Spain closed 2022 with a deficit of 4.8% of GDP, a figure that was below the commitment reached with Brussels, which was 5%. For the third consecutive year, the national economy meets the objective agreed with the European Commission. The final result, a deficit of 81,521 million, is due to the notable increase in income and that occurs despite the spending of 22,000 million deployed during the past year in aid to try to alleviate the economic consequences of the war in Ukraine.
In the last two years, the public deficit has gone from 10%, in the 2021 financial year, when the pandemic broke out, to the aforementioned 4.8%. In other words, the administrations are managing to bridle the gap between income and expenses, although the fiscal rules are still suspended. In 2025, yes, Spain has committed to the Commission to reduce the deficit of 3%, an objective that the Government considers acceptable while waiting for the new community framework to be applied to be defined. “We are a credible country”, proclaimed the Minister of Finance, María Jesús Montero, during the presentation of the budget execution data.
For the person in charge of public spending, this is a key budgetary compliance to boost foreign investment in Spain, she added on the eve of Ferrovial definitively beginning the transfer of its headquarters to the Netherlands.
In relation to the reduction of the deficit by subsectors, it was the central administration, with 3.1%, which assumed the greatest reduction, along with Social Security, with 0.5%. Autonomous communities, with a deficit of 1.1%, and local corporations, with 0.1%, left the budget balance and the surplus on the eve of the regional and municipal elections.
Tax collection broke records for the second consecutive year. The public coffers grew, specifically, by 255,463 million euros, which represents a growth in tax revenue of 14.4% compared to 2021 thanks to the creation of employment, the improvement in business profits and the increase in the consumption. Montero has stated that “the rise in prices only explains a third of the increase in revenue.”
Specifically, personal income tax income grew by 15.8% last year; VAT increased by 13.9%; and corporate tax increased by 20.8%. The fact that VAT is the tax whose collection has grown the least would explain why inflation is not the most determining factor for the increase in tax revenue. In the first three months of 2023, gross collection is increasing by around 6% compared to the same period last year, according to what the head of the Treasury has revealed.
Of the 45,000 million spent on aid or tax reductions since the start of the current crisis, 22,000 million were concentrated in 2022, Montero has detailed. 8,000 had to do with lower tax revenues for public coffers, a reduction caused by the reduction in VAT on electricity, gas or the suppression of the generation tax. The rest, 16,000 million, were allocated to spending measures: aid to companies, transport, gas-intensive consumers, the first anti-inflation check of 200 euros, free transport or fuel discounts.
