The Government has communicated this Tuesday to Brussels that it estimates that the Spanish economy will continue to grow by 2% of GDP in 2024 and 1.9% in 2025, improving by one tenth the forecasts for next year that it had made until now. The Ministry of Economy has sent tonight to the European Commission the update of the macroeconomic and fiscal forecasts for the next two years and in them the main conclusion drawn by the department led by Carlos Corps is that Spain “would continue to lead economic growth” among the main EU countries.
The document replaces the old stability program, which had to be submitted at the end of April each year. In this exercise of return to fiscal rules, the Government postpones to September the sending to Brussels of the Structural Fiscal Plan, the binding vademecum with which it plans to fulfill the commitment to lower the deficit to 3% this year, as stated in the Pact of EU Stability.
In the update of the fiscal forecasts sent this Tuesday to the Commission, the Government confirms that Spain is ready to close the year with the objective of a deficit of 3% of GDP already in 2024. Even the Ministry of Economy advances to Brussels that in 2025 the public deficit will be reduced to 2.5% of GDP, which is two tenths less than in the previous path. These macroeconomic perspectives for 2024 and 2025, supported by the latest available data, have been endorsed by the Independent Authority for Fiscal Responsibility (AIReF).
Domestic demand will be the main driver of the economy, explains Economía, driven by the positive evolution of investment, thanks to the positive evolution of investment due to the execution of the Recovery Plan, and by household consumption, supported by the dynamism of employment and the gain in purchasing power of salaries. The ministry adds that investment will accelerate in the coming years, especially in capital goods, thanks to the positive evolution of business confidence and the continued momentum of the Recovery Plan.
This economic scenario, explains the Government, will allow Spain to continue on the path of reducing the debt-GDP ratio. Economy also improves the forecasts and indicates that this year will close with a ratio of 105.5%, a decrease of more than 20 points in four years. In 2025 it will drop to 104.1% of GDP. Another novelty in the economic scenario is that the Government expects a primary fiscal surplus to occur in 2025, which will accelerate debt reduction.
The economic area of ????the Executive does not close the door to approving new measures to fight inflation or extending some of those that are in force. In recent years, Spain has spent 120,000 million on deploying a “social shield”, both in a pandemic and to confront the rise in prices as a result of the war in Ukraine.
The fiscal forecasts have been prepared in an inertial scenario, that is, in the absence of approval of new measures, and in a context of extension of the General State Budgets 2023.
Regarding tax revenue, the document sent to Brussels reflects that personal income tax collection will improve due to the good performance of employment. Also that Corporate Tax will increase thanks to greater business profits as a result of economic growth. Likewise, Economía foresees an increase in VAT collection of 2.4%, helped by the withdrawal of some current bonuses.
The Government does not specify whether the VAT reduction on food will disappear on June 30 or will be extended. The Special Tax on Electricity will also be progressively recovered until it reaches its normal rate of 5.11% at the end of June, as well as the Tax on the Value of Electrical Energy Production, whose exemption will progressively disappear throughout the year. year in an inertial scenario.
Economy also does not mention what will happen with the temporary levies on financial entities and energy companies, which expire this year.
