Following are excerpts from a CNBC interview with Spain's Minister of Economy and Business, Nadia Calviño, and CNBC's Geoff Cutmore and Steve Sedgwick.
SS: Well, I'm absolutely delighted, and it's the first time I've met this person, Nadia Calviño has joined us, the Spanish Minister of Economy and Business. Nadia, really nice that you could join us here-,
SS: Thank you very much indeed for joining our-, our wintery set-,
NC: Yes [laughs]-,
SS: We call it, as well. Look, populist politics isn't necessarily a bad thing, it's an expression of anger, it's an expression of frustration, from populations who feel they're missing out, as well. We've seen it exhibit itself north of the Pyrenees, we've seen it exhibit itself in Italy, as well. Just an update, and we know, in-, in Catalonia, it's had its own version, as well, but across Spain, we don't seem to hear so much about it, as well. Is it going on? What are you doing to combat it? What are you doing to listen to the concerns? Good morning to you.
NC: Yes, good morning, thank you very much. Yes, indeed, we are-, we are actually worried, I-, I think populist politics, when it comes to economic policy, at least, has not shown to be very performant, you know, so I think that we have to stay away from that kind of approach. At least what the Spanish government thinks is that what we need is to strike the right balance between fiscal discipline, which we're absolutely committed to, and taking care of the people, you know, trying to, for example, fight inequality, which has risen a lot in Spain. So far so good, I think that the Spanish population generally is supporting this balanced approach, and we are going to keep on that line.
SS: Minister, when we saw the-, this-, this extraordinary exchange, between Mr Tria and his own government, and Mr Tria and the Commission, about whether they were going to come in at 2.4 deficit or 2.04-,
SS: As well, I couldn't help thinking that there were semantics going on here, as well, because we know that the Italian growth assumptions were a little bit generous, to say the least, as well.
SS: Let me take this back to-, to Spain, as well, and say, at a 2.7% budget deficit figure, where you are spending more, you are looking at your taxation regime, you're looking at government spending, to negate some of those concerns, as well, you're quite near the mark, on breaching limits, as well, over in Spain. You're-, you're running it as tight to the 3% level as you possibly dare.
NC: Oh, no, not at all, no. This was 2018.
NC: In 2018, we expect to close with 2.7%-,
NC: Which is a very significant reduction, as compared to the previous year, and our approach, this year, is to have a target of 1.3%-,
NC: So, no, no, actually, we're absolutely committed to budgetary discipline
SS: Is that based on realistic growth assumptions, minister?
NC: Well, I mean, we just issued our latest assumptions, we expect growth in 2019 to reach around 2.2% in Spain, which is above the EU average, above the largest economies in Europe. This is actually the expectation of all international and national forecast institutions, the IMF just issued the forecast, and Spain was the only country that has not been downgraded, or revised downwards. So, you know, we-, we think this is a prudent assumption for 2019, and this is the framework within which we think that we have to be ambitious, in terms of deficit reduction, debt reduction, you know, take the advantage of this growth, to reduce-,
NC: Our imbalances.
GC: The trouble is, you're surrounded by countries, in the Eurozone-,
GC: That are exhibiting slower growth trends, at this point. Are you concerned at all that your core assumptions may be damaged by the problems in Italy, the-, the problems in France, the weaker growth in Germany?
NC: Well, we-, in the last ten years, what has happened in Spain, is we-, we bounced back from the very deep crisis, very long crisis, we've shown quite dynamic growth, and part of this growth is coming from the increased internationalisation of Spanish businesses. They have been very dynamic, they have been very competitive, they have found, and-, and grown in international markets. So, indeed, the Spanish economy is more open, we cannot be isolated from developments, in Europe, and elsewhere. Having said that, the assumptions we integrated in to our macroeconomic forecast were already quite prudent, and not very upbeat, or optimistic, so-,
NC: You know, for the moment, I don't think that we should revise them downwards, no, I think this is a realistic assumption, but of course we are following very closely developments in the other European markets, because whatever happens in Germany, of course has an impact on all of us.
GC: Yes. Just to-, just to pick up on Steve's populist line, because I would be interested in your view on this. I was just in Poland, interviewing the Prime Minister-,
GC: And they feel that they've been unfairly targeted, I mean, let's set aside-,
GC: Some of the concerns about the politics-,
GC: But they do feel that, on the economics, the Commission has taken a very tough line on budget deficits, where core-,
NC: In Poland? In Poland?
GC: Around the-, the way that they've been managing their finances-,
GC: But they also feel that Italy has been unfairly targeted-,
GC: And those countries like France get away with it, year after year.
GC: Is there, a sense that we need, actually, a shift in the thinking, within the Commission, and perhaps it should be operating a little bit more efficiently than it currently does-,
GC: Given that we-, we still have things like the-, the-, the Alstom-Siemens deal-,
GC: Waiting on some form of final approval here.
GC: It all just takes too long, and-, and, at times, it doesn't seem as though they fairly distribute the views.
NC: Mm-hm. Well, I mean, you-, you-, you have put, like, three or four questions, you know-,
GC: Yes, I have, I'm sorry.
NC: In one, so I'll try to be as efficient as possible in replying. I think, when it comes to the stability and growth pact, so the fiscal discipline which underpins, in particular the euro, I think we have to stick to that, because what we have seen throughout the crisis is that, having a common currency demands on all of us to be responsible, vis a vis each other, you know?
NC: If one country is just having excessive deficit, this is going to have an impact on the euro's stability, and that is why, you know, coming from the Spanish perspective-,
NC: We think that we've learned our lessons, we want to have a disciplined budget, not because somebody's imposing it on us, but because this is going to give us better funding conditions. During 2018, we had a record year, in terms of lowering the interest rate-,
NC: The beginning of 2019 has also been very positive so far, we had a record demand, only some days ago, in the current week, for a-, for a last issuance of long-term bonds, and I think that this is the right approach, you know, to have fiscal discipline, but also take care of the people. That's-, that's one thing. Then, on the other side, the rules have to be applied equally to everybody, I-,
NC: I fully agree with those that may think, 'Well, you know, all countries have to be respecting the rules.' Large, small, you know, north, south-, I think that that's the right approach.
GC: So, you'll be critical of France, if they breach their deficit guidelines this year?
NC: I-, I wouldn't like to be expressing a view on-, on another country, before I see the evaluation of the European Commission [laughs].
SS: Minister, I've got two questions, but I'm going to-, I'm going to stick to one, if I may-,
SS: I think you've been correctly quoted by saying that small countries with small weight shouldn't really necessarily try and push others around, the Hanseatic Alliance, I think there was some criticism from you, about certain low countries, as well, competing visions for where Europe goes next. Is Spain on the same page as the French and the Germans? Are the French and the Germans on the same page as the rest of southern Europe, as well? There are competing visions, Brexit's made everyone look at themselves-,
SS: And see what happens next, as well. Do you think Europe is moving forward in lockstep? Or actually, we've got a serious debate that needs to happen, about where we go next?
NC: I think that this is a-, I mean, Europe has been in a crisis since the beginning, so we are quite used to having different views on the issues, and I don't think that this is necessarily bad. What I don't think is useful is to start having alliances that seem to be going in to a confrontation. I was not correctly quoted about that, actually, what I was referring to is not the fact that they are small countries, but-,
NC: That I can understand that a smaller country is feeling more the need to get together, you know, to have a higher weight, but I don't think that that would be the right approach, you know, to start putting north versus south, east versus west-,
SS: For sure.
NC: I-, that's not the approach.
NC: I think, generally, Spain is-, is-, is very willing to play a very constructive role in this debate, you know, and we are generally aligned with Germany, France, Portugal. I think that here, there is a-, a-, an approach which is defending the European values, liberalism, and-, and a tighter cooperation within Europe, that is probably the strongest force to drive things forward, in the-, in the future, you know. But, you know, I would-, I would try to stay away from, 'Oh, I'm going to create a Mediterranean League,' for example, you know-,
NC: Or a-, a Hanseatic-, I think that's not a very useful approach, because we may agree on some issues, and disagree on others, and that's the way to move forward.
GC: Minister, I think we've got to wrap it up.
GC: Thank you so much for joining us-,
NC: Thanks to you-,
GC: A real pleasure.
NC: And it was-, we had good weather, after all, so-,
SS: Yeah, yeah, yeah. It's slightly warmer now, than it was-,
SS: An hour or so ago.
GC: Nadia Calviño, the Minister of Economy and Business for Spain.