Tuesday, June 6, 2023

Brussels demands Spain use savings from withdrawing war aid to reduce deficit

Brussels is determined that the EU follows a narrow fiscal path: on the one hand, it demands that states heavily control their current spending as debt continues to be at abnormally high levels and interest rates rise and, on the other, It prays as public investment is maintained not to lose footing in the dual digital and ecological transition. In the Spanish case, this is specified with the recommendation that savings from the withdrawal of extraordinary aid to ease the energy crisis should be allocated to reducing the imbalance in the public accounts and not to other spending, as well as to advice To invest together and “ensure the effective absorption of Recovery Fund grants and other community resources,” it states in its financial recommendations for 2024.

Commission economists put forward the numbers presented from Madrid, after analyzing the Spanish accounts and the stability programme. There is a discrepancy of three tenths in the figures of one and the other (the Spanish executive estimated a shortfall of 3% and the community of 3.3%) but it means that “they are in line”, as can be read in typical Spain. document submitted to, in which, moreover, it is highlighted that by the end of 2024 the forecasts of the public debt of both parties are the same, 109.1% of GDP. “The European Commission confirms that the fiscal path presented by Spain will meet the fiscal needs demanded by 2024,” says the Ministry of Economic Affairs, led by First Vice President Nadia Calvino.

On paper, it would not be difficult for Spain to follow an accommodative path to Brussels’ demands. For all the states, the request made by the commission is equal to five tenths. However, in the Spanish case it is somewhat higher, seven tenths, as it is one of the countries with the highest debt in the EU and also has a deficit above 3%. “To guarantee this reform, an increase of nationally funded primary expenditure in 2024 [por tanto, sin contar con el dinero procedente de los fondos europeos] It should not exceed 2.6%”, he says.

“At the same time, the remaining energy support measures (currently estimated by the Commission at 0.6% of GDP in 2023) should be gradually phased in, depending on the development of the energy market and starting with at least select ones Is. , and this same savings should be used to reduce the public deficit”, the document continues in the following paragraph.

However, to fully materialize all these favorable signs, it will be necessary for Spain to recover its performance somewhat during 2022. Due to increase in energy prices. Spain did not do enough to limit current spending financed from its income”, he added.

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