This is because, after ten years of rapid expansion at a rate that has recently exceeded potential growth, the actual buoyancy of tax revenue has naturally been associated with the buoyancy of domestic demand and, in particular, with the vigour of the real estate sector, and therefore has a temporary component that would tend to disappear in an economic slowdown. It is therefore imperative to preserve the stabilising potential provided by the current state of public finances so that phases of less dynamic private spending can be faced with strength and the ability to react and, above all, so as to be prepared for unexpected contractionary shocks. This approach is especially valid in the current climate of uncertainty, in which a continued economic policy of rigour and budgetary stability is one of the most valuable resources when it comes to preserving internal and external confidence in our economy. Perseverance in the strategy of budgetary consolidation is also necessary from a mediumterm perspective so as to be in the best possible position to address the foreseeable impact of population ageing, aside from the required further progress in reform of the pension system. Regarding the co-ordination of this strategy, I would like to add two more comments. First, it is very important that all tiers of government contribute effectively, particularly the regional governments, whose weight in public spending policies has become most substantial.
Second, the progressive normalisation of the real estate market, against a background in which the demographic factor and the buoyancy of employment are lending greater support to housing demand than in previous property cycles, would limit the effect of slower house price rises on consumption and soften the impact of the cyclical change on residential investment. At the same time, the step-up in private- and public-sector investment in recent years has raised the level of capitalisation of the economy following a prolonged period of intense job creation, and this should manifest itself in higher long-term potential growth. Although it is unlikely that the expansion of business investment and non-residential investment in construction will maintain the pace of recent quarters, the growth outlook for both spending components is, at first sight, favourable. In any event, it seems unlikely that productive investment alone can offset the lower contribution from household spending. Hence, as I pointed out in my previous testimony, the role of net external demand will be fundamental in making some containment of spending compatible with a continued growth rate of around 3%. As we have seen in the last few years, the contribution of this variable to growth depends very much on the performance of Spain’s export markets, but also on the competitiveness of Spanish production.