45 billion euros is no small sum. It is the adjustment that the French government is undertaking until 2013 in order to reduce their public debt to the 3 percent of PIB demanded from Europe. It is Apple´s liquidity at the close of the first quarter. And it is the size of the enormous hole that Spain?s public works sector is right in the middle of.
The Ministry of Public Works has been making adjustments and readjustments from 2010 to 2014, and major construction companies calculate that the constant resettling will reduce their total contracts figures by 45 billion euros, causing significant negative effects. They offered a taste of what´s to come: it will start a 1% decline in overall PIB, from 1% in salaries and 1.8% in employment.
This small public investment in infrastructure equals 4.5% of PIB and "indicates that in the next two years there will be practically no new work, considering the normal drop in bids for this work that we expect will happen after the next electoral period," said the president of the Confederación Nacional de la Construcción (CNC) Juan Lazcano. "There are two possible positions: resign ourselves to the inevitable until things clear up, or prepare to face alternatives that allow us to maintain the investment without detriment to the adjustments."
The confidence is obviously low, considering that these 45 billion euros "represent the business of an entire year," says a businessman in the sector. And while David Taguas, former advisor to the president and now advisor to the construction company Seopan, asks for more, José Blanco advises differently. "The whole world can´t have everything," he says. "Ports without goods, trains without passengers or airports without planes are not symbols of progress, but lost opportunities."
After the agents words, there was another hit for the sector, and that it?s already official in the Government Stability Program 2011-2014, which reduces the investment to 2.6% of PIB. "We don´t understand how the public investment, which represents 6.5% of the Public Administration?s spending, nonetheles supports 20% of the adjustment, which would suppose multiplying by three times the speculative force that would correspond,? explained the vice president of Seopan, Julián Núñez.
There have been three adjustments already and still more remain, say the construction companies. Not in vain, the plan is added to cutbacks of 23.5 billion euros from the Stability Program passed by the government for 2010-2013 and 7 billion more cut for 2010-2011.
Edited in English by Brandon Dyches and Jose L. de Haro (for comments contact: joseluisdeharo@eleconomista.es)
