Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Spain’s new economy minister will be Carlos Cuerpo, head of the country’s treasury and a key negotiator in a recent deal over the EU’s fiscal rules, replacing Nadia Calviño as she leaves to head the European Investment Bank.
Announcing the appointment on Friday, prime minister Pedro Sánchez described Cuerpo, 43, as “a young professional of proven competence and a public servant with an exemplary career within the administration”.
Cuerpo will take the reins of the ministry with Spain’s economy in a stronger position than many of its EU peers but heading into a crunch year when tough debt reduction rules agreed by member states in December come into force.
Sánchez said Cuerpo would bring the same “professionalism and honesty” that distinguished Calviño, who became well-known and respected in her five years as the face of Spanish economic policy in Brussels and at international forums such as the G20 and IMF.
Cuerpo has been a close ally of Calviño and his appointment represented “continuity”, according to one government official.
As head of the treasury and a salesman for Spanish sovereign debt, Cuerpo is already well known to many international investors, said another Spanish official.
In Spain, the economy ministry also has a crucial role in managing how the EU’s post-pandemic recovery funds are spent. The country is the second-biggest recipient in the bloc after Italy, and is due to receive a total of €164bn in grants and loans — but some businesses have criticised the handling of the funds.
The prime minister decided to split Calviño’s role in a mini-cabinet reshuffle, handing her other duties as the most senior of Spain’s deputy prime ministers to finance minister María Jesús Montero.
Montero, who is already the number two official in Sánchez’s Socialist party, had been junior to Calviño while running a finance portfolio that was focused on tax and budget policy but excluded international issues.
Sánchez said Montero had been essential to making his government’s “reinforcement of the welfare state compatible with fiscal consolidation policies”.
Spain’s public debt was equal to 109.9 per cent of gross domestic product in the third quarter of this year, down from a high of 120 per cent at the height of the pandemic in 2020.
The EU earlier this month agreed to update fiscal rules in the so-called Stability and Growth Pact, which were suspended during the Covid-19 pandemic but will come back into force in 2024. The deal gave high-debt states some extra wriggle room as part of a transition period, but included stricter overall limits on spending that were crucial to winning over Germany.
Countries with debt ratios above 90 per cent of GDP will be required to cut excess debt by one percentage point per year over the duration of their national spending plans.
Cuerpo was a negotiator in the talks over the rules because Spain has for the past six months held the rotating presidency of the EU.
In an interview with the Cinco Días news site published on December 27, Cuerpo said the deal was “balanced” and that it allows “fiscal consolidation paths adapted to the specific characteristics of each country”.
“This is a very important element that the previous, more rigid framework did not have,” Cuerpo added. “We do not want what happened after the great financial crisis to happen to us, where investment was the great victim of consolidation and we spent years decapitalising our economy.”
Cuerpo has previously held a series of roles in government relating to public debt and macroeconomic analysis. He has also worked at Airef, Spain’s independent fiscal watchdog.
Sánchez applauded the appointment of Calviño as the first woman to lead the EIB, the world’s biggest multilateral lender. He said it “reinforces Spain’s presence and influence at the heart of the European project” along with Josep Borrell, the EU’s chief diplomat and another Spaniard from the Socialist party.
Read the full article here
