat greater strength. On this occasion, moreover, Germany and France – the area’s two biggest economies and two of our biggest trading partners – were also affected. The latest ECB projections point to a moderate recovery, whereby the area’s GDP is expected to grow 1.5% this year and 1.9% in 2016. These are, then, clearly lower rates than those projected for our economy. Other external developments have provided a boost to activity. I have already mentioned the fall in oil prices. Unquestionably, though, the most durable positive external impulses stemmed from the ECB’s monetary policy and the start-up of the Banking Union. BIS central bankers’ speeches  3  Throughout last year and in 2015 to date, the ECB has continued to deepen its expansionary monetary policy stance.