Pablo Hernández de Cos: The European economic policy response to a scenario of lower growth and inflation

Speech by Mr Pablo Hernández de Cos, Governor of the Bank of Spain, at the closure of the 2019 La Granda Summer Courses, Avilés (Asturias), 31 August 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Distinguished rector, honourable mayor, academic authorities, dear students, ladies and gentlemen. Let me begin by extending my particular thanks to Professor Velarde for his kind invitation to participate in the closure of the 2019 La Granda summer courses.

It is an honour for me to be here in this building, whose doors are open to all those interested in discussing and delving into the essential issues ever-present in these courses.

Today I would like to share some thoughts with you on the complex economic outlook the European Union (EU) and, in particular, the countries comprising the euro area currently face. This is at a time when free trade, the bedrock of the European project and an essential source of the improvements in economic well-being in recent decades, is subject to continuous threats.

I shall first describe the latest economic developments and the main challenges ahead. Then I shall analyse what, in my opinion, the economic policy responses to these challenges should be.

The return of protectionism

Only two years ago the global environment was a favourable one. It was marked by a synchronised expansion of the emerging and advanced economies, reflected in the highly robust world trade performance.