Spain needs to reform its pensions system even at the cost of future cutbacks in other areas, warns the President of the ifo Institute
The Spanish economy is enjoying a sustained and balanced recovery with a robust performance overall. However two weaknesses stand out: an unacceptably high youth unemployment rate and an excessive public deficit. This is the snapshot of our country’s juncture offered by the President of the ifo Institute, Professor Clemens Fuest.
11 May, 2018
On the subject of the recently announced increase in pensions, he sees it as an important political decision but one with clear budgetary implications: “Spain is undergoing a demographic shift and needs to implement reforms to ensure a sustainable pension system. And that, of course, will do little to improve the deficit situation. If expenditure persists at these levels, there will have to be cutbacks in other areas.”
In Spain, Fuest points out, pensions have become a lifeline for families affected by unemployment. For this reason, he adds, the reform must be structural in nature: “It is essential to keep in mind the whole system of transfers, particularly the protection available to society’s younger members.”