The European Commission begins to pave the way for countries to prepare for fiscal adjustments. After three years with the escape clause, but with the pandemic behind us, and despite the shock of the war in Ukraine, governments must start to make an effort.
For this reason, Brussels asks Spain to be prudent and move towards reducing the deficit. To this end, it proposes that support measures be eliminated to alleviate the energy price crisis and that the savings generated can be used to reduce this excessive spending.
Brussels believes that by 2023 energy aid measures for companies and households should begin to be dismantled. In the event that there is a new energy crisis next winter, he proposes that they are not for everyone, but that they are focused and focused on vulnerable people and companies to avoid an open bar that will trigger the debt and deficit again. “The support measures must be dismantled and the savings used to reduce the deficit,” recalled the economic vice-president, Valdis Dombrovskis.
It is not the only thing that Brussels has warned, which also calls for Spain to have a prudent spending path in 2024, with a ceiling in which the government cannot spend more than 2.6% compared to the previous year. To achieve this, it will have to cut the structural deficit by seven tenths of GDP, which is equivalent to an adjustment of 9.3 billion euros.
According to the recommendations of the Executive, Spain will meet this objective if the current situation does not change, since it calculates that the increase in primary spending will be 1.4%, as published two weeks ago in its economic forecasts. “Taking into account fiscal sustainability considerations and the need to reduce the deficit below the reference value of 3% of GDP, an improvement in the structural deficit of at least 0.7% of GDP by 2024 would be appropriate,” notes the report.
The Executive has also advised caution beyond 2024, and that this strategy continue in the medium term, while investments and reforms are maintained, especially through recovery funds. “The funds are the most important tool to guarantee sustained and sustainable growth”, added the Commissioner for Economic Affairs, Paolo Gentiloni. “We ask for prudence but, at the same time, continue with growth, we cannot afford one thing without the other, it is a difficult marriage, but we must achieve it,” said the Italian politician.
