The governor of the Bank of Spain, Pablo Hernández de Cos, yesterday defended the withdrawal of the extraordinary measures put in place after the invasion of Ukraine to curb the rise in energy prices. It did so without setting a date for the elimination, although the Spanish Government must decide whether to extend or abolish them before the start of 2024.
What is at stake is the reduction of VAT, special tax and exemptions from the payment of regulated costs on the receipt of electricity. It must also be decided whether or not to maintain the reduction in VAT and the limitation to the increase in the regulated gas rate. The budgetary cost of these measures, examined until 2025, is close to 9,300 million, according to Bank of Spain calculations. However, they contribute to lowering inflation, as the institution itself acknowledges.
Yesterday, Hernández de Cos assured in Madrid during the International Forum of Sovereign Wealth Funds that “governments must withdraw energy support measures” and replace them if there was “a new energy crisis” with fiscal support. selective”. It is about helping vulnerable groups without making indiscriminate discounts, as the European Central Bank (ECB) also advocates.
The Bank of Spain is already working with an inflation forecast of 4.3% for next year, seven tenths more than previously forecast, in which it expects that the Spanish Government will withdraw the approved measures two years ago to reduce the effects of rising energy prices. De Cos also claimed yesterday that “in 2024 fiscal policy will be restrictive in the euro zone”.
The Spanish Government must decide in December whether to withdraw aid associated with energy, in addition to the reduction of VAT on food or public transport subsidies from next year. Yesterday the first vice-president and acting minister of Economic Affairs, Nadia Calviño, refused to confirm it.
“From now until the end of the year”, Calviño assured after the Council of Ministers, the measures that are considered most appropriate will be taken, “always thinking about a responsible fiscal policy and the best use of public resources”.
The Spanish Government estimates that, so far, it has mobilized almost 50,000 million euros of public resources to cushion the impact of the war in Ukraine on companies and individuals. They have helped make Spain’s inflation one of the lowest in the EU.
The association Facua-Consumidores en Acción demanded yesterday from the Spanish Government to extend until 2024 the measures related to the electricity bill in order to, in this way, “protect” families from the “skyrocketing” increase in energy .
