The high political and economic cost of corruption and uncertainty

The tearful performance at Ferraz on the afternoon of June 12, 2025 (12-J) disqualifies itself in political terms. Back in 2014, Sánchez told Rajoy that "you are besieged by corruption. You don't come to Congress or the Senate to ask for forgiveness, you come to render accounts and assume responsibility." On Thursday, Sánchez appeared not in Congress but at the PSOE headquarters to ask for forgiveness, not once but several times, looking as if he had never broken a plate in his life and hinting that he had fallen off a cliff that morning and had been the victim of one of his closest collaborators. But it wasn't confirmation of Santos Cerdán's resignation that we expected to hear from the president, but rather transparent explanations and the direct assumption of political responsibility. Neither did Sánchez do it in July 2021 when he secretly removed Ábalos from the government , nor did he do it in 2023 when he re-included him on the Congressional lists to silence him, nor has he done it now that the UCO has revealed the corruption plot (or criminal organization, as you prefer) made up of Santos Cerdán, Ábalos's replacement as PSOE's organizational secretary, Ábalos himself, and his all-around assistant Koldo García.

Sánchez Code 2017: breached

A few months before the vote of no confidence that ended Rajoy's presidency on June 1, 2018, Sánchez presented a document at Ferraz on June 26, 2017, which for the sake of brevity I will refer to as the Sánchez Code. Although separating right from wrong is a difficult task, the work is greatly simplified when we have a moral code established by the public figure to whom we apply it. According to the Sánchez Code, "the corruption schemes affecting the government are a stain on the international profile and prestige of our country"; "public exemplarity is non-negotiable, and the greatest enemy of our state is corruption"; and, "a president of the government must be, above all, a moral beacon for society as a whole." These are the standards of conduct required today of the Sánchez government and of the president himself.

It would be unfair to hold Sánchez responsible for events that occurred before he became general secretary of the PSOE, just as unfair as it is to hear the president, his ministers, and deputies every day bring up cases of corruption that affected PP leaders years ago. However, it can be said with certainty that Sánchez and his entire party leadership already violated their own moral code when the PSOE rehabilitated and publicly supported Chaves and Griñán at the 41st Federal Congress of the PSOE held in Seville in 2024. A tribute undoubtedly deserved for two "moral role models for society as a whole" who hindered judicial investigations as much as they could from the Andalusian executive, never assumed their responsibilities, and never resigned from their positions.

But the PSOE's corruption is not limited to past cases already investigated and prosecuted. The corruption cases that have come to light in these two fateful years of the legislature (Santos Cerdán, Ábalos-Koldo-Aldama, García Ortiz, Begoña Gómez and David Sánchez) undoubtedly indicate that the PSOE as an organization, with Ábalos at the head of the organization secretariat between 2017 and 2021, and Cerdán as secretary of territorial coordination (2017-2021) and secretary of organization (2021-2025), and the Presidency of the Government itself, with Sánchez at the helm and (Óscar) López as director of the presidential office (2023-2024), are part of a corrupt network that has abused public institutions such as the State Attorney's Office and the Attorney General's Office to hinder judicial investigations and cover up their alleged crimes.

An uncertain political horizon

Sánchez's refusal to assume political responsibility and call elections leaves the government and the PSOE in a position of extreme weakness vis-à-vis their governing partners (PSC and Sumar) and their backers in Congress (ERC, Junts, PNV, EH Bildu, and Podemos) , which could have irreversible consequences for the configuration of the Spanish Autonomous State, the Public Treasury, and the distribution of public debt among Spanish citizens. No one should expect moral or disinterested reactions from any of them, because they are delighted that Sánchez remains at the head of the Spanish government, and they are even more so given his greater political and parliamentary weakness. Now, they must be saying to themselves while rubbing their hands, is the time to tighten the screws, because his extreme weakness ensures they will obtain almost everything they demand.

Because Sánchez fears nothing more than losing the presidency of the government , currently his only hope, albeit perhaps illusory, of not ending up in the dock with his comrades in arms Ábalos, Santos Cerdán, and Koldo. Sánchez made this very clear in his appearance on June 12: he does not intend to leave the Falcon before 2027 and is prepared to use all the levers of government (the Constitutional Court, the State Attorney General's Office, and the General State Budget) to buy the necessary votes and prolong this agony, relying on his political fortunes to remain firmly in power in the Moncloa Palace. The damage he has wrought since the 2023 elections, the amnesty, the transfer of powers, and the forgiveness of €17.1 billion in debt to the Catalan government are already extensive and very serious. But no one knows how much more damage he could cause to the state institutions if he manages to remain at the head of government for two more years. Perhaps the time has come for García Page, Madina, Lambán, Redondo, González, Guerra, Vázquez, and so many other socialists to step forward and prevent Sánchez from dragging the PSOE down with him.

Economic achievements?

As an economist, my assessment of Sánchez's administration is very negative, and his continued presence at the helm of the government does not bode well, despite the GDP growth and job creation figures he often boasts about. To begin with, in mid-2018, he inherited a growing economy that had weathered the heavy legacy left to Rajoy by Rodríguez Zapatero at the end of 2011, and that growth has continued with the exception of 2020, the year of the pandemic.

The government's lack of foresight and improvisation are responsible for the disastrous management of the pandemic in the nine weeks between March 9 and May 10, 2020, and a historic drop in real GDP of almost 11% in 2020. Despite the fact that the economy has grown at a healthy pace since then and tax revenue has registered considerable increases every year, the State has continued to run high deficits every year and has no intention of balancing the public accounts in the remainder of this legislative term.

Let's look at the situation in more detail. Between the second quarter of 2018 and the first quarter of 2025 (the latest data available), the period since Sánchez took office, cumulative real GDP growth was 10.0%, cumulative nominal GDP growth was 36.5%, and public administration debt growth was 30.5%. It can therefore be concluded that of every €100 increase in nominal GDP over those nearly seven years, €83.60 is explained by the increase in debt. Furthermore, if we compare the cumulative real GDP growth of 10.0% with the cumulative growth in the number of employed people according to the EPA (Legal Employment Survey) over the same period, 12.5%, we conclude that the output per employed person has decreased by approximately 2.5%.

We are growing, yes, fueled by massive injections of debt and European transfers from the Next Generation EU fund , a scenario that no half-serious economist would consider healthy and sustainable. We are growing, and this growth in production increases the number of employed people, but productivity, instead of increasing, decreases. It is also true that debt as a percentage of nominal GDP has decreased in recent years, but mainly as a result of the sustained rise in prices, which has raised nominal GDP growth 20.5 percentage points above real GDP growth. With more deficits looming, a debt of 1.668 trillion at the end of March that continues to grow despite GDP growth, with no General Budget for 2025, with NATO demanding an increase in military spending by who knows how many tenths or percentage points of GDP, with pension spending growing at 5.8% in 2025, and with the need to meet the demands of Junts and ERC, the political and economic landscape facing Spanish society is very delicate. There is no doubt that elections could help clear up so many doubts, but calling them, with the permission of Santos Cerdán, Ábalos, Koldo, and the courts, is in Sánchez's hands.

Clemente Polo . Emeritus Professor of Economics.

Abad Oliba CEU University 2020-2025. Professor of Fundamentals of Economic Analysis 1992-2020. Autonomous University of Barcelona