Speech by the President of the Government at the closing ceremony of the 15th edition of the international financial forum 'Spain Investors Day'

Madrid

SPEECH BY THE PRESIDENT OF THE GOVERNMENT OF SPAIN, PEDRO SÁNCHEZ

Thank you very much to all of you, and especially to the Secretary of State for Trade, the president of Spain Investors Day and, of course, the members of the governing board. Congratulations on this 15th edition of a forum that we can say is unique and already a benchmark in our country. In this regard, I commented earlier to the organisers on the media impact this forum has been having since its inauguration by the head of state, King Felipe VI. We would also like to thank the entrepreneurs, businesspeople and investors who have joined us for another year at this event.

Ladies and gentlemen, I would like to begin by evoking an image, that of a crestfallen and wounded solitary bull, surrounded by a dry, brown field and labelled with the name of our country in English, "Spain", with the 's' falling into the void, revealing the word "pain", which in English as you know means "dolor". You will all remember that this was on the cover of the weekly magazine The Economist a few years ago, in 2012, portraying with extreme rawness and harshness the perception that Spain was not experiencing a good moment both internally, and externally in terms of its image. It was a country wounded by the consequences of the financial crisis, and as was pointed out earlier, was one of the PIGS, as the southern Mediterranean countries were pejoratively called.

Just a month ago, and I think it is important to highlight this, the same weekly magazine- which by the way does not give out this type of recognition at all lightly- pointed to Spain as the best economy in the world in the year 2024. Institutions as important as the OECD, the European Commission and the International Monetary Fund also praised Spain's performance, sending a clear message that our country is at the forefront of economic growth in the developed world, and also has very favourable future prospects, outstripping those of many neighbouring countries. And today, as I commented earlier, AIReF has just raised its economic growth forecasts for 2024 to 3.1%, as well as those for the year 2025, which we have just started. Need I say more?

I believe that this also tells us something else, and that is that the Spanish model works, and that it is therefore something we should be proud of as a model to be followed and imitated by other countries. When I have the opportunity to speak with other European leaders, they also convey to me their recognition not only of the public institutions, but also of the business community, of the workers, of the country as a whole, of all of Spanish society, because we are going through a magnificent economic moment in a very complex context from both the European and the international points of view.

Yesterday, I was reading the economic growth forecasts for the leading European economy, Germany, where for the second year in a row recession is being predicted. As soon as Germany improves, as soon as France improves, this will undoubtedly also be very positive for our country's economic growth prospects.

And our ambition - which has already led us to reach this milestone in 2024 - is that we want to be the best economy in the world again in 2025. We are aiming for this and we are going to work for it.

Going back to that image of 2012, and the image now in 2024, I believe there are multiple factors for this 180-degree turnaround. The recovery of economic activity following its loss after the pandemic has clearly been an influence. But I think it is important not to look at everything just in quantitative terms, but also in qualitative terms. And we are doing this first and foremost, and much better than other countries around us. The Economist, as you well know, does not confer on any government, and even less a progressive government, an honours degree, but I believe that with an appropriate economic policy, bursting with ambition- which is what we have been deploying for almost seven years now- we are sowing the seeds of solid, sustainable growth, with which we are obtaining very positive results from Spain's point of view.

We have been working on this policy for seven years, and many ministers and vice-presidents at this forum, as well as secretaries of state, have informed about it. But as I said before, I would like to focus not only on quantity but also on quality, because this time we are growing, we are growing in a balanced way and we are doing so cleanly and transparently.

That is why I would like to talk to you about three of the pillars that underpin this model. I could talk about many other things aside from these, but what I want to do is translate this image of a virtuous triangle of growth, economic progress and social justice into three fundamental lines of action. The first is the modernisation of our productive fabric. The second is the opening up of our external economy. I was saying earlier that I loved the message from the head of state at the opening event yesterday, because precisely at a time when the world is in retreat, when the world's main economies are in retreat, the Government of Spain - including its institutions, led by the head of state - is saying that what Spain wants is not to close in on itself but to open up to the world, and not only to a traditional market as is the European market. Therefore, the second line of action, the opening up of our external economy. And last, something the Secretary of State has mentioned, and that is our financial situation.

I would like to develop some reflections along these three lines to share with all of you.

First, productive transformation. As I said before, and as the Secretary of State said earlier, we ended the year with a year-on-year growth of over 3% of our GDP. To put this in relative terms, we are growing more than twice as fast as the average, or rather Germany, France and Italy. And as I said before, it is estimated that until 2026 the economic growth figures for our country will be above 2%, once again among the highest of the large economies of the EU.

We are growing more, and we are doing so by reducing inequality. I think it is very important that we also convey that this model of success in Spain is not just boosting GDP and creating employment, but it is also reducing inequalities. Just today, we heard some news from the International Labour Organisation, which in its Global Wage Report names Spain as one of the advanced economies with the lowest wage inequality. And this is largely due to the effort that employers are also making, linked to the impact of the increase in the minimum wage.

High value-added activities such as technology, telecommunications, and professional and financial services, now account for more than 18% of our economy. Another example is environmental protection activities, which already account for around 3% of our GDP. In short, what I want to say is that these figures have not come about by chance; they are the result of the Government of Spain's firm commitment to innovation, and to the deployment of technology in small and medium-sized enterprises, which are ultimately the heart of our productive fabric, and of leading sectors. They mark a path the central government will continue to follow during this term with the utmost determination and ambition: to make the training of our human capital the basis of our present and future prosperity.

I believe that these data, if we look at them in perspective, eloquently exemplify the effort we have made over the last six years to compete in one of the main competitions the world and all economies are involved in- especially the most developed economies- which is the attraction of talent. In the past, we talked about talent, attraction, competition for talent. In the last six years we have increased public investment in education by 38%, which is what guarantees equal opportunities and meritocracy.

We have made an unprecedented commitment to vocational training, which is not only represented by the new laws and the updating of vocational training regulations, but also by the creation of more than 300,000 vocational training places and the constant updating of the range of these courses on offer.

And the success of this ambitious commitment is measured not only in the extraordinary attractiveness of the new vocational training - which you all know - but also in our determined vocation to align our offer with the professional demands of the productive sectors, where we are also investing many of the resources linked to the Recovery, Transformation and Resilience Plan and the NextGenerationEU funds. A few weeks ago, I had the opportunity to meet with the Minister for Education and Vocational Training and with some of the major companies to create four major hubs linked to the audiovisual, environmental, technology, aerospace and rail sectors.

And what we want to say is that vocational training, the investment we are making in universities, and also of course, in the primary and secondary education of our young people, is fundamental and is the basis for improving the capacity of our talent, which is already extraordinary in itself.

Similarly, and this has been said here before, our public spending on science and innovation has grown by 50% in the last six years, and this is already materialising in patents and innovation, with figures that are double those of a decade ago. Some 40% of large enterprises and 8% of small and medium-sized ones are already integrally incorporating advanced AI technologies. And we have one of the most advanced cyber-security ecosystems in the world. But because there is much improvement needed in this area, in the last Council of Ministers we approved what is a transposition of a cybersecurity directive to organise the governance, the governability of cybersecurity in our country. And as you know, we lead in green hydrogen investment projects in Europe, and we are among the OECD countries with the highest number of companies devoted, for example, to biotechnology.

None of these achievements would have been possible without the contribution of companies, workers, and of course investors, who have seen a unique opportunity for our country to be an engine of transformation in these sectors. A transformation that I would also like to emphasise, because - and I was reminded earlier that the first time I was here we were wearing masks because of COVID-19; now we should probably put on masks because of the flu that many of us are suffering from - but in any case, when the NextGenerationEU funds were launched, there was a lot of criticism and people said 'be careful' that they were not only for large companies, but that they could also benefit small and medium-sized companies. Well, these funds now reach no less than 637,000 small and medium-sized enterprises in our country- 637,000 small and medium-sized enterprises, which are, after all, the preponderant productive fabric in Spain. In other words, they account for €2 out of every €5 of the calls completed under the Recovery, Transformation and Resilience Plan.

All in all, on this issue - and I am very aware, as I was told earlier, of the need for both Spain and Europe to scale the size of companies- the number of companies in our country with more than 250 workers is increasing at a rate of more than 6% per year, 6% per year, and the percentage of workers employed in large companies is more than 38%, when in 2018 it was 34%. A total of 18 Spanish companies - it is true that there could be more- but 18 Spanish companies have achieved unicorn status, and according to the Global Startup Ecosystem Index, we are among the top 15 countries in the world for our entrepreneurial ecosystem.

What I mean by this is that there is extraordinary confidence in the possibilities and potential of our economy, both now and for the future. We are ranking in the top 10 in the world in terms of confidence for foreign investment, and that is because Spain today has key assets for business competitiveness. We have the infrastructure - although there is no need for me to expand on that because you know it well. We have immense potential for the self-supply of clean and cheap energy. We come from a country where the sun used to be taxed, but where self-consumption is now one of the main levers of energy independence in a geopolitical and energy situation - imagine this - where we have had to make a Copernican turn from dependence on Russian gas to other energy supplies, and also of course, to other continents for the supply of these energy supplies. And third, a broadband and 5G network deployed throughout the national territory, which during the pandemic we all saw was effectively an element of competitiveness with respect to other very important economies in Europe.

Something the secretary said earlier- and myself having been president of the Government during the pandemic, and being aware of the challenge this represented in terms of social impact, coexistence and the housing sector- I want to thank the foreign tourists who come to visit Spain. Because when we remember the tourism figures we had in 2020 and we see today how Madrid and many other capitals, our country and our cities, are visited by foreign tourists, I can only say thank you. The fact that in 2024 there were 94 million people from all over the world who thought that Spain was the place to spend their holidays and spend €126 billion, well, I think the figures say it all; Spain's potential is evident: 11 million more foreign visitors than in 2019, the year prior to the pandemic.

I remember having been with Manolo - the minister is not here and so I cannot refer to him - and the Secretary of State for Economic Affairs, talking to many companies in the tourism sector, people in jobs and businesses indirectly affected by the pandemic... and to see where they are at now... I think this is living proof of the resilience (now that this term is very fashionable) of the Spanish economy and also of our productive fabric. Therefore, huge pride and gratitude to the employers and workers of such important sectors as the tourism sector and its derivatives.

I referred earlier to quantity/quality. The Government of Spain's objective - and it may seem strange to say this - is not growth for growth's sake. I believe that it is also important to grow to make progress and to improve the lives of our citizens, because in the end these two aspects are the underpin of cohesion and coexistence - reference was made earlier, for example, to stability. Unequal societies lead to greater insecurity and therefore less ability to progress and grow. So fighting inequality, redistributing the benefits of this growth in a fair way, will always be one of the guidelines for action, a roadmap for my Government.

We want Spain to be an attractive country for investors, of course, but we also want it to be a good country for our workers, for our self-employed and for our businesspeople, for the citizens as a whole. Because I also believe that one of the paradoxes we are together proving wrong with respect to what happened during the financial crisis and subsequent years, is that creating wealth and sharing it are incompatible; on the contrary, they are two pedals of the same bicycle that leads us to the same destination, which is the development of our societies in a balanced and fair way.

The data are there. I do not want to expand on them here either, but let me just say one thing. In the last six years, with crises such as the war or the wars and the pandemic, among us we have managed to create 2.4 million jobs - mainly companies - and to bring unemployment down to the lowest level since 2008. Today, almost seven out of ten people between 20 and 64 years of age are in employment. Is there still work to be done? No doubt about it. But let us also recognise what we have done over these complex years. There are 2.2 million more women in work than a decade ago. And the labour force participation of the over-55s, which has always been one of the challenges in our country due to long-term unemployment, is the highest in the recent history in our country.

I think we have one of the best educated workforces - and it has been said before - in the world. You know that. And with this asset, I believe we can realistically say that the Government of Spain's objective, between now and 2027 at the end of this term, is to achieve full employment. And to do so with a model far removed from precariousness and low wages. A model that advances purchasing power and also makes it possible to balance work and family life in our country.

I believe that many of the elements to do with some of the aspects mentioned before are, of course, due to the working day and the impossibility, the inability of workers to balance work and family life, which in some way is an issue that we all have to resolve together.

We have more employment today than ever before, with a temporary employment rate that is half that of 2018 and wages that are growing by an average of 4%, without- and I will come back to this later- this being a burden on our competitiveness.

Because together with this transformation and modernisation of the productive fabric, the second point I would like to mention is something His Majesty the King talked about at the inauguration- which I think is something we should be proud of- and that is the extraordinary and increasing opening up to the outside world the Spanish economy is currently undergoing. Since the great recession, the financial crisis, Spain has managed to diversify its sources of growth, making room for more international activity. I imagine that all of you know this, but today four out of every 10 euros of the income we generate in Spain comes from what we sell abroad, to the rest of the world. We have therefore ceased to be an importing country and have become a major exporting country. We are increasingly opening up to the rest of the world, and I believe that this has been made possible thanks to three factors that I would like to share with you.

First, we are selling abroad more than ever before. In the last year, our export earnings in goods and services - when I saw this figure, I was truly shocked in positive terms - have reached almost €600 billion. Secretary of State, €600 billion. To put this in perspective, in ten years that is an increase of almost 70%. Almost 70% more.

The Spanish economy's external surplus, which was always the Achilles' heel, the drag on our country's economic growth because it did not contribute positively to it, has now reached 3.4%. This is a historically high figure which, to give you an idea, represents similar magnitudes to large exporting economies like Japan. This is the transformation that is taking place in our country.

And it is not the first time this has been said. We are not given to speaking well of ourselves, except when we go abroad. I think it would be good for us to focus more on these data, not as a success story of any one in particular, but as a success story for the whole country, because we are doing this in a very difficult context, as you all know, and with present and future uncertainties, which of course concern us and which we should all take part in trying to resolve step by step.

We are selling more. We are increasing our market share in European and world trade. We are diversifying our export basket with an increasing weight of non-tourism services. I often read that it is thanks to the contribution of tourism that Spain is growing. Well, fortunately, we have the tourism to which I referred earlier, but that is not all we have. We have, as I have said, a growing weight of non-tourist services, which are already bringing in - to give you an idea - 7.5% of GDP in terms of income.

And another very important thing. We are also increasing the number of companies selling abroad on a regular basis. I believe that this also has a lot to do with the task we have pending of gaining in dimension, in scale at both national and European level, as I was asked about before.

Second, and I believe that this is also very important, and some of you- when I have had the opportunity to discuss it bilaterally- have heard me say this on other occasions. We have to make a commitment to strategic autonomy. To put it in simpler terms, we have to re-industrialise, re-industrialise and re-industrialise our continent. And Spain has to win in that context. And this also has a lot to do with the extraordinary performance of our external sector, because our energy independence today is six points higher than it was in 2018, when I came to government. Our energy independence. And if we meet the objectives- which I imagine the Vice-President for Ecological Transition presented in the talk and in the presentation- if we meet the objectives set in the National Integrated Energy and Climate Plan we sent to Brussels, that is, to reach 81% of renewable electricity by the end of the decade, in the year 2030, then, to give you an idea, in a decade we will be saving €85 billion in fossil fuel imports. €85 billion is wealth that we are not transferring to other economies, but that we could use to create more wealth in our country.

This is also a clear commitment- and not only to environmental sustainability, which is so necessary after coming from a year, 2024, when science has told us that for the first time the world has exceeded the 1.5 degrees that the Paris Agreements set for us. In this regard, believe that we must educate and teach our citizens that this commitment to environmental sustainability is not only necessary from the point of view of the viability of our species in the medium and long term, but also from the point of view of the opportunity for economic development. And we are not going to take steps backwards, as some of you know very well, because I have said so both in private and in public.

And the third factor is Spain's positioning as a global hub for access to markets such as Europe, Latin America and North Africa. We have always looked to the north of Africa, in all our diplomatic relations with North Africa, as a geographical location where we can deploy shared development. And the fact that these countries are doing well is good for Spain because it means we can create complementarities and synergies with them. And this positioning has meant that the stock of foreign investment - as the Secretary of State reminded us earlier - increased by more than 33% between 2018 and 2022, and already represents, in relative terms, more than 40% of our GDP; that is, we are ahead of such powerful and leading economies as Germany and France.

And the last of the lines of action with which I would like to end this speech- and I am sorry to be so lengthy- is our sound financial position. Because I think this is something which, in contrast to what happened during the expansionary phase prior to the financial crisis - and some financial investors and the financial sector here know this well, and I will always be grateful to them for their work - is rather eloquent.

Our households and businesses are spending and investing, but they are also saving more than in previous upturns. And if we look, for example, at the debt ratios, they are, of course, typical of an economy that is growing, but in a non-speculative way.

Our banking system is in extraordinarily good health. So, I believe, are our public finances. You know that the European Commission has just endorsed the credibility of the Government's fiscal plan, which is committed to reducing both the public deficit and public debt.

We are going to close the year 2024 with a public deficit of 3% of GDP, which I believe is a significant reduction. And, above all - and this is what I would like to emphasise because I know you are concerned - we have managed to ensure that the weight of public debt in relation to GDP has fallen by no less than 20 percentage points since the post-pandemic peak. To give you an idea - and I imagine that Minister Cuerpo has said this, because he often says it - we have reduced public debt by five points a year since the pandemic peak.

I believe that this is an extraordinary figure, which most importantly sets our country a horizon for 2027, at the end of this term, of a public debt of less than 100% of its GDP. I believe that this is a feasible objective, which is foreseen in our Structural Fiscal Plan and which our government is working towards. And we are doing so- and I believe this is the important thing- by returning to growth and redistribution without compromising the quality of public services, unlike what happened in the past.

Therefore, productive transformation, openness to the outside world and fiscal consolidation I believe is the virtuous triangle we must defend, and is giving credibility and results to our economic policy, which has allowed us to climb high in the rankings and be in the position we are in. And I believe that the success of our policy is also strengthened by three other assets that investors and foreign companies that invest in our country, CEOs I mean, value highly. First, social peace. I think this is very important, because if we look at other countries, Spain has had to tackle very important reforms; the reform of the labour market has, without a doubt, been the reform of the pension system... And we see how all these reforms have been carried out thanks to the responsibility mainly of the social partners, with the support of the Government of Spain, and guaranteeing social peace of course gives economic operators predictability. We have been governing for seven years, carrying out major reforms, important reforms and, I believe, managing the country's future in the right way. And last, something that foreign businesspeople who come here to live with us say a lot about the extraordinary security our country enjoys- being able to walk through the streets with a guarantee of safety. Security also from a legal point of view makes our country one of the safest countries in the European and international contexts.

However - and I will end here - the diagnosis I have just made does not mean that we are complacent. Much remains to be done. I started the week by talking about the housing sector, one of the main problems that mainly affect young people, but not only young people, and a major source of inequality in our country. We need to modernise and boost the construction and housing sector. We need to be more productive; we need to innovate more. We need to continue to invest in human talent. In short, I believe that Spain has every ambition to make training and its transformation one of its main hallmarks.

So how do I want to end this speech? I want to end it with an announcement that I believe could be both newsworthy and interesting for investors and companies working in this area. I would like to announce that we are going to set up a Strategic Investment Committee, a body with two essential tasks. First, we are going to identify needs and target investment priorities in digitisation, innovation and green transition. And together with this identification in sectors that are, of course, behind the competitiveness of our economies, what this Strategic Investment Committee is then going to do is accelerate the projects with the greatest impact and relevance for our economy and for our territory. I believe that this also responds to the request to speed up procedures, the bureaucracy, which sometimes slows down, if not paralyses, important investment projects for our country and for our territory. In short, it is an initiative that provides companies with a stable and facilitating framework to undertake the investment decisions in strategic projects that you, all of you, have in mind.

I will conclude as I ended my speech last year, by saying that investing in Spain pays off, and that there is no doubt about this; and that the Government's commitment is clear, and it is to guarantee a regulatory environment that generates confidence and certainty, to continue promoting the unparalleled infrastructure network in all areas, and to seek not only understanding but also complicity with the private sector to ensure that these investments that are so necessary for our country and for companies can be deployed, generating value for both, for society and for the companies that are committed to our country. And I would also like to conclude with a very clear message and invitation in this regard: Invest in Spain, invest in Spain if, for example, you believe in the ecological transition and that it is possible to produce in a more sustainable and environmentally friendly way. Invest in Spain if you are committed to real and effective equality between men and women in the management bodies of your organisations. Invest in Spain if you believe that economic progress must go hand in hand with social justice and the well-being of future generations. Invest in Spain if you care as much about your workers, their families and their homes as you do about your bottom line. Invest in Spain if you believe that security, connectivity, entrepreneurship and a commitment to artificial intelligence with a humanistic approach should be the drivers of the development, economic progress and social cohesion of nations. Invest in Spain, and do so, moreover, by looking for opportunities throughout our country, and not only in the big cities, because there are great opportunities in inland Spain.

In short, invest in Spain if you believe in our country and our model. It is a model that we defend because it is a win-win model, and this is the investment we believe in and the investment we want for Spain. Thank you.

(Transcript edited by the State Secretariat for Communication)

Original speech in Spanish