One of the most repeated arguments by the Republican Left of Catalonia (ERC) candidate, Pere Aragonès, during the electoral campaign is that the Parliament rejected “the most expansive budgets in history” and that his party has achieved an increase in public spending. of 30%. The last time he referred to this increase was this Monday in the press conference cycle of the EFE agency, where he stated that Catalonia has “30% more budget for health and education than at the beginning of the legislature.” .
But this comparison is misleading. It is true that the global public spending planned for 2024, if the budgets had been approved, would have been 34% higher than those of 2021, when Pere Aragonès became president. Those for 2023, extended for this year, are 26% higher.
If we look at the specific Education budget, making the same calculations we see an improvement of 30% (specifically, 32.4%), with the budgets presented for this year, but the difference between those for 2021 and those extended is stands at 22.7%. Regarding Health, the improvement would have been almost 24% if the 2024 budgets had been approved, while the increase with respect to the extended accounts is 19.6%, also far from the figure of 30%. that the ERC candidate gives. In any case, these calculations are made based on current prices and do not take into account the strong inflation that Catalonia has suffered, nor the increase in population that it has registered.
Since 2021, the CPI in Catalonia has increased by 13% and 255,000 more people now live in the territory than in that year, 3% more, according to Idescat data. To maintain the per capita public spending of a few years ago, it was imperative that the total budget rise. In other words: if the current budget were the same as three years ago, public services would have suffered cuts.
Taking into account the CPI and demographic growth, the per capita budget has increased by 8% since 2021, when this legislature began, according to spending data from the Department of Economy. This calculation comes from dividing each year’s budget by the number of inhabitants and, dividing it by the CPI, which indicates how consumer prices have increased.
If the 2024 budgets had been approved, this improvement would have been 15%. It would have meant a real increase in public spending, but far from the 30% that Pere Aragonès repeats.
This method – that of calculating the real value from the inflation of consumer prices – is not the only one. Contrasting the budget increase with the GDP deflator – a financial instrument that measures inflation on a more general scale than the CPI – the real increase in per capita budgets compared to 2021 becomes 13% in 2023.
That the budget has increased by 30% since the beginning of the legislature is true if we compare the nominal values ??of the current Generalitat accounts with those of 2021. That is, if we take the economic value of the budgets at the time of being presented . This is called current prices.
What is the problem? That since 2021 prices have become more expensive, and analyzing a historical series in current prices (without taking inflation into account) can lead to a misleading comparison. On the other hand, making the comparison at constant prices allows us to know the real value of the budgets at each moment in history.
Three years ago, one million euros – to give you a figure – allowed you to buy more material and pay more salaries than today. Since 2021 and until now, the Consumer Price Index has increased by 13%. In other words: to buy what three years ago cost one hundred euros, now you need 113.
This simile is not necessarily applicable to a country’s economy, since the CPI measures the purchase prices of the products that people need to live: food, housing, transportation, clothing and technology, among others.
To measure GDP growth at constant prices, economic science uses the GDP deflator. A deflator is an index that eliminates the effect of inflation on GDP growth and allows you to know exactly how much an economy has actually grown, without worrying that the value of money has changed.
For our calculation, we have applied two deflators: the CPI and the GDP deflator index, which have given slightly different results but both far from the 30% announced by Pere Aragonès.
