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THE EURO ZONE

How to spend it

Apply the brakes or splash the cash? Put bluntly, those are the two options facing Spain as it begins to deploy its EU Covid recovery funds. External powers are already shouldering their way into the debate, with Germany saying this week the main goal should be to reduce public debt. But Pedro Sánchez has higher things in mind, announcing on Tuesday the start of a process that he says will transform Spain in a way not seen since its admission to the EU in 1986.

It's often left to Germany to be the exponent of fiscal conservatism, to remind other EU members of their tedious responsibilities when no one else will. In this case, though, Angela Merkel's implied recommendation of austerity for Spain probably is misjudged and premature. The Iberian economy is only just emerging from a Covid-induced coma, which is why external bodies such as the International Monetary Fund say its reawakening depends on stimulation, not cutbacks.

Nevertheless, Germany has a point. The chunk of EU money that's being loaned rather than granted to Spain (almost half of the total amount) will only increase the country's public debt - possibly holding it at 120% of GDP for the next few years - and as yet there's no real indication of how Sánchez's administration proposes to reduce that problematic ratio.

The Socialist leader's high-flown talk of comprehensive reform also raises another, more disquieting, possibility. If Covid had never swept the planet, are we to suppose that there would have been no such change, because in that (preferable) scenario Spain wouldn't have received the requisite EU funding? That arguably reveals the country as too reliant on Brussels, and suggests that it would be better off finding more sustainable methods of regeneration. By definition, reform that's dependent on bailout funds awarded on the back of a global crisis will be impossible most of the time.

That's not the only problem. For Spain's EU recovery package to be effective in any of the spheres that Sánchez is targeting, it'll have to prosper in a hostile environment. Among the hazards threatening its survival are mismanagement, over-bureaucratised administrations and corruption, the scourge of Spanish politics.

Meanwhile, in an odd outburst to reporters outside parliament on Wednesday, economy minister Nadia Calviño was fretting about bankers' salaries. As is often the case with this sort of hand-wringing, she didn't say why it was specifically bankers' high salaries that she finds "unacceptable", rather than oversized pay packets in general (why not any private or public sector executive earning over a certain amount, for example?). Calviño's implication seemed to be that, because a lot of people have lost jobs or suffered reduced income due to the pandemic and politicians' attempts to manage it, NO ONE should be earning a "high" salary - an argument which is missing some logical steps, to say the least.