25.10.2021
Testimony before the Parliamentary Budget Committee in relation to
the Draft State Budget for 2022
Congress of Deputies
Pablo Hernández de Cos
Governor
Ladies and gentlemen,
I appear once more before this Committee for the parliamentary presentation and discussion
of the State and Social Security Budget (hereafter, the Budget) for 2022.
Let me first briefly clarify a point concerning the content of my address. As a member of the
Governing Council of the European Central Bank (ECB), I am today bound by the so-called
"quiet period" prior to the meetings at which monetary policy decisions are taken.
Accordingly, my thoughts should not be interpreted as indications of the monetary policy
outlook.
On this occasion, the circumstances of my appearance are, fortunately, notably different
from those we were facing in autumn 2020. Still fresh in our thoughts then was the memory
of the harshest phase of the pandemic in Spain. Precisely a year ago, moreover, the second
wave of the virus was hitting us hard and the use of the first vaccines against COVID-19 had
still not been approved.
One year later, the vaccination roll-out allows us to look ahead with greater optimism and
less uncertainty. This Budget, therefore, should be an instrument that provides for a shift in
objective from mitigating the consequences of the pandemic for our households and firms
to that of accompanying the recovery and paving the way for a structural transformation of
the Spanish economy that raises collective well-being.
I shall begin with a description of recent economic developments and the attendant outlook.
That will allow me to set in context the role economic policies must play in this phase of the
recovery. I will then offer the view of the Banco de España of the key features of the Draft
Budget. I shall conclude with some thoughts on the medium-term fiscal policy challenges
facing our country.
1 Recent developments and the outlook for the Spanish economy
1.1 The global context
Global economic activity has recently acquired greater momentum after a long and complex
period of crisis. The two major levers of this economic recovery are vaccination against
COVID-19 and the extraordinary support of economic policies in many countries.
The health crisis is still not over. But the vaccination roll-out has meant that the restrictions
on activity in many countries have been substantially eased. This has resulted in a stimulus
to private consumption and, especially, to spending on services, which had been weighed
down by the pandemic-containment measures.
Forecasts by the various international organisations coincide on robust global economic
growth this year and next. In particular, the recently published IMF forecasts indicate that
global GDP growth will be 5.9% in 2021 and 4.9% in 2022, easing to 3.6% in 2023.
The recovery is advancing at different speeds from region to region, which largely reflects
the differences in vaccine access and in the scale of the stimulus provided by economic
policies. Generally, the recovery is proving sounder in the advanced economies which,
according to the IMF forecasts, will attain pre-pandemic GDP levels next year. Conversely,
it is weaker in the emerging economies, where the vaccination process is generally proving
slower.
In the euro area, real annual GDP growth is expected to be 5% in 2021, enabling the
prepandemic level to be attained in Q4 this year, and, on these same forecasts, 4.3% in 2022.1
Among the main economies in the area, significant GDP increases are expected in France
and Italy (respectively, 6.3% and 5.8% in 2021 and 3.9% and 4.2% in 2022). Like Spain, the
contraction in these countries was sharper in 2020. In Germany, by contrast, growth will be
lower in 2021 (3.1%), having been revised downwards owing to the impact the global
shortage of supplies is exerting on some industrial sectors.
This global economic scenario is, in any case, subject to high uncertainty and to certain
risks related mainly to three factors: how the pandemic unfolds; mismatches in goods
supply and demand globally; and how persistent inflationary pressures prove. The more
unfavourable course of the latter two factors, which have a cross-cutting effect on all the
main economies, is already perceptible in some of the latest economic indicators. I shall
analyse these aspects in greater detail when I review developments in the Spanish
economy.
1.2 Recent developments in the Spanish economy
The initial impact of the pandemic on economic activity was particularly marked in Spain
compared with its peers. After the strong rebound in 2020 Q3, developments up to Q1 this
year were marked by the subsequent successive waves of the pandemic and by the
extension of several containment measures.
As from spring this year, headway in vaccination ran in parallel with a return to the growth
path interrupted in the final stretch of 2020. GDP grew by 1.1% quarter-on-quarter in Q2,
underpinned by the strength of private consumption. In particular, there was a rise in
spending on those services whose provision has most benefited from the easing of the
lockdown measures.
But the pick-up in activity is as yet clearly incomplete. There was still a gap of 8.4 pp
between the level of output in Q2 and that observed at end-2019. This gap was 2.5 pp in
the euro area.
The impact on the labour market was also very severe in the initial phase of the pandemic.
In April 2020, almost one in four people registered with the Social Security System before
COVID-19 struck had either lost their job or been furloughed. However, employment is
recovering more quickly than GDP. In September this year, Social Security-registered
numbers were slightly above the February 2020 level (0.1% in terms of the seasonally
adjusted series). The gap remained negative (-1.2%) in terms of "effective registrations", a
variable constructed by subtracting furloughed workers from the figure for registered
individuals. The information for the first fortnight of October suggests this positive trend is
continuing at the start of Q4.
The unemployment rate stood in Q2 this year at 15.3%, 1 pp down on last year, but still 1.5
pp above its pre-crisis level.
Turning to the general government accounts, the deficit stood at 11% of GDP in 2020, the
result above all of the increase in public spending. Approximately two-thirds of the increase
of almost €63 billion in public spending in 2020 (around 3.7 pp of GDP) related to
disbursements to finance health spending and that relating to furloughed workers and the
suspension of activity of the self-employed. The decline in revenue was tempered by the
taxation to which a substantial portion of household and business spending is subject.
Hence, personal income tax and social security contributions revenue actually increased
slightly compared with the significant cuts in receipts from other taxes, such as corporation
tax, VAT and excise duties. Overall, government receipts as a proportion of GDP increased
in 2020 as a whole.
In 2021, the easing of the health situation and the improvement in economic activity are
allowing a slight correction of the budget deficit. However, in July this year the deficit was
still 8.4% of GDP in 12-month cumulated terms. Compared with the same period in 2020,
the improvement is due to the rise in receipts. Indeed, receipts have now exceeded their
level in the same period of 2019. Expenditure, meantime, despite the decline in crisis-related
disbursements, has scarcely stabilised in nominal terms.
While the gradual easing of restrictions has enabled the most affected sectors and regions
to begin recovering, the effect of the pandemic remains very uneven. Sector by sector,
economy-wide effective Social Security registrations were, at the end of Q2, only 2.6%
below their pre-crisis level. However, this gap ranged from 22.6% to 16.2% in the hospitality
and leisure sectors. In terms of value added, whereas some sectors such as finance,
agriculture, education and healthcare have already attained or exceeded pre-crisis levels,
others such as wholesale and retail trade, transport, hospitality and leisure are still at least
20% down.
Cross-regional differences are also substantial. The employment rate for Spain as a whole
was, in Q2 this year, 0.9 pp down on 2019 Q2 (-2.2 pp in terms of effective employment),
but was 4.7 pp and 3 pp down in the Canary Islands and the Balearic Islands, respectively
(8.4 pp and 5.6 pp in effective terms). Conversely, Murcia and Asturias posted respective
increases of 1.2 pp and 0.9 pp.
The crisis continues to affect certain groups of workers disproportionately; in particular,
younger and lower-income workers, given their sizeable weight in the sectors most affected
by the pandemic. Moreover, these effects have only been corrected to a limited extent
following the onset of the recovery.
Specifically, the employment rate for those aged 16-29 was, in Q2, 2.8 pp less than at the
start of the crisis. This figure is 1.3 pp down in the 30-44 age bracket, and shows a positive
sign among older workers (0.3 pp).2 The bigger impact on more vulnerable workers with
more limited resources to sustain their expenditure might, therefore, have prompted an
increase in inequality.
1.3 The macroeconomic outlook
The Banco de España published its latest macroeconomic projections in September. They
forecast a continuation of the recovery, under the assumption of further ongoing
improvement in the epidemiological situation both in Spain and the rest of the world, the
prolongation of the expansionary stance of demand-side (both monetary and fiscal) policies,
and intensive use of the Next Generation EU (NGEU) funds. Specifically, the projection was
for GDP growth of 6.3% in 2021, declining slightly to 5.9% in 2022.
However, following these projections, there have been some significant developments.
Firstly, INE revised quarter-on-quarter GDP growth significantly downwards in 2021 Q2,
from 2.8% to the aforementioned figure of 1.1% (along with smaller revisions in the
preceding quarters).
Such a high downgrade mechanistically entails (i.e. if the growth rates projected for the
coming quarters were to hold unchanged) a substantial reduction in the average GDP
growth rate for 2021 and, to a lesser extent, in that for 2022 also.
Secondly, some changes have been afoot in the global economic environment in past
months, and have acquired greater significance in recent weeks. I refer to the disruptions in
global supply chains and to the higher costs of some inputs used in productive processes
and, in particular, of energy (which, moreover, is a very important component of the
household consumption basket). Overall, these changes tend to point to a worsening global
economic picture.
In fact, the swift recovery in global demand, added to the strong consumption of
manufactures prompted by the pandemic in substitution of spending on restricted services
and in view of accelerating digitalisation, has given rise to tensions in global supply chains.
International maritime transport has been disrupted, prompting a significant increase in
costs and delays in the supply of products. Supply shortages have led to bottlenecks in
industry that have more sharply affected the advanced economies. Against this background,
it is illustrative that, on provisional estimates, the composite euro area PMI output index fell
by almost 2 points to 54.3, a six-month low. While the biggest fall-off was in manufactures
(with a 2.5-point decline in October to a 16-month low of 53.2), the services sector also lost
momentum (falling 1.7 points to 54.7, a six-month low).
In Spain, the effect of global supply chain shortcomings has already led to a significant
increase in delivery delays for industrial orders and, in some cases, to the need to slow
production, as a result of the shortages in commodities and inputs. A case in point is the
automobile industry, one of those most affected by global semiconductor shortages.
Further, inadequate supplies of some goods and services in meeting demand has given rise
to price increases. Such increases have been particularly marked in the case of various
industrial and transport-related metals, and in that of energy sources, whether primary (such
as oil, gas and coal) or secondary (such as electricity, produced in part through some of the
main primary sources mentioned). This increase has fed through to the final prices paid by
households and firms, which squeezes their real incomes and, therefore, adversely affects
the pace of the recovery.
Finally, the other economic indicators released after the publication of our projections tend
to confirm the initial assessment, namely that output in the economy has been notably
dynamic in the summer months. In particular, although foreign tourism continues to hold at
levels far removed from those observed pre-pandemic, the latest information suggests an
improvement in this demand component.
The labour market also continued to perform favourably over the previous quarter,
according to the effective Social Security registrations figures. That said, a characteristic of
the recovery period is that employment is faring notably better than economic activity, as
was especially highlighted following the QNA revision.3
The Banco de España, in coordination with the rest of the Eurosystem, will not be publishing
new macroeconomic projections until December. However, the developments I have
described foreshadow a significant downward revision of growth for the current year in
Spain. Indeed, some analysts have already incorporated these latest developments into
their projections. Taking Consensus Forecasts, we can see how in the latest monthly edition,
published in mid-October, the panellists have revised their GDP growth forecast for this year
downwards by 0.5 pp to 5.6%. Conversely, the average of the projections for 2022 has held
stable, standing slightly above 6% (6.1%).4
3
Like GDP growth, employment growth, measured in hours, has been lowered in the revised estimate. But the scale of
the revision of employment was, expressed as a quarter-on-quarter rate, much less (0.4 pp, to 4%) than that of GDP.
That illustrates the difficulties, in the current recovery phase, of appropriately assessing the relationship between activity
and employment and, therefore, of translating the robustness of this latter variable in the summer months into the growth
rate of GDP in Q3.
4
The revision of 2021 growth is even somewhat greater (down 0.7 pp to 5.4%) if consideration is given solely to the
panellists who have changed their forecasts in the last month, whether upwards or downwards. It should be borne in
mind that, although Consensus Forecasts is published monthly, not all the panellists update their forecasts so frequently.
In 2022, the revision is 0.1 pp upwards, irrespective of whether the set of panellists or only those who have altered their
forecast is considered.
1.4 The main sources of uncertainty
Discrete growth estimates aside, the level of uncertainty remains high and there is a series
of risks that will influence activity over the coming years. I shall now review the main sources
of risk.
First, recovery prospects are subject to the assumption that the reduction in the incidence
of the pandemic will continue. In particular, our macroeconomic projections rest on the
hypothesis that new vaccine-resistant and more infectious variants of the virus will not
emerge.
Nonetheless, we cannot rule out more unfavourable epidemiological developments. The
extensive circulation of the virus in global regions where the immunisation of the population
is less advanced might, for example, be conducive to the emergence of strains that are
more infectious or that have built up some resistance to the vaccines. That might entail the
reintroduction of recovery-hampering containment measures.
Second, there is uncertainty over the pace and extent to which households will spend the
notable volume of saving built up during the pandemic. On our estimates, this reservoir of
saving might account for around 6 pp of GDP. In principle, there are several reasons to
believe households will partly use this saving in the medium term. On one hand, it has
tended to be concentrated in higher-income households, which typically show a lower
propensity to consume. On the other, the possibilities of consuming in a deferred fashion a
significant portion of the spending forgone during the pandemic are limited, since it
corresponded above all to leisure and hospitality-related services. Our projections assume
that households will only resort in part to this accumulated saving. That said, the level of
uncertainty surrounding this assumption is high.
Third, there is also very high uncertainty over tourist flows, which are so important to
economic activity in our country. It was assumed in the September projections that the
prepandemic volume of non-resident tourism would not fully recover until 2023. Specifically, in
connection with the third quarter of each year, coinciding with the high season, it was
assumed at the time that the level of tourism exports would, in 2021 and 2022, be
approximately 45% and 90%, respectively, of the 2019 level (the last pre-COVID year). The
assumption was that it would be necessary to wait until summer 2023 for a virtually full
recovery. However, foretelling the patterns of behaviour of post-pandemic international
tourism is no easy task.
Fourth, how the Spanish economy performs will hinge crucially on the mobilisation and
allocation of the NGEU funds. In December 2020, the Banco de España explicitly included
the impact of NGEU for the first time in its projections, once the Draft Budget for 2021 had
provided the first details about the volume of funds earmarked for this year. We noted at the
time that there was high uncertainty over the outturn calendar. In practice, the rate of uptake
has been lower than that included in the various projections exercises conducted since then,
which has given rise to successive temporary shifts in spending volumes. The September
projections envisage projects for an amount of slightly over €11 billion in 2021 and €31
billion in 2022, which would translate into impacts on the GDP growth rate for those two
years of 0.6 pp and 1.8 pp, respectively. In any event, notable uncertainty prevails as to
when the projects will be executed and to their multiplier effect on activity and employment.
And that will decisively influence economic developments in the coming years.
In this respect, any delay in the execution of projects may not necessarily be a disadvantage,
provided that this contributes to project selection prioritising those with a higher multiplier
effect. This latter aspect would be enhanced if the projects were accompanied by structural
reforms geared to raising the economy's potential growth. But, set against these more
medium-term advantages, any delay in spending projected for 2022 would give rise to lower
GDP growth next year.
Fifth, there is still high uncertainty over the ultimate impact of the crisis on the productive
system. Our projections have been devised under the assumption that this impact is low.
Yet it cannot be ruled out that these effects may ultimately be more marked and that they
may, therefore, be an obstacle to the recovery.
To date, we have already detected some signs of impaired solvency at firms, concentrated
essentially in the sectors most affected by the pandemic. Thus, for instance, we have seen
some impairment in creditworthiness in some banks' loan portfolios and a rise in the number
of firms immersed in insolvency proceedings, despite the moratorium on these proceedings
in force until the end of this year. The phasing out of the public measures of support to firms
might mean there is further impairment of business solvency in the future if the activity of
the companies affected recovers too slowly to offset the effects of the withdrawal of these
stimuli and the extraordinary measures adopted during the pandemic.
Sixth, the greater intensity and persistence of bottlenecks in the supply of certain energy
and non-energy inputs may jeopardise the momentum of the recovery. Indeed, according
to the latest indicators (PMI) to which I referred earlier in the euro area context, there is
already partial evidence of this factor. And, on some estimates, the existence of bottlenecks
is expected to have reduced exports in the first half of 2021 by 7% for the euro area as a
whole.5
Seventh, and lastly, a factor capable of adversely affecting the outlook for the Spanish
economy is the recent rise in inflation. While this increase was essentially due to transitory
factors, it is still too early to see how persistent this phenomenon will be. But conceivably
in the coming months, in any event, we will continue to observe relatively high rates of
inflation.
When assessing the possible incidence of the inflationary rise in the medium term, it is
important to consider as a starting point the disinflationary trend observed over much of the
past decade, which was the basis for very low rates of price growth. In particular, one of the
characteristics of the disinflationary process of the pre-pandemic years was the apparent
weakening of the connection between the degree of cyclical slack and price and wage
growth. Various arguments have been brandished to explain this globally observed
phenomenon. These include developments such as globalisation, the automation of
productive processes and the expansion of e-commerce, which will have contributed to
easing workers' wage demands and firms' capacity to expand their margins. Further,
demographic developments - the inertia of which is very high given their nature - will have
contributed in recent years to keeping demand pressures relatively moderate.
In my view, it is very premature to consider that the future incidence of the foregoing factors
may have declined after the pandemic and, therefore, that the recent rise in inflation may
entail a break in the low inflation trend that prevailed for approximately a decade.
The causes behind the current rise reflect a series of determinants different from the
previous ones, in many cases transitory. This is the case with the closure of specific
productive activities as a means of containing the pandemic, which prompted - especially
in the first half of 2020 - significant declines in the price levels for certain goods and services.
The subsequent recovery of pre-crisis price levels, in step with the reopening of the
economy, has led to a step-effect on the inflation rate. That has been the case for oil prices
and also for services in which personal contact plays a more prominent role. Once again,
the price rises should, in principle, be purely transitory, not continuing any further than the
time when the base effects are stripped out of the calculation of the year-on-year rate.
As I have explained, the gamut of energy goods is undergoing additional price rises, which
infuses recent developments with greater persistence. In principle, this rise in prices is
expected to be transitory, as anticipated by the market-listed futures prices of these
commodities, which point to a reduction over the course of 2022. But it cannot be ruled out
that the increase in prices may persist over the coming months, given the rise in energy
consumption during the winter, in a setting in which the volume of oil and gas stocks is
relatively low. Moreover, a complex set of more structural factors - on both the supply and
demand sides - are at play in these energy price rises. Such factors include the policies of
the main oil and gas-producing countries and the curbing of fossil fuel investments
stemming from their uncertain future, given the policies to combat climate change.
Moreover, in the case of various non-energy industrial goods, the disruption to global
production chains and the higher cost of many inputs and commodities, and of transport,
has added to the pick-up in demand. This increase in costs is expected already to be
feeding through in part to the sale prices of final products.
Taken together, these factors add notable uncertainty to the duration of the current episode
of rising production costs. And, evidently, the longer the episode lasts, the greater the
probability that the increase in inflation gains in persistence, both because the cost
increases filter through with greater intensity to final prices and because the increase in
these prices gives rise to greater wage demands. Such a scenario is not, however,
inevitable. On the contrary; the actions of national economic agents - in the public and
private realm alike - can contribute to reducing their potential incidence, as I shall point out
later.
This line of argument infers that the potential impact on activity of the current inflationary
episode is very uncertain, since it depends on many factors. These include the very
persistence of the episode or reaction by different economic agents to it. In any event, as
regards the specific case of the rise in the price of electricity, in-house estimates at the
Banco de España using various methodologies can act as a guide. They would suggest an
impact of 0.2-0.3 pp of GDP after three years for a permanent increase of 10% in the
electricity price paid by consumers.
1.5 The role of economic policies in the current situation
The swift and forceful economic policy response since the onset of the crisis has been
crucial in limiting the effects and scarring of the crisis. Monetary and fiscal policies enabled
households and firms to retain a high proportion of their income and helped mitigate the
adverse impact of the pandemic on their financial position. These policy actions are also
expected to have prevented major harm to the productive system; however, we are still far
from being able to affirm this with certainty.
The current and forecast setting is characterised by a progressive recovery in activity. But
this recovery is still subject to several significant risk factors and is highly conditional upon
the support of economic policies. Monetary and fiscal policies should thus avoid a
premature withdrawal of the stimuli.
In the case of monetary policy, the latest decisions of the ECB Governing Council, including
the new monetary policy strategy, ensure highly favourable financing conditions will remain
in place during the economic recovery.6
In particular, the new ECB strategy, announced on 8 July, sets an inflation objective of 2%
in the medium term. This objective is symmetric, in that positive and negative deviations
from target are considered equally undesirable. To maintain this symmetry, the new strategy
acknowledges the importance of taking into account the consequences of the lower bound
on interest rates. The new strategic framework establishes the need for particularly forceful
or persistent monetary policy measures when the economy is close to this lower bound.
This may also entail a temporary period in which inflation is moderately above target.
There was an initial application of this new strategic framework to the ECB's monetary policy
toolbox on 22 July, amending the institution's forward guidance. Under the new
arrangements, the Governing Council expects key ECB interest rates to remain at their
present or lower levels until it sees inflation reaching 2% well ahead of the end of its
projection horizon and durably for the rest of the projection horizon, and it judges that
realised progress in underlying inflation is sufficiently advanced to be consistent with
inflation stabilising at 2% over the medium term.
Thus, the new forward guidance arrangements, along with the widespread perception that
the current inflationary episode is predominantly transitory, translate into expectations that
the current expansionary monetary policy stance will remain in place for a lengthy period.
In the case of fiscal policy, support will continue to be necessary in 2022, albeit more
selectively; the focus will be on firms and population groups in which the consequences of
the crisis are still being felt. This selectiveness of fiscal policy support is warranted by a dual
need: first, to minimise the impact on budgetary imbalances in a setting in which these have
increased most significantly during the crisis; and further, to ensure that economic policies
do not hamper the necessary reallocation of resources.
It is then important that the measures should be temporary so as not to further increase the
structural deficit. In parallel, a consolidation programme should be designed to enable the
high budget deficit and public debt levels to be gradually reduced, with the programme
being launched once the recovery firms. I shall offer further details later.
In the case of the business sector, for instance, it remains important to focus assistance on
reversing the crisis-induced damage to solvency at firms deemed viable. In this respect,
there seem to have been some problems in implementing the assistance programme
approved last spring. These need resolving promptly. In any event, by its nature this type of
programme is aimed at a high number of firms, which are very small in most cases. That
hampers implementation and calls for regular assessment warranting adjustments if the
results show signs that the objectives envisaged are not being met.
The effects of the crisis in the medium and long term will also depend on how firms adapt
to the new economic reality. Economic policy should smooth this adaptation, which will on
the one hand require allowing the use of the adjustment mechanisms provided for by
legislation (labour law in particular), and that these should adapt to firms' specific conditions.
On the other hand, legal and out-of-court debt restructuring procedures, the workings of
which are currently prone to shortcomings7, need to improve. The efficient functioning of
these procedures plays an important economic role by providing for the survival of viable
firms with solvency problems, and for the orderly exit from the market of those others with
viability problems. In this connection, the Council of Ministers approved on 3 August the
draft Insolvency Reform Law bill, which introduces far-reaching changes into the
preinsolvency and insolvency arrangements regulating the insolvency of firms, the
selfemployed and consumers.
From the standpoint of employment, training policies and job-search assistance should be
reinforced to lessen the potentially structural damages of the crisis. The aim would be to
provide for the reassignment of workers who have lost their job to more vibrant sectors in
the wake of the pandemic.
Beyond the short-term challenges, I would stress that the structural challenges the Spanish
economy faces are very important. Some were already there before the crisis: low
productivity, the inadequate functioning of our labour market, the fight against climate
change, population ageing and high inequality. Others have arisen or intensified as a result
of the pandemic, such as those stemming from digitalisation. All these challenges can only
be tackled with a resolute structural reform agenda, supported too by the use of the
European funds.8
Finally, allow me to mention, as one of the main changes from my previous appearances,
the challenge that properly managing economic policy entails against the background of the
inflationary rise we are witnessing. Recent developments have shaped a complex setting
for the pursuit of economic policies. It is one we economic authorities had not faced since
before the previous financial crisis. Indeed, the ECB has been struggling to achieve its
inflation objective for a lengthy period. Against this backdrop, and given the information
currently available, our resolve at the ECB is to continue providing the monetary stimuli
needed so that, in the medium term, inflation may durably attain its objective of 2%, without
reacting prematurely in the face of transitory shocks.
Fiscal policy must adopt a medium-term perspective in which budgetary consolidation,
once the recovery is entrenched, takes front stage. That does not mean it should cease to
pay attention, as I have just emphasised, to supporting those segments of society most
impacted by the consequences of the pandemic. But it is one more argument for justifying
support being selective and avoiding a generalised fiscal impulse. Were such an impulse
implemented, it might translate into an increase in the already existing bottlenecks, in the
most stressed sectors, which would ultimately feed through to prices. It is also especially
important to avoid the widespread use of automatic indexation clauses in the expenditure
items that mi