Why can Europe no longer make affordable cars?

For decades, the automotive industry has been one of Europe’s great industrial strengths. But the model that turned Volkswagen, Mercedes-Benz, BMW, Renault and Stellantis into global benchmarks is under pressure. 

Manufacturing on the continent is expensive, the technological transition requires multibillion-euro investments, and China has built an industry capable of producing electric vehicles at much lower costs. The consequences are already visible: workforce cuts, oversized factories and new cars that are increasingly difficult to afford. An industrial crisis that is inevitably also transforming the second-hand market.

The crisis facing Europe’s automotive industry is often presented as a consequence of the transition to electric vehicles, but the problem runs deeper. Europe is suffering from a combination of high costs, excess production capacity, technological dependencies and increasingly aggressive international competition.

The sector remains enormous: it accounts for approximately one trillion euros of European GDP and directly or indirectly employs around 13 million people. Precisely for this reason, the European Commission itself acknowledges that the industry is at a “critical inflection point” in the face of technological transformation and increasing global competition.

For decades, European manufacturers perfected the combustion engine until it became one of their great competitive advantages. Now they have to transform factories, train workers and invest billions in batteries, software, electronics and new platforms while continuing to support much of the old industrial structure. In a way, it is like having to rebuild the plane while it is still flying.

China is no longer competing on cheap labour alone

The problem is that Europe is undertaking this transformation at a time when its Chinese competitors have already achieved enormous scale in some of the technologies that will define the car of the future.

According to the International Energy Agency (IEA), the cost of manufacturing an electric vehicle in China is more than 30% lower than in advanced economies. Battery cells alone are, on average, more than 30% cheaper than in Europe. It is not merely a question of labour costs: production scale, automation, a highly integrated supply chain and access to components and critical minerals all play a role. The gap continues to widen. In 2025, battery packs were approximately 35% cheaper in China than in Europe. 

At the same time, the global centre of gravity of the automotive industry has shifted. China already accounted for 35.4% of global passenger car production in 2024, while European Union production fell by 6.2%. This forces European brands to compete on price while financing a costly industrial transformation. A particularly difficult combination.

Job cuts are the symptom

When factories can produce far more cars than the market can absorb profitably, sooner or later an adjustment follows.

Volkswagen agreed to cut more than 35,000 jobs in Germany by 2030 and reduce the production capacity of its German plants by around 734,000 units. The company itself links these measures to the contraction of the European market and increasing competition.

The crisis also extends to suppliers. In 2025, Bosch announced an additional 13,000 job cuts, mainly in its German mobility division, after identifying an annual gap between costs and revenues of around €2.5 billion in this area. The company directly points to falling demand, overcapacity and the need to restore competitiveness.

Therefore, job cuts are not the origin of the problem, but rather the result of an industry that simultaneously needs to invest more and spend less.

What happened to the affordable car?

For consumers, this transformation has a much more tangible consequence: new cars have become enormously more expensive.

In Spain, the average price offered by dealerships rose from €30,513 in 2019 to €44,419 in 2025, an increase of 45.6%, more than twice the accumulated inflation over the same period. The increase is even more striking in traditionally affordable segments: prices for A-segment cars rose by 78.3%, while B-segment cars increased by 46.7%.

Not all of this increase is due to electrification. Vehicles now incorporate more technology and mandatory safety systems, production costs have increased, and the supply problems caused by the pandemic have also left their mark. But manufacturers have contributed to the phenomenon through a commercial decision: prioritising larger, better-equipped vehicles with higher margins.

In the European electric vehicle market, for example, C-segment SUVs and models in higher segments went from accounting for 28% of sales in 2020 to 64% in 2024.

The business logic is easy to understand. If a company sells fewer cars, it can try to compensate by making more money on each unit. The problem arises when this strategy turns the car, traditionally a mass-market product, into something increasingly inaccessible to the middle class.

The second-hand market absorbs the blow

When a new vehicle becomes too expensive, the need for mobility does not disappear. Buyers simply look for an alternative.

In 2025, 2.22 million second-hand passenger cars were sold in Spain, almost two for every new vehicle. And 57.3% of transactions involved cars more than ten years old. This figure exposes a contradiction that is difficult to ignore. Europe wants to accelerate the renewal of its vehicle fleet to reduce emissions, but high prices are pushing many families to keep their cars for longer or buy an older one. If replacing a vehicle is economically inaccessible, the transition slows down, no matter how ambitious the regulations may be.

However, an interesting shift has emerged during 2026. Growing competition from new brands, many of them Chinese, has forced manufacturers and dealerships to increase promotions. By July, the average discount on the list price of new cars had already exceeded 14%, while the average price had fallen to €43,477. It remains well above the 2019 level, but the trend has begun to change.

And this price war has reached the second-hand market. Nearly-new cars less than a year old had seen their average price fall by almost 10% in the first quarter of 2026 and, during the first half of the year, the correction was already affecting even cars more than ten years old. It is a clear example of the extent to which the arrival of new competitors can disrupt the entire value chain.

Europe needs to bring back the affordable car

The battle facing Europe’s automotive industry is not simply about manufacturing more electric cars. It is about managing to produce them at a price that allows them to be sold on a mass scale without destroying companies’ margins or the jobs that depend on them.

Europe still has powerful brands, engineering expertise, human capital, an extensive network of suppliers and decades of industrial experience. But history does not guarantee future competitiveness. If its manufacturers need €40,000 or €50,000 to offer a vehicle that a competitor can sell considerably more cheaply, the problem cannot be solved through tariffs or regulations alone.

Europe also needs to regain efficiency, scale and, above all, an idea that was fundamental to its automotive industry for decades: the affordable car. The paradox is that Europe wants to renew its vehicle fleet, electrify mobility and reduce emissions, but it will struggle to achieve this if a growing share of the population can only afford to drive a fifteen-year-old vehicle.

The big question, therefore, is not only whether Europe will be able to manufacture the car of the future. It is a much more fundamental one: whether European citizens will be able to afford it.

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In the same way that we take out loans and other financing mechanisms when the money we earn is not enough to cover our household expenses, it is common for a State to borrow money when its income is insufficient to meet its budgetary needs. We explain where this financing comes from and the consequences of high public debt.

Public debt or sovereign debt is the total money owed by all the public administrations of a State to private investors or other countries, while the negative balance that gives rise to the need for financing is known as the public deficit. It is a form of financing that allows a country to raise immediate revenue when tax revenues are not sufficient to cover its budgetary needs and to repay it gradually over time.

Although the figures may be surprising, sovereign debt in itself is neither good nor bad. Countries can require financing for public investment to stimulate economic growth, without suffering the consequences of raising taxes or issuing more of their own currency.

That said, borrowing to make an investment that will generate value for the economy is not the same as borrowing to cover uncontrolled spending. Likewise, there are countries that are able to afford high levels of debt because the financial markets have confidence in their ability to pay, thanks to the stability of their economies or their national currency.

Financing through public debt securities

Depending on the financing needs of each country, there are different models for issuing public debt securities. The repayment term of the loan, short, medium or long term, and the various ways of earning interest determine the main differences.

Treasury bills have the shortest repayment term of 3, 6, 12 and up to 18 months and therefore offer a lower interest rate than Government Bonds, with a term of between two and five years, which also distribute coupons to investors, which are collected on a regular basis.

Finally, governments can issue long-dated Government Bonds with maturities of up to 30 years, designed for long-term investors seeking a higher interest return. Precisely because these are assets with such a long maturity period where the interest rate does not depend so much on the monetary policy of the country’s central bank, but on structural factors of the economy, they are a good barometer of the degree of investor confidence in the future economic stability of a state.

Budget imbalances and runaway public indebtedness

Expansionary public investment policies in the wake of the economic stagnation caused by the health crisis have pushed the sovereign debt of many countries to historic highs. Economists and international organisations are concerned about the high level of global public debt, which may end up being unsustainable for developing economies.

In other words, debt is a necessary instrument for growth, as long as it is sustainable, but the reality is that public debt figures in the world have risen considerably in recent years, approaching those of global GDP, and are therefore far from this sustainability. Spain’s public debt continues to set historical records, the latest being last August when it reached a figure of 1.49 trillion euros after rising by 4.44 billion.

Data published by the Bank of Spain on Friday 21 October in its latest economic report showed that in the last 12 months the debt has increased by a further 72,029 million euros. Eurostat also said that eurozone debt in the second quarter also reached a record high of 12.1 trillion euros. How do you pay for all this?

Some analysts say that public debt is never really paid off, i.e. it is never reduced in absolute terms because it is always being rolled over. Even when a state goes bankrupt, as happened with Greece in 2008, the conditions are renegotiated and new debt is issued. In practice, however, we are all paying for it, unequally. As happened in Greece, those who have the least pay the most, those who keep cash in their pockets or current accounts, see their money lose more and more of its value.

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The United States has accumulated one of the largest mountains of debt in the world, but this is not, in itself, the figure that worries economists the most. The real problem is that it increasingly has to allocate more money to paying the interest on that debt, which reduces the room available to finance other public policies.

When a growing share of the budget is used simply to keep accumulated debt alive, the risk no longer depends only on how much is owed, but on the cost of continuing to finance it. And this is where a debt crisis stops being an abstract hypothesis and becomes a risk that affects the entire global economy.

To understand the problem, there is no need to master complex economic concepts. Imagine a family that spends more than it earns every year and covers the difference by borrowing money. For a while, the situation may be manageable, especially if interest rates are low. But each new loan is added to the previous ones and, over the years, the family not only has to keep financing its deficit, but also has to pay the interest on the accumulated debt.

Allowing for all the differences, this is the dynamic putting pressure on US public finances. According to projections by the Congressional Budget Office, the United States government will spend around $7.4 trillion in 2026, while revenues will stand at around $5.6 trillion. This leaves a deficit of close to $1.9 trillion.

It is important to distinguish the deficit from the debt. The deficit is the gap generated during a specific year. Debt is the accumulation of previous deficits. Put graphically, the deficit is the water that keeps flowing into the bathtub; the debt is all the water that has already accumulated in it.

A debt larger than the economy

The scale of this accumulation is already considerable. The CBO estimates that federal debt held by the public will reach approximately 101% of US GDP in 2026 and could rise to 120% in 2036 if there are no significant changes in fiscal policy.

This percentage is important because it allows debt to be compared with the country’s economic capacity to sustain it. Owing a lot is not necessarily a problem if the economy grows enough and creditors continue to trust the country’s ability to repay. That is why exceeding 100% of GDP does not automatically mean being on the verge of bankruptcy.

What it does mean is greater vulnerability to interest rates. The larger the debt, the greater the impact of any increase in the cost of financing it. And this is precisely where the US situation has become more complicated in recent years.

When interest payments start to weigh

For much of the past few decades, the United States was able to live with rising debt because borrowing was relatively cheap. Interest rates were low, and this made it possible to refinance large volumes of debt without the bill soaring.

The situation is now different. The CBO expects the federal government to allocate more than $1 trillion to net interest payments in 2026, a figure that could exceed $2.1 trillion a year by 2036.

This spending has an important characteristic: it does not finance hospitals, roads, education or research. It simply remunerates the creditors who lent money to the government. The greater the weight of interest payments within the budget, the less room there is to allocate resources to other priorities.

In addition, a large share of the debt periodically reaches maturity and has to be refinanced. If those bonds were issued at a time of very low interest rates and now have to be replaced by new securities offering a higher return, the financial cost increases automatically.

When debt feeds more debt

From this point onward, a dynamic that is difficult to break can emerge. If the government maintains high deficits, it needs to issue more debt. This new debt generates new interest payments, which increase spending and can widen the deficit even further.

Therefore, the problem is not only that the United States owes a lot of money, but that the very cost of the debt can contribute to making it grow.

The CBO estimates that net interest payments will rise from 3.3% of GDP in 2026 to 4.6% in 2036. In this scenario, a growing share of public revenues will simply be used to pay the cost of previous budgetary decisions.

This is where the difference lies between having a lot of debt and starting to have a debt problem. A powerful economy can sustain high levels of indebtedness for a long time, but if debt persistently grows faster than the economy, the situation becomes increasingly demanding.

A crisis does not need to begin with a default

When we think of a debt crisis, we often imagine a government announcing that it cannot pay. But in the case of the United States, a crisis could begin much earlier.

The first sign could simply be investors demanding higher returns in order to keep buying Treasury bonds. If they perceive that the fiscal path is becoming increasingly unsustainable, they may demand higher interest rates in exchange for continuing to lend money.

An apparently small difference in interest rates can have a huge impact when applied to tens of trillions of dollars. And this effect would not be limited to US public finances.

Treasury Bonds are a central benchmark for the international financial system. If their yields rise, mortgages, business loans and the debt of other governments can also become more expensive. That is why a crisis of confidence in US debt would have global repercussions.

The extraordinary privilege of the dollar

The United States, however, has an advantage that almost no other country has: it borrows in its own currency, and that currency is also the world’s main reserve currency.

This greatly reduces the risk of a conventional bankruptcy. The Treasury issues debt in dollars and the Federal Reserve has the capacity to provide liquidity to the system. It is an extraordinary privilege that gives Washington far more room for manoeuvre than almost any other economy would have.

But that room is not unlimited. If monetary creation were used excessively to facilitate debt financing, the consequences could emerge through another channel: higher inflation, a depreciation of the dollar or a gradual loss of investor confidence.

Put another way, being able to create the currency in which the debt is paid reduces the risk of default, but it does not eliminate the economic cost of excessive indebtedness.

Everything depends on confidence

In the end, the key word is this: confidence. There is no exact figure beyond which a state automatically enters a crisis. What determines debt sustainability is investors’ confidence in the government’s ability to keep paying without having to resort to extreme measures.

For decades, the United States has enjoyed a privileged position thanks to the size of its economy, the depth of its financial markets and the international role of the dollar. This combination explains why the world remains willing to finance Washington despite its recurring deficits.

But that confidence is not infinite. The important question, therefore, is not whether the United States will go bankrupt tomorrow. The question is how long it can maintain a trajectory in which debt grows faster than the economy and interest payments absorb an increasingly large share of the budget.

A US problem with global consequences

As long as investors remain willing to buy US debt at an affordable cost, the system can continue to function. But if that cost rises on a sustained basis, the problem stops being a simple accounting figure and becomes a real constraint on the economy.

A US debt crisis, therefore, would not necessarily begin on the day Washington stopped paying. It could begin much earlier, at the moment when the world demanded an increasingly high price to continue lending it money.

And when the borrower is the country that issues the world’s main reserve currency and sits at the centre of the international financial system, the bill is unlikely to remain only at home.

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A diferència de les divises fiat, el Bitcoin és una moneda digital descentralitzada que no està sotmesa al control d’un govern o banc central. El seu valor no està definit per una entitat, sinó que es deriva de la confiança del consumidor. Però en què es fonamenta aquesta confiança?

Tot i les diferències, les criptomonedes com el Bitcoin comparteixen algunes similituds amb les monedes fiduciàries tradicionals a les quals tots estem acostumats. Per tant, és important entendre què dona valor als diners fiat abans d’analitzar per què hi ha un gran nombre de persones que veuen al bitcoin com un dipòsit de valor.

Lluny queda un sistema monetari segons el qual el valor de les divises està sostingut per la seva convertibilitat a l’or. D’ençà que el president Richard Nixon va reunir el seu equip a Camp David per anunciar que suspenia la convertibilitat del dòlar amb l’or. El dòlar va passar de ser una moneda que basava el seu valor en l’existència d’una contrapartida en or, a ser una moneda fiduciària, diners fiat, amb un valor que deriva de la relació entre l’oferta i la demanda i l’estabilitat del govern emissor. 

Així doncs, els governs i els bancs centrals poden crear diners per ampliar la seva oferta monetària i estimular la despesa a través de mecanismes econòmics sense preocupar-se de tenir suficients reserves d’or, almenys això és la teoria. Per tant, tot i que aquestes monedes fiduciàries no estan sostingudes per actius tangibles, el seu valor és causat per la confiança col·lectiva en les divises. Com a contrapartida, les polítiques monetàries dels governs i banc centrals, així com l’evolució de l’economia poden fer fluctuar aquesta confiança i el valor de la moneda. 

Descentralització, seguretat i oferta limitada

L’ecosistema monetari del Bitcoin està totalment descentralitzat, és a dir, cap autoritat central regula la base monetària, eliminant la necessitat d’intermediaris i atorgant als usuaris més control sobre les seves transaccions financeres. En eliminar les autoritats centrals, es democratitza la creació de moneda, donant més poder i llibertat a la comunitat d’usuaris.

La creació de Bitcoins segueix unes regles detallades en un protocol molt estricte que es basa en la tecnologia blockchain. Aquesta tecnologia de cadena de blocs utilitza algoritmes criptogràfics i la fa més segures que les monedes físiques i altament immune a crisis. A més, si l’usuari vol fer una transferència o un pagament, té total llibertat, ni el banc, ni VISA, ni Mastercard l’han d’autoritzar. Aquestes característiques i el fet milers de comerciants ja accepten Bitcoin com a pagament per béns i serveis, li han donat un valor d’utilitat.

Per altra banda, des de la seva introducció, es va establir un límit màxim de 21 milions de monedes que es poden minar, la qual cosa introduïa un element d’escassetat intrínsec que també contribueix a donar-li valor, quan tenim en compte la relació entre preu i escassetat. És per això que molta gent considera el Bitcoin com a reserva de valor, tot i la seva volatilitat. La regulació global dels criptoactius i la competència amb altres monedes digitals marcaran el futur del Bitcoin, però en última instància, serà la confiança de la gent el que assegurarà, o no, la seva existència.             

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With climate change, natural disasters are becoming more frequent. And it is not always your insurance that is responsible for compensating you when any of your insured property suffers damage.

Climate change is causing increasingly extreme weather events. Long periods of drought and record high temperatures sometimes give way to heavy rain or hailstorms. One example is the hailstorm that hit regions such as Baix Empordà, Gironès and Pla de l’Estany at the end of August. The hailstones, some of which more than ten centimetres in diameter, even caused the death of a 20-month-old girl.

Beyond the impossibility of compensating for such personal misfortunes, insurance policies may cover some material damage linked to natural disasters, but they do not necessarily cover all of it. Moreover, the characteristics of the incident will determine whether we have to be compensated directly by our company or by the Insurance Compensation Consortium. This entity covers extraordinary risks in the event of certain natural catastrophes. However, only and exclusively in the event that the affected property is insured.

Damage to vehicles and homes caused by hail or hailstone, very typical at the end of summer, is not covered by this “extraordinary risk” coverage. Therefore, it is our own company that should compensate us according to the coverage contracted. If our car insurance includes windows, we can claim for windows damaged by hail. But dents in the sheet metal will only be compensated if we have comprehensive insurance.

As for damage to crop fields and livestock or livestock farms, these are not covered by the Consortium either. There is a state system to cover them, the Agroseguro, which gives the right to economic compensation if we have insured any of these areas against a specific meteorological phenomenon and are damaged by it.

What does the Insurance Compensation Consortium cover?

This entity is responsible, among others, for damages to our insured goods caused by extraordinary floods, earthquakes, tidal waves, volcanic eruptions, atypical cyclonic storms and the fall of sidereal bodies or aerolites.

Of the above natural catastrophes, floods cause the most damage in Catalonia. And, for the purposes of coverage, they are considered as “the flooding of land caused by rain or thawing; by water from lakes with a natural outlet, from estuaries or rivers, or from natural watercourses on the surface when they overflow their normal channels”, according to the Consortium itself. It also includes the impact of the sea on the coast, even if there is no flooding.

It should be taken into account that this concept of flooding does not include rain falling directly on the insured risk, or that collected by its roof or rooftop, its drainage network or its patios, nor flooding caused by the bursting of dams, canals, sewers, collectors and other artificial underground channels unless the bursting has occurred as a direct consequence of the extraordinary event covered by the Consortium.

In the case of an atypical cyclonic storm, tornadoes and extraordinary winds, characterised by gusts of more than 120 Km/h, are included, among others.

The insured person is fully entitled to compensation, even if the public authorities do not issue an official declaration of “catastrophe” or “catastrophe zone”. However, in order for this body to cover damage caused by earthquakes, tidal waves, volcanic eruptions and falling sidereal bodies or aerolites, it must be certified by the National Geographic Institute or the competent public body in the matter. 

When does the Consortium not cover the damage?

According to the Regulation of the Insurance of Extraordinary Risks, we will not be entitled to compensation from the Insurance Compensation Consortium despite having insured the damaged property in some circumstances.

One of the cases is when the insurance contracted is for the transport of goods, construction and assembly, civil liability, health, legal defence or travel assistance. The same exclusion applies to policies covering agricultural production that can be insured through the Combined Agrarian Insurance system.

As for the type of damage, for example, those caused by alterations in the supply of any kind of energy are not covered. Neither is the loss of profits as a consequence of damage suffered by other goods or by other natural or legal persons other than the insured person covered.

How the Consortium is financed

The Insurance Compensation Consortium, which depends on the Ministry of Economic Affairs and Digital Transformation, is financed by a percentage of each vehicle and home insurance policy that is taken out.

It is important to bear in mind that this type of compensation has nothing to do with the aid that may be offered by public administrations in the event of declaring a specific area of the territory a “catastrophic zone” due to some extreme meteorological effect.

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El deute públic en el món s’ha disparat en els últims anys i les seves xifres ja són similars a les del PIB global. Tot i que pot ser un recurs molt útil per estimular l’economia en moments d’estancament o per millorar la competitivitat d’un país, els actuals nivells de deute generen molta inquietud per com pot llastrar el creixement.

En macroeconomia, el deute públic no es considera necessàriament una cosa dolenta. De fet, pot ser molt positiva. Tot i que costi digerir aquesta afirmació contraintuïtiva, la veritat és que els Estats l’han utilitzat des de fa segles per finançar-se sense que, en la majoria dels casos, hagi conduït a la ruïna dels països.

Què determina llavors la seva incidència positiva o negativa en l’evolució de l’economia? Per què el que hauria de ser un recurs pot convertir-se en una llosa? Hi ha tres factors clau: com s’utilitzen aquests diners, el context competitiu global i el volum de deute.

Oli per al motor econòmic

L’economia és un complex engranatge que periòdicament passa per alts i baixos, en cicles que es van encadenant. Quan aquest engranatge s’encalla, el deute públic pot servir com a lubrificant per a millorar el seu funcionament. D’aquí ve que els Estats tendeixin a aplicar polítiques d’inversió pública expansives quan l’economia s’estanca i hagin d’aprofitar els cicles de creixement econòmic, en els quals augmenten els seus ingressos gràcies a la major recaptació, per a equilibrar els seus comptes.

El deute públic té conseqüències tant en el present com en el futur. L’objectiu més immediat és facilitar recursos per a evitar el col·lapse econòmic. Si en un context de crisi una empresa normalment rendible veu reduïdes les seves vendes i entra en números vermells, podria arribar a tancar. Com a conseqüència, augmentaria l’atur i el que fins llavors eren ingressos per a l’Estat gràcies als impostos sobre les seves vendes passarien a ser despeses en forma de prestacions per desocupació. Al seu torn, els menors ingressos dels treballadors reduirien la seva capacitat adquisitiva, amb la qual cosa cada vegada més empreses es veurien en una situació precària per la reducció de la demanda.

Per això el deute públic s’utilitza en un primer nivell per a frenar la sagnia en situacions excepcionals a través d’ajudes i estímuls fiscals que evitin la destrucció de teixit productiu. Això explica, per exemple, que ara es plantegi una rebaixa en la quota d’autònoms per evitar el tancament de moltes microempreses. I fins i tot el subsidi per desocupació i altres despeses corrents es podrien considerar instruments per evitar que la demanda s’enfonsi en un context d’estancament o recessió.

Si l’endeutament conjuntural fa possible que el sistema prengui aire i torni a ser competitiu sense els estímuls públics, l’economia podria sortir reforçada. Però si aquest endeutament tan sols serveix per mantenir viu el teixit productiu de manera artificial, estaríem davant una economia zombi, incapaç de sobreviure sense els estímuls públics, així que el deute podria fer-se crònic. D’aquí la importància de com s’utilitza el deute públic i d’acompanyar aquesta inversió de les necessàries reformes estructurals.

Competitivitat, la paraula màgica

Més enllà de parar el cop en una crisi, el deute públic també pot servir per augmentar el potencial de creixement d’una economia. La inversió pública en infraestructures, educació, sanitat o polítiques actives d’ocupació pot enfortir les bases per al futur desenvolupament.

Tot i que en un primer moment poden incrementar-se el dèficit i el deute, com a contrapartida tindrem una economia més forta. I això suposarà una major capacitat per fer front al pagament d’interessos i l’amortització del deute gràcies a la major recaptació.

Un exemple de bona praxi bastant acceptat és la inversió que va suposar la American Recovery and Reinvestment Act després de la crisi financera de 2007-2008. Els més de tres quarts de bilió de dòlars de despesa aprovats pel Congrés nord-americà van permetre modernitzar les infraestructures i xarxes tecnològiques als Estats Units. A més, la reforma sanitària i del sistema de desocupació va millorar la cohesió social. Tot això ha contribuït al fet que l’economia nord-americana es trobi avui dia en una situació una mica menys compromesa que l’europea.

De tota manera, des de fa bastants anys els països desenvolupats s’enfronten a una inquietant pèrdua de competitivitat, la qual cosa complica el seu creixement econòmic i limita la seva capacitat per equilibrar els seus nivells de deute.

Els riscos d’un deute excessiu

És necessari tenir present que, encara que el deute no sigui dolent en si mateix, suposa un compromís de devolució amb interessos en el futur. I això pot arribar a restringir el marge financer i pressupostari de l’Estat si no es produeix un augment d’ingressos que el compensi. A més, l’emissió de deute públic pot atreure capital que d’una altra manera es destinaria al finançament del sector privat.

Tot i que el límit de deute públic que estableix el Tractat de Maastricht per als Estats és del 60 % del seu PIB, el conjunt de països de la zona euro ja porta un any per sobre del 100 %, segons dades d’Eurostat. La situació fora d’Europa no és millor, ja que el Fons Monetari Internacional estima que, a finals de 2021, el deute públic global representava el 100 % del PIB mundial. I la situació podria empitjorar si la crisi s’accentua.

Espanya ja porta més d’una dècada per sobre de la recomanació del 60%. De fet, el Fons Monetari Internacional va fer una sèrie d’advertències a Espanya al març pel risc que el deute s’estanqui en cotes superiors al 115 % del PIB. Però, en vista de l’evolució actual, serà difícil que aquesta ràtio es redueixi en el futur pròxim. I més si tenim en compte l’estructura demogràfica, que en els pròxims anys dispararà la despesa en pensions.

La majoria d’economistes adverteixen contra aquest excés de deute públic. És significatiu que una revisió de 40 estudis publicats durant la dècada passada indiqui que 36 d’ells conclouen que el deute té una influència negativa en el creixement econòmic.

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When we hear an economist talking about taxes, inflation, wages or housing, we tend to think that their conclusions are purely technical. But reality is different. Behind every economic proposal lies a particular way of understanding how society works. Economics is a social science. And, like all social sciences, it is made up of different schools of thought that interpret reality from different perspectives.

For more than three hundred years, these schools have attempted to answer the same questions: what creates wealth, what role the State should play, why crises occur, and how they should be addressed.

Each school is a product of its time. Mercantilism emerged when the European monarchies competed for world trade; Adam Smith wrote during the Industrial Revolution; Karl Marx observed the harsh conditions of nineteenth-century workers; John Maynard Keynes sought to explain the Great Depression; Friedrich Hayek and Milton Friedman reacted to the inflation of the 1970s. What is most remarkable is that none of these schools has disappeared. All of them continue to influence, to a greater or lesser extent, the economic policies of governments, central banks and international institutions.

The major schools of economic thought at a glance

Schools also have a history

Each economic school emerged in an attempt to respond to the major challenges of its time.

This summary highlights one essential idea: the schools of economic thought do not disagree only about the solutions. They often disagree about what the real problem actually is.

What creates wealth?

This is the first great question that has divided economists for centuries.

Mercantilists believed that prosperity depended on accumulating gold and maintaining a positive trade balance.

The Physiocrats overturned this idea by arguing that wealth originated from production.

Adam Smith expanded this concept: prosperity is the result of labour, specialisation, innovation and the freedom to exchange.

Karl Marx also placed labour at the centre, but argued that the capitalist system allows part of the value created by workers to be appropriated by the owners of capital.

Keynes shifted the focus towards demand. An economy may produce a great deal, but if households and businesses stop consuming, factories come to a halt.

For Austrian and Monetarist economists, sustainable growth requires saving, productive investment, entrepreneurial initiative and a stable currency.

What role should the state play?

This is where the best-known differences emerge.

Mercantilists advocated strong governments that directed trade.

Classical economists preferred to limit the State to basic functions such as justice, security and infrastructure.

Marx envisioned an economy in which the principal means of production were collectively owned.

Keynes believed that, during recessions, the State should stimulate demand and prevent economic activity from collapsing.

By contrast, Hayek warned that excessive intervention could reduce economic freedom and generate new inefficiencies.

Milton Friedman shared this caution, although he accepted a limited role for the State in ensuring stable rules and a consistent monetary policy.

Why do crises occur?

The same recession can generate completely different diagnoses.

For Marx, crises are part of the very functioning of capitalism.

For Keynes, they are the result of a decline in consumption and investment.

Austrian economists attribute them to excessive credit expansion and artificially low interest rates.

Monetarists emphasise mistakes in monetary policy.

Classical economists tend to interpret them as adjustment processes that markets eventually correct.

How should inflation be fought?

Few issues generate as much controversy as this one.

Keynesians accept that moderate inflation may be acceptable if it prevents a deep recession.

Milton Friedman argued that “inflation is always and everywhere a monetary phenomenon,” that is, the consequence of an excessive amount of money in circulation.

The Austrian School shares much of this diagnosis, but places the main responsibility on the artificial expansion of credit driven by central banks.

Classical economists trust that competition and market adjustments will eventually moderate prices.

Marxists, by contrast, tend to interpret inflation within the framework of distributional conflicts between wages, profits and economic power.

The new schools: Economics continues to evolve

The classical schools remain essential for understanding economics, but the new challenges of the twenty-first century have given rise to schools of thought that incorporate factors which previously played only a secondary role.

Behavioural economics: we do not always make rational decisions

For decades, it was assumed that people made rational decisions. Daniel Kahneman and Richard Thaler demonstrated that cognitive biases, emotions and habits influence many economic decisions.

This discipline has influenced the design of savings plans, pension systems, taxation and public policies based on the so-called nudges—small incentives that guide behaviour without imposing it.

Institutional economics: Institutions matter

Why do some countries prosper while others remain stagnant despite possessing abundant natural resources?

Economists such as Douglass North, Daron Acemoglu and James Robinson argue that the answer lies in the quality of institutions. Legal certainty, the protection of property rights, judicial independence and the fight against corruption are factors that are just as important as capital and labour.

Modern monetary theory (MMT): A new debate on public debt

Modern Monetary Theory argues that a State which issues its own currency has far greater room for manoeuvre than has traditionally been assumed. According to this school, the main constraint on public spending is not the budget deficit, but inflation.

Its supporters argue that this approach makes it possible to deal more effectively with major public investments or economic crises. Its critics warn that it could encourage the excessive creation of money and fuel inflationary pressures.

The debate remains open and is one of the most active in contemporary economics.

An ongoing conversation

Economics is not a collection of infallible recipes. It is a conversation that has lasted for more than three centuries and continues to evolve with every social, technological and political transformation.

No school has succeeded in explaining the whole of reality, but each has provided tools for understanding part of the world. For this reason, when we hear an economist defending a particular fiscal, monetary or social policy, it is worth asking not only what they are proposing, but also from which school of thought they are speaking.

Understanding these traditions does not guarantee that we will always find the correct answer, but it does allow us to interpret, with greater judgement, the debates that shape our savings, our investments and the future of the economy.

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Every day we hear about the Ibex, the Nasdaq or the Dow Jones as if everyone knew exactly what they represent. But what exactly are these indices? And what do those famous points that constantly rise and fall actually mean?

It’s time for the evening news. The presenter announces that the Ibex-35 has gained 240 points, that the Nasdaq has reached new all-time highs and that Wall Street is expected to open higher. The story lasts less than a minute and the programme moves on. We’ve heard it hundreds of times, yet if someone asked us what those points really mean, many of us would probably struggle to answer.

And that’s a shame, because stock market indices are much easier to understand than they seem. Once you discover what they represent, financial news stops sounding like a language reserved for experts.

The scoreboard of the markets

When we want to know how a football league is going, we don’t need to watch every single match. A quick glance at the standings is enough. In just a moment, we know who’s leading the competition, who’s dropping down the table and who’s enjoying a good run of form.

Stock market indices work in exactly the same way. They are not companies, nor are they the stock market itself. They are simply a scoreboard.

The Ibex-35 summarises the performance of thirty-five of the most representative companies listed on the Spanish stock exchange. The Nasdaq-100 does the same with some of the largest technology companies in the United States, while the Dow Jones and the Nikkei perform the same role in their respective markets.

Their purpose is to summarise, in a single figure, how this group of companies is performing. But this scoreboard has one particular feature: it doesn’t count goals, it counts points. And this is where the confusion usually begins. Points are not euros. They are not dollars either, nor do they represent a fixed amount of money. They are simply a unit of measurement.

We can think of them like the degrees on a thermometer. When the temperature rises from twenty to thirty degrees, nobody asks how many litres of heat there are outside. Degrees simply tell us that it’s warmer than before. Exactly the same thing happens with stock market indices. If the Ibex is trading higher today than it was yesterday, it simply means that, as a whole, the companies that make up the index are worth more than they were the previous day. The points merely measure that difference.

Why don’t all companies count the same?

If an index summarises the performance of many companies, it seems logical to assume that they all influence it equally. But that’s not the case.

Imagine a basket containing a watermelon, four apples and a handful of cherries. If you remove one cherry, the total weight barely changes. If you remove the watermelon, the difference is enormous. The same principle applies to stock market indices. The largest companies carry much more weight than the smaller ones. That’s why, when a company such as Inditex, Iberdrola or Santander experiences a sharp rise or a significant fall, it can pull a large part of the Ibex along with it. It is perfectly possible for many companies to finish the day higher while the index itself falls. And the opposite can also happen.

The stock market is not the entire economy

This is probably the most common misunderstanding.

When we hear that Wall Street has reached a new record or that the Nasdaq is enjoying an exceptional year, it’s easy to assume that the economy is thriving. But stock market indices only tell part of the story.

They reflect the performance of listed companies and, above all, investors’ expectations. The health of a country’s economy, however, also depends on wages, employment, consumer spending, housing prices and the situation of thousands of small businesses that are not even listed on the stock exchange.

That’s why the stock market can rise while many families continue to lose purchasing power. And the opposite can happen too. Stock market indices are an excellent thermometer for financial markets, but not for the economy as a whole.

Even the stock market has summer sayings

Like any other field, financial markets also have their own well-known expressions. One of the most famous is “Sell in May and go away.”

The saying originated more than a century ago in the City of London, when many wealthy investors left the capital during the summer months to spend time at their country residences. With fewer participants in the markets, trading activity declined, giving rise to the belief that the best time to invest began once autumn arrived.

As with all popular sayings, it doesn’t always come true. There have been outstanding summers for the stock market and terrible years outside that period. Even so, it remains one of the best-known expressions in the financial world.

Looking at stock market indices with different eyes

Every point gained or lost by an index is the result of thousands of decisions made simultaneously by investors around the world. It is not a prediction of the future, nor a verdict on the state of the economy. It is simply a snapshot of that particular moment.

Perhaps not all of us will end up investing in the stock market, but understanding what the Ibex, the Nasdaq or the Dow Jones actually represent allows us to follow economic news with a much more critical perspective.

Because the next time we hear that an index has gained 300 points or closed at record highs, we’ll know there’s no mystery behind the figure. Just as the scoreboard in a football match doesn’t tell the whole story of the game, stock market indices don’t tell the whole story of the economy. But they do help us understand, at a glance, which way the markets are moving.

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Tots estem familiaritzats amb els conceptes bàsics de les assegurances. Però, saps com funciona aquest sector, quina és la seva regulació i d’on provenen els seus beneficis?

Les assegurances no són més que eines financeres que permeten cobrir determinats riscos. Ho fan des de fa milers d’anys. El Codi de Hammurabi, un compendi de lleis de l’antiga Babilònia, ja regulava els préstecs a risc de mar, que feien possible a prestadors i naviliers compartir els riscos i els beneficis del comerç marítim.

A tots ens sonen més o menys els conceptes bàsics de les assegurances. Una pòlissa no és més que un contracte entre l’assegurat i la companyia d’assegurances mitjançant la qual, a canvi d’una prima (preu de l’assegurança), l’entitat asseguradora es compromet a indemnitzar per un mal produït o a satisfer un capital, renda o una altra prestació en cas de produir-se un sinistre contemplat en les cobertures d’aquest contracte.

Tots els detalls de la cobertura de l’assegurança i altres condicions estan recollits en la pòlissa, que estableix els drets i obligacions de totes dues parts. El prenedor, que és la persona o empresa que contracta el segur i paga la prima; l’assegurat, que és qui està exposat al risc cobert per l’assegurança, i el beneficiari, que és qui té dret a rebre la contraprestació convinguda en la pòlissa, poden coincidir o ser diferents persones o entitats.

És probable que aquests conceptes ens resultin familiars. Però, sabem com funciona el sector assegurador? Repassem com es regula i d’on provenen els seus beneficis.

El marc regulador

Existeixen diferents tipus d’entitats asseguradores en funció de la seva constitució jurídica: societats anònimes, mútues, cooperatives i mutualitats de previsió social. A més, cadascuna d’elles pot operar en un o en múltiples àmbits (automòbil, llar, responsabilitat civil…), però sempre requereixen l’autorització de l’organisme regulador.

Per garantir el correcte funcionament del sector, estan regulats tant les característiques com el funcionament d’aquestes entitats, establint límits a la seva activitat i imposant uns mínims de solvència o una certa formació per als seus empleats.

L’1 de gener de 2016 va entrar en vigor Solvència II, la directiva europea per la qual totes les asseguradores europees estimen la seva solidesa financera de la mateixa manera. Aquesta directiva obliga a calcular la quantitat de recursos que ha de tenir un assegurador per afrontar possibles escenaris negatius relacionats amb el negoci (que hi hagi més contratemps de l’esperat o que les indemnitzacions siguin de major import), amb les inversions (una caiguda de la Borsa, per exemple) o d’altres tipus. L’assegurador ha de tenir fons propis suficients com per a cobrir aquest eventual forat.

Solvència II se sustenta en tres pilars. El primer determina els recursos propis mínims requerits a cada asseguradora en funció dels riscos assumits. El segon planteja la valoració qualitativa dels riscos, que són identificats, mesurats, monitorats i administrats segons l’exposició al risc de cada companyia, i estableix un control intern d’aquests riscos a través del govern corporatiu per millorar l’eficiència i la rendibilitat de les entitats. El tercer pilar busca una major transparència de les empreses asseguradores gràcies als informes periòdics que han de presentar.

Aquesta directiva europea es complementa amb la Llei d’ordenació, supervisió i solvència de les entitats asseguradores i reasseguradores, que regula el sector en l’Estat espanyol.

Una primera font d’ingressos

Segons dades del Fons Monetari Internacional, el volum de primes emeses en el món arribava l’any 2016 als 24 bilions d’euros, dels quals el 85% pertanyien a assegurances de vida.

En el cas de les assegurances de vida, el principal canal de comercialització és el bancari, amb una quota de mercat una mica superior al 70%, mentre que els agents i corredors d’assegurances presenten una quota de mercat lleugerament per sobre del 20%.

En canvi, la resta d’assegurances es comercialitzen principalment a través d’agents i corredors d’assegurances, els qui aconsegueixen una quota de mercat del 60% aproximadament, seguits per la venda directa (19%) i el canal bancari (13%).

Una primera via per la qual les companyies d’assegurances guanyen diners és avaluant acuradament el risc de cadascuna d’aquestes pòlisses perquè els ingressos per primes superin a les reclamacions que hagin d’abonar.

La veritable naturalesa del negoci

No obstant això, les asseguradores són sobretot gestores dels recursos que els seus clients els confien a través de les primes, ja que utilitzen part d’aquests ingressos per invertir. De fet, es calcula que el 12% dels actius mundials estan en mans de companyies d’assegurances.

Això sí, a partir de la gran crisi financera, la legislació estableix uns límits prudencials estrictes a l’hora d’invertir. Fins l’any 2007, el sector assegurador va viure un idíl·lic període de tranquil·litat. Però la gran crisi financera, que es va emportar per davant al gegant de les assegurances nord-americà AIG, va aflorar l’estreta relació de les asseguradores amb les entitats bancàries, tant per la participació en el seu capital social com en les seves emissions de renda fixa i variable.

Segons Unespa, que aglutina a prop de 200 asseguradores de l’Estat espanyol, aquestes inverteixen principalment en deute públic i, en menor mesura, en fons i accions privades: per cada euro invertit en aquests últims, es dediquen sis al deute públic. A més, aquesta associació aclareix que, en èpoques de bonança econòmica “les asseguradores han arribat a tenir una capacitat d’inversió equivalent al 2 % del PIB”.

Les reassegurances, un negoci en auge

Una tercera via d’ingressos són les reassegurances. Es tracta d’acords mitjançant els quals un assegurador, denominat cedent, transfereix a un altre assegurador, denominat reassegurador, la totalitat o una part dels seus riscos a canvi d’una part de la prima. Això permet al cedent protegir-se de grans pèrdues potencials en situacions d’excessiva exposició.

El canvi climàtic i la pandèmia de COVID-19 estan impulsant aquesta àrea de negoci, el volum del qual s’espera que superi els 500.000 milions d’euros l’any 2025.

Grans canvis en l’horitzó

Molts senyals indiquen que el sector assegurador es prepara per a una època de canvis transcendentals. En aquest sentit, s’espera que es formin ecosistemes en els quals proveïdors de diferents indústries interactuaran per crear valor a partir de dades compartides. Per tant, no es vendran tant productes i serveis aïllats com experiències creades gràcies a una multitud d’actors.

El 67% dels líders del sector assegurador consideren que els models de negoci actuals seran irrecognoscibles en els pròxims cinc anys i que aquests ecosistemes seran el principal agent de canvi, segons dades d’Accenture Research. A més, el 58% de les companyies asseguradores asseguren buscar ja de manera activa ecosistemes en els quals integrar-se i tres de cada quatre preveuen que almenys la meitat dels seus beneficis procediran d’aquests ecosistemes en els pròxims cinc anys.

Si vols conèixer una assegurança justa per a la teva llar i per a la societat, descobreix 11Onze Segurs.

For many years, the Western economic model has been characterised by a system of crony capitalism based on the promiscuous relationship between politics and business. An endemic evil that affects, to a greater or lesser extent, the vast majority of countries.

Xavi Viñolas, 11Onze editor

Crony capitalism is a term used to describe a capitalist system in which business success depends on mutual favours between businessmen and politicians. These relationships often lead to government policies that benefit a few companies or individuals to the detriment of the interests of the public, which end up instrumentalised by the powers that be.

The use of political connections to secure preferential treatment or unfair advantage can take the form of public contracts, subsidies, or regulations and laws that favour a select group of companies or individuals. Commissions, bribes, and revolving doors from politicians to big business are part of the lexicon that accompanies this practice of nepotism and corruption, which, unfortunately, no longer surprises anyone.

In this context, economic activity does not follow the principles of a free market economy designed to serve the consumer with the best products, but to maintain the favour of political power through businesses or lobbies that corrupt public officials, generating inefficiencies, fostering oligopolies, slowing economic growth and eroding trust in the political class.

The 2008 global financial crisis is an excellent example of how collusion between financial institutions and governments can lead to risky and irresponsible practices by monopolies that control the market, causing economic devastation that taxpayers end up paying for by rescuing banks from bankruptcy with public money.

Political disaffection

One of the most serious consequences of widespread government corruption and abuse of power is that citizens become disengaged from the political process. The apathy and cynicism of a population, which sees public officials using their positions for their own benefit, manifests itself in low voter turnout and the destruction of the moral fibre of society.

If the lack of transparency and oversight weakens trust in government institutions and makes politicians unaccountable for their actions, it is difficult to convince citizens that social and economic improvements are achieved by putting into practice ethical values such as effort, hard work and honesty.

The lack of credibility associated with governments is compounded by a two-party political system, de jure or de facto, established throughout the Western world, which in many cases does not even favour two parties or political coalitions antagonistic to each other. On the contrary, it is often a matter of two political actors sharing power in a cyclical fashion, but with little difference in the implementation of policies that benefit the establishment that acts outside the institutions.

No information, no accountability

A free press is the cornerstone of democratic societies. It serves as a check on government power and promotes transparency and accountability. Without a free press, citizens would not have access to the information they need to make informed decisions and hold their leaders accountable.

Unfortunately, much of the media has become a mouthpiece for economic and political elites. Far from reporting on government actions or corporate malpractices, the journalistic narrative often contributes to their propaganda while whitewashing corruption, ensuring the impunity of elected officials.

This reveals an unwillingness to serve the public interest, preventing citizens from being aware of government actions that may involve conflicts of interest. This is a bleak picture that is unlikely to change unless civil society organises to empower citizens through information and education, enabling them to make decisions that guarantee their fundamental rights.

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