Despite the shadow of suspicion cast over his government, Pedro Sánchez can at least claim to have finished the year on an economic high. Over the last week, the Socialist-led coalition passed its third budget in a row, despite holding only a minority status in parliament, and received the IMF's largely positive end-of-year report on Spain's economic health. Both developments also highlight potential flash points for 2023, not only within the coalition but also for the country's fragile post-Covid economy.
Sánchez always wants his budget victories to count as proof of governmental unity. They can indeed be viewed that way, but only if you forget how much the Socialists and Podemos bicker over practically everything else, from Morocco's role in Western Sahara to rent capping. The patchwork of cross-party votes required to get the budget through parliament - some from the Catalan separatist groups on which Sánchez is crucially dependent - can also be seen as evidence of the coalition's instability: it depends which way you look at it.
Still, infighting hasn't always prevented progress. The IMF is right to praise the labour market reforms enacted by Yolanda Díaz, arguably the most promising candidate for a future Spanish president in Sánchez's cabinet. The Washington-based fund notes a "significant shift from temporary to permanent contracts" this year, adding the caveat that more time is needed to see the impact of this trend on overall unemployment rates, which remain the highest in the EU.
The IMF also offers qualified congratulation for the Spanish government's disbursement of the EU's "Next Gen" Covid recovery funds, which it says has "accelerated" throughout 2022. But it also cites the problematic lack of national accounting data, apparently owed to the fact that the computer system required to log all NGEU-related financial activity is still being built. A disparity between the amount of money Spain is receiving from Brussels and the amount it is spending, or at least documented as spending, makes it difficult, according to the fund, "to assess the extent to which resources are reaching the real economy" - the true test of their success. Getting this absurdly belated computer system operational will be crucial to the effectiveness of next year's budget.
The pace of news is so fast these days that every development proves ephemeral, almost erasing the story that came before it and, in its turn, being erased by the next story. Spin doctors exploit this collective short-term memory to great effect, knowing that the best way to make people forget a scandal is to release a positive story straight afterwards. So it is worth remembering that the government has yet to dispel suspicions that it tapped the phones of dozens of leading Catalan separatists with the approval of Spain's highest court. That particular scandal might have been temporarily bumped from the headlines by budgetary success, but it shouldn't be forgotten.