Xavier Mena (ESADE): "We entered the crisis with a 37% debt-to-GDP ratio, and now we're coming out of it at 100%"

“We entered the crisis with a 37% debt-to-GDP ratio, and now we’re coming out of it at 100%,” declared Xavier Mena, Professor and Director of the Department of Economics, Finance and Accounting at ESADE Business & Law School, this morning at the 6th Spain-US Business Forum. After acknowledging that Spain is on the path to recovery, Prof. Mena insisted that “there is still much work to do”. He added: “Social Security is draining our coffers, the consumer price index continues to fall, Germany is watching us, and the political instability isn’t very helpful, either.”

Turning his attention to Spain’s relations with the United States, Prof. Mena noted that the US is the number-one destination of Spanish exports and origin of Spanish imports. Similarly, in his opening remarks, Luis de Guindos, Spanish Minister of Economy and Competitiveness, highlighted the role of small and medium-sized enterprises. “Ninety-three percent of Spanish companies that do business in the US are small or medium-sized,” he observed, before noting that there are “more than 1,300 American companies operating here in Spain.” He added: “Overall, one of every eight euros in Spanish investment goes to the United States.” However, according to Prof. Mena, the most pressing issue related to Spain’s relationship to the New World is the Transatlantic Trade and Investment Partnership (TTIP), which, he argued, “we must implement urgently”.

“A drugged European economy”

Although Spain starts from a relatively advantageous position in its relations with the United States, the same cannot be said of Europe as a whole. According to Prof. Mena, the fact that the Federal Reserve has normalised its monetary policy while the European Central Bank maintains an expansionary policy has affected currency exchange, interest and interest rates, in particular. This asymmetry is leading to “a drugged European economy” that is, in turn, facing a significant risk of deflation. “The banking union and other future measures will be important steps forward in this regard,” commented Prof. Mena, before concluding, in spite of everything, that “after various sudden changes of course, the sun’s finally coming out, but we still need to keep taking steps forward”.

After Prof. Mena’s remarks, these steps forward were highlighted in a panel discussion entitled “Strategies for Investing in the United States”, moderated by David Vegara, Lecturer at ESADE and former Spanish Secretary of State for Economic Affairs. CEOs from EULEN, Mapfre, Técnicas Reunidas and Gestamp discussed their strategies for internationalisation on the other side of the Atlantic. Despite the fact that they represented different sectors, all of the panellists agreed that the management of human resources and capital goods needs to be globalised but also adapted, not only to a country with a different market, but to multiple countries with different characteristics and regulations.

The 6th Spain-US Business Forum, organised by the Spanish Chamber of Commerce and the Spain-U.S. Chamber of Commerce, also featured the participation of top executives from both institutions, as well as Antonio Garamendi, Vice-Chair of the Spanish Confederation of Business Organisations (CEOE) and Chair of the Spanish Confederation of Small and Medium-Sized Enterprises (CEPYME); Krishna R. Urs, Deputy Chief of Mission at the U.S. Embassy in Madrid; and Jaime García-Legaz, Spanish Secretary of State for Trade.