Carlos Body, new Minister of Economic Affairs

The President of the Government appoints Carlos Body Minister of Economic Affairs. Pedro Sánchez chooses a technical profile that is highly trusted by Calviño, until now Secretary of State for the Treasury. His work at the head of the debt issuance strategy has been key to complying with the reduction path committed to Brussels. He has experience within the ministry that he will begin to lead; Before joining the Treasury, Corps was director of Macroeconomic Analysis for the department. In this position, he managed the official Government forecasts that accompany the General State Budgets, the Budget Plan and the Stability Program. In addition, he has experience outside the Executive. Before his appointment, he worked at the Independent Authority for Fiscal Responsibility (AIReF), first as deputy director of Public Debt and later as director of Economic Analysis.

The new minister will have a complex network of challenges ahead of him. The project initiated by Calviño must be targeted, sustaining the momentum of the three pillars that keep GDP growth afloat in a hostile external environment. Has to ensure that tourism continues to support the economybut also speed up the landing of European funds in the real economy and maintain the cruising speed of job creation, once the labor reform seems to have already deployed 100% of its potential.

Counterweight to Yolanda Díaz

Added to this is the political challenge. The new head of Economy must pick up Calviño’s baton, and be of new counterweight to Yolanda Díaz. So far the future president of the EIB has managed to stop – despite the Sumar leader – a good part of the spending increase policies that the Minister of Labor demands. The disagreements between Calviño and Díaz have been resolved – in most cases – on the side of the now former Minister of Economic Affairs. The last of them, in favor of a revision of the temporary bank tax, it will be permanent but with modifications that will try to avoid an open war with the sector.

Body must also have full coordination with the newly appointed first vice president and Minister of Finance, María Jesús Montero. Fiscal discipline is key from now on. The return of fiscal rules require exhaustive effort control of the reduction of the deficit and debt, and the application of an adjustment in spending that guarantees that Spain complies with the committed path.

The relationship with Brussels, essential

Furthermore, the European elections to be held in June next year could change the good relationship built by Calviño with Brussels. Von der Leyen’s term ends in October, and a change of faces at the head of the Community Executive will require the head of the economy to rebuild relations with the new representatives of the European Commission.

The relationship with Brussels will continue to be key, and even more so during the next three years in which the disbursement of the Next Generation depend on the authorization of the community commissioners. Last week, Spain requested the fourth disbursement worth 10 billion euros, and it includes new commitments, milestones and reforms that will be looked at closely from the capital of the European Union.

Dealing with the rest of the groups in the Congress of Deputies is also essential. Calviño’s focused profile allowed him to maintain a balance in his parliamentary relationships, he even had the respect – not the sympathy – of the Popular Party spokespersons. Now with a more fragmented chamber and with parliamentary support measured to the millimeter, the new minister will have to have the political waist to prevent several of the economic measures from going ahead.

Sánchez tested several candidates

Along the way are the rest of the candidates who have not stopped talking in recent weeks. Manuel de la Rocha will continue to be Sánchez’s main economic advisor. Furthermore, according to close sources, the Chief Executive tested several names outside the Government. David Vegara -from Banco Sabadell- Maurici Lucena -president of AENA- or Professor Ángel Ubide would have rejected the possibility of accessing the helm of the Spanish economy.