The banks are predicting that credit availability will plunge 6% this year and another 5% the following year. Certainly there is a private sector with debt exceeding 150% of the GDP and debts trying to de-leverage themselves at a time when we have cut ourselves off from foreign liquidity that could help us maintain some equilibrium.
It is also true that the solvency of funding requests has worsened. Still, the criteria for granting a loan have also stiffened drastically. Added to all of this is the fact that we have to do more to recapitalize our banking system than the rest of Europe has to do for theirs.
Just in this context it will a challenge for us to attract investors, such that basic capital requirements will rise, thereby reducing the balance and credit. To top it off, the EU has been extraordinarily strict with our lenders due to hopes that they will provision a small part of the national debt and because they are not entering anti-cyclical buffers, which is something that is only explained because of hesitation around accounts in Spain's financial system because they might be tied to unknown real estate assets.
These lenders continue to struggle under a weight that ties down their resources and impedes financing cash flows. Things must be cleaned up, but where are we going to get the funds to do so? Meanwhile, as we cut public spending, capital that could reinvigorate activity in the private sector is resting on the sideline. Likewise, fewer self-employed workers are on the EPA. For the first time under 3 million, just when they need to be building business. All indicators suggest a dangerous contraction that must be avoided.
