Interview and speech by President of the Government at World Economic Forum

Coordinator.- President of the Government Sánchez, I give you a warm welcome to this cold Davos. It's a bit colder than in Madrid, isn't it? It gives us great pleasure, on behalf of the World economic Forum, to invite you to this meeting.

As you will appreciate, Europe is a key issue at the meeting of the World Economic Forum this year and, in this regard, you are one of the main figures as prime minister of one of the most important countries on the world stage. Spain is one of the most important countries in terms of economic growth, and you have reaffirmed your government's commitment to the deficit requirements imposed by the European Union.

After your appointment in June last year, you announced that feminism, environmentalism and pro-Europeanism, together with social rights, were your priorities. Many people are interested in hearing about the path Spain will take under your leadership.

You have proposed that Spain progresses in the technological revolution, and your government is very active on these activities. You have also inherited many challenges, for example, the very complex situation in Catalonia and the Budget from the previous government.

President of the Government, we hope to develop the debate on the future of Europe and I would like you to share with us Spain's vision on Europe and on global affairs.

President of the Government.- President of the World Economic Forum, ladies and gentlemen,

10 years have passed since the outbreak of a major international financial crisis. We now know that this was not an ordinary crisis. Nor was the recession following on from another recession. And in fact, some economies have still not put it behind them. Furthermore, the recovery we are presently enjoying is not an ordinary run-of-the-mill recovery.

We run the risk of forgetting all this; of forgetting what happened; of forgetting what we have suffered; of forgetting our mistakes; of forgetting what we promised to change. The initial boost of global coordination was positive and moved us away from the abyss our economy was heading towards, but once the danger passed, we dropped our guard. Some of the most pressing weaknesses of global capitalism have still not been decisively addressed.

The announcement of the transformation of capitalism has waned with time; we still haven't even managed to abolish tax havens.

Considering the key macro-economic indicators, we can see that our societies still shoulder the burdens of the crisis, of polarisation, of disappointment in the government, authoritarianism, reactionary populism and this has led to inequalities.

We must remember all of the mistakes made and make changes, since we have a certain freedom to act at this time. But we must do this while remembering that the economy is not a goal in itself, but is at the service of people. Growth yes, but to improve people's lives and enhance well-being.

Growth yes, but at the same time we must learn to grow within the limits of our environment.

Our societies are facing an unprecedented rate of change. No part of our lives will remain intact and unaffected by the economic and technological changes of the fourth industrial revolution. In the developed world, the digital revolution has reshaped our economies, and continues to do so daily. It has transformed the way in which we maintain relations with others, how we communicate and how we learn.

These measures, the digital transformation and globalisation form part of the same phenomenon, and this phenomenon, as we know, calls into question the very existence of national States, redefines the concept of borders, complicates decision-making, re-writes the concept of sovereignty and creates new challenges for global governance.

We must understand this phenomenon and include it when designing public policies. The opportunities offered by new technologies are tremendous. The technological applications of artificial intelligence, big data and machine learning must increase the effectiveness of policies and improve citizen services in such sectors as medicine, healthcare, security, education and mobility.

But the digital transformation also shares a series of challenges for the economy that we must tackle. For example, taxation - taxes levied on new digital businesses. Or disinformation and fake news, which can undermine democracy and call into question digital platforms.

We run the risk of creating new technology gaps if we do not ensure that all our citizens form part of this modernising revolution. And we must join forces. Inequalities are destroying us; they are destroying all of us and our societies. They are an ethical abhorrence and a source of de-stabilisation.

In the 20th Century, politics turned its back on economics and the outcome was two World Wars. In the 21st Century, hence, it would be irresponsible to ignore the political impact of the economy. We must find a way to understand political motivations, desires, decisions and consequences that go beyond a mere stock take, or a balance sheet; decisions taken may translate into the marginalisation of young men and women, with limited expectations, or inadequate conditions for workers despite them making greater efforts.

The world is growing, but with less strength ten years on from the great recession. And it is not growing in a synchronised fashion. There are levels of inflation that make it difficult to re-establish a normal monetary policy, above all in the Eurozone. There is more indebtedness and unacceptable inequalities.

In this situation, politics must set the pace responsibly because if not, unscrupulous politicians will appear who will only exacerbate these fractures in society.

Reactionary nationalistic populism has ceased to be a problem of one country or one continent. At present, this is the main challenge facing liberal democracies. If we hadn't forgotten that the economy must always be at the service of people, perhaps this nationalistic populism would not have reached the extremes it has.

The task of politicians is to look to the future and provide responses for their people. Since we have lost a decade, we are obliged to look to the future, recover what we have lost and harness the benefits of the opportunities ahead of us.

In different parts of the planet we can see that technological change is perceived as a threat rather than a source of progress. Ecology and climate change are considered a limitation on economic activity and not as a benefit in terms of social wellbeing.

We can see how globalisation is perceived as a challenge to the national identity, and not as a source of cultural wealth. Feminism is distorted and is presented as a struggle between men and women, rather than as equal opportunities.

Demographic changes are often presented in advanced economies as a fight between the young and the old, rather than as a balance between generations.

Technological change, ecology, globalisation, feminism and demographic changes. Behind each of these five challenges lies a dividing line, one that separates social progress from privilege.

Our societies are now richer and have reached extraordinary levels of well-being, but even so, they continue to create pariahs, those who are marginalised, those that Zygmunt Bauman describes as "human waste". Bauman explains it very well: "the rich become richer simply because they are rich. The poor, the very poorest, simply because they are poor". This breaches our social contract and weakens our democracies. Citizens must feel that their destinies are in their own hands, that effort, talent and courage are important. That social mobility exists and that they can make independent and feasible life plans.

Our priority must involve reversing this negative model in which people fear robotics, and commit to equality for women, clean energy and solidarity. This can be reversed if politics and the economy go hand-in-hand.

In 2018, we could see that the tailwinds behind economic growth in recent years had started to wane. Meanwhile, we have seen an increase in tensions, risks and familiar uncertainties both in Europe and elsewhere.

Uncertainties that the populist forces and far right use to their advantage, and this generates economic instability that harms us all.

We are witnessing a turning point in human growth.

I can but share with you the pride I feel over Spain continuing to head up economic growth among the main European economies, and the outlook remains positive. According to the European Commission, Spain will continue to grow by more than France, Italy and Germany, and by more than the Eurozone average until 2020. This week we have seen how the International Monetary Fund's forecasts for Spain have changed. For 2018, sorry, 2019, our economy will create more than 330,000 jobs. The risk premium in Spain is stable, at around 110 basis points and in 2018 Spain was visited by more than 80 million tourists.

Spain inspires confidence in both international organisations and in the financial markets. The Spanish economy is well founded, and has a financial sector that has significantly reduced its risks; the public deficit has fallen and the current account surplus has remained steady.

Good evidence of this confidence can be seen in direct foreign investment which continues on its upward curve.

Why does the Spanish economy deserve this confidence? In my opinion, this is down to three reasons: firstly, the social economy, also including labour relations; secondly, legal certainty; and thirdly, strong institutions and companies.

And I would also add a fourth important element, which is that Spain is a singularly pro-European country.

There is only one openly Eurosceptic party in Spain. And our vision is of an open Europe, a Europe which is a community of values, which are our shared values. But our identity also wants to be that of the United Nations 2030 Agenda, which is a summary of the challenges we are facing and the way in which we can tackle them.

One of my government's priorities is to strengthen social cohesion, not only out of a sense of justice, but also because a more equal society contributes to a more flexible, more resilient, more stable and more balanced economy.

We have just presented our Budget for 2019, which has been drawn up with three main goals: firstly, to achieve equality by strengthening the Welfare State, by changing the social world and recovering the value of science and innovation, reducing public deficits, guaranteeing the long-term sustainability of our accounts and reducing our debt.

And allow me to mention a key aspect which is one of the top priorities of our government. As I said before, we must fight climate change and address the energy transition. Work in this area will require ecological and inclusive responses from all governments. Climate change is a global and cross-cutting issue that affects many sectors, such as housing, tourism, water, mobility, to just mention a few. But we shouldn't be frightened by this ecological transition, which is starting to be known at many forums as the "Green New Deal".

According to the ILO, for each job lost by the energy reform, four new jobs will be created. Spain is in a privileged position to lead this change. We know what needs to be done and we are going to do this.

In the process of change, my government cannot nor does it wish to act alone. We need to work with companies, with citizens and with the financial sector.

This change will bring some great opportunities for everyone and will mobilise some 200 billion euros in investment over the next decade; 80% of these funds will come from the private sector.

In short, we are creating wealth, jobs, opportunities and equality. This means that we are creating the future; a future for our country.

I have been a convinced progressive since my youth. I grew up believing that the most glorious period in the history of humanity began in the post-war era in Europe. Knowing that this pact was forged by people with very different ideas and convictions - the so-called social democratic pact - contributing to the most outstanding achievement in politics of all times - peace, social well-being, universal healthcare, compulsory education, protection of the most needy, economic growth and liberty.

And that constitutes our social model. And today, nobody, or practically nobody, would dare bring this into question.

I don't agree, in any way whatsoever, with the idea that progressive politics are in crisis, and that progressives do not know how to create. Quite the opposite. I believe that the progressive forces are the only ones that continue to explore paths that can lead us to a new social pact.

What has happened in history, in my opinion, is a protectionist, conservative and provincial model that is incapable of seeing the world as a place that belongs to everyone.

What has also now ended is the neo-liberal model that took us into the great recession; a model that confuses de-regulation with liberalisation and that offers us a world that is increasingly more hostile towards those who are not the most powerful.

What ideas has this model launched in the last few decades? None. The left, in contrast, has proposed new and revolutionary political concepts, such as basic universal income and the redistribution of wealth. These ideas are necessary; they reflect the logic of the world we are heading towards. They will be the foundation for the new social pact of this new era. And furthermore, as in past times, they will be welcomed by reasonable people of all ideologies. And this has happened many times throughout history, when such concepts as the vote for women, universal healthcare and a public pension system were considered revolutionary.

Let's look up from economic charts and face the future head on.

Thank you very much.

Coordinator.- Thank you, President of the Government, for such a complete speech, full of ideas, visions for Europe and also values in relation to Europe.

We know that European elections are looming this spring and that they will be very important. We know that Spain will also play an important role after the European elections. President Macron of France has shared his vision of the European Union. How do you see this convergence within the European Union in relation to the ideas you have mentioned: more inclusivity, a less hostile world, job creation? Do you feel that you can influence the rest of Europe in this regard?

President of the Government.- Well, I hope that we can manage to be influential in building the European Union.

Regrettably over the last 10 years, Spain has not been present at the main debates on building the future of the European Union. This is somewhere we want to be present, following the upcoming European elections, not only in the European Parliament but also on the European Council.

I am firmly committed to the European Union project. Following Brexit we will be one of the largest countries, not only from a political point of view, but also from an economic point of view, in the European Union, although I also want to say that Brexit will lead to new challenges and opportunities for all Member States, precisely to strengthen and further enhance our integration process.

What are the main challenges the European Union faces at this time?

Well, firstly, I feel that we have prepared ourselves for potential economic crises, and that means that we must complete the economic and financial union in Europe. One of our goals is the European insurance scheme, the aim of which, I believe, is to create unemployment insurance at a European level. This way we can bring the European Union closer to our citizens. In other words, we must finalise and complete this Economic and Monetary Union.

Then, secondly, I believe that we must strengthen our common approach to migratory flows, not only in Spain but also in other parts of the European Union where they also take place.

And then thirdly, of course, there is climate change. We must develop a single energy market which clearly operates to the benefit of our country, with this connectivity through interconnections that we need between France and the Iberian Peninsula.

And finally, as you mentioned a moment ago, you also have the role that we want to play in international relations through the European Union. But I believe we must strengthen multilateralism first. I firmly believe that we need to reform the World Trade Organisation (WTO), precisely so as to guarantee free trade. Through these trade agreements we have and that we negotiate with all parts of the world we are opening up opportunities for the European economy.

And then, you have a fifth challenge, which is precisely the fourth industrial revolution. This means that all countries, and we are doing this in Spain, start to introduce 5G technology; we have made a clear commitment to start-ups, but of course, we need to coordinate and complete the digital market at a European level as well. In other words, there are many things that we must improve and strengthen at a European Union level.

And finally, I wanted to say that we must protect Europe, a Europe which, in turn, will protect our citizens.

So these are the challenges we face coming into, but, above all, following the European elections.

Coordinator.- That is a very rich programme you have outlined for us, Mr President of the Government. The fourth industrial revolution is not something that is approaching in ten years' time; it has already arrived. It is already being rolled out and we must prove to be competitive in addressing this fourth industrial revolution by providing responses to this challenge.

And Europe is seeing increasing technological competition. Some would say that the trade dispute between China and the United States is also part of this competition, to see who will come out on top after all these technologies of the fourth industrial revolution, the Internet of Things, artificial intelligence and all these new and innovative technologies are introduced.

Are you concerned that Europe is at the centre of a conflict between China and the United States and that it will have to take sides? Would you opt for one or the other?

And in addition, do you feel that Europe has the capacity to unite as the European Union and say that we, as the most important global market, can also be one of the leading players together with the United States and China? Do you aspire to this leading position?

President of the Government.- Well, I don't know whether we have the capacity, but we certainly have the need.

I was in Strasbourg last week to address the European Parliament and I said that we must take the initiative in artificial intelligence and the technological revolution, and that is something we are taking very seriously in Spain. We are heading up several technologies in Spain, a basic 5G technology. We are boosting our vocational training system, which is very important for our young people. And we want to do all of this together with our companies and trade unions, which I also feel are primordial.

And why not? I appreciate that we are on the threshold of an enormous change which, furthermore, we want to put in the hands of the public sector. We are facing a tremendous change in the public sector, in state education, and our companies and our economy must be capable of responding to these challenges. And I believe that we must also do this at a European level. Which is why I say, and I have always advocated to the European Council that before the European elections we must find a way to approve the Multiannual Financial Framework so that we can mobilise the necessary economic resources to tackle these new challenges we are facing as a continent.

Coordinator.- Thank you very much, President of the Government, for coming here and sharing your views with us: an ambitious reform programme.

Thank you very much.

President of the Government.- Thank you.

(Transcript edited by the State Secretariat for Communication)

Non official translation