green light from brussels Spain budget plan for 2023. The European Commission considers that the project was submitted by the Executive Board in mid-October. Pedro Sanchez It is in line with the European Union’s fiscal guidance and meets the recommendation that locally funded current expenditure growth rise below potential growth in the medium term next year, as recommended by the EU before the summer to maintain a prudent fiscal policy. But Brussels warns: expanding measures against the crisiswithout focusing on vulnerable households and businesses, triggers current spending, deficit and public debt.
The extension of existing support measures and/or the introduction of new support measures in response to higher energy prices will contribute to higher growth in government-financed net current expenditures and an increase in public deficit and debt expected in 2023. Community Manager on Brussels, “To maintain incentives to reduce energy demand and withdraw as pressures on energy prices subside, it is important that Member States target these measures to target the most vulnerable households and the most exposed businesses.”
Most of the measures in Spain “do not seem to target vulnerable households or companies and do not fully protect the price signal to reduce energy demand and improve energy efficiency,” according to analysis by Community technicians. As a result, the amount of which could be taken into account in assessing compliance with country-specific tax advice for 2023. Temporary and private aid to households and companies most affected by increases in energy prices is estimated to be 0.5% in 2022 and 0% in 2022. GDP in 2023,” they explain.
non-targeted measures
According to Community Executive’s internal calculations, the problem isn’t just in Spain. 70% of the measures adopted in the EU are not targeted, this rate could jump to 90% next year. “The vast majority of these measures are price measures (two-thirds)” and thus “can distort the price signal and reduce incentives to limit energy consumption and improve efficiency”The Commission warns that the measures adopted in 2022 will cost as much as 1.3% of European GDP. If Member States choose to extend them, they will increase at a rate close to 2%.
“There is a clear risk that the financial stance will be wider than expected at the moment,” said Paolo Gentiloni, Commissioner for Economic Affairs. This is what could happen, for example, if Spain expands existing support measures or adopts new initiatives without heeding the recommendation to focus only on vulnerable households and companies. Apart from Spain, the only country with a 0% impact of GDP in 2023 is Italy, which changed its government in October and has not yet submitted its new budget project for next year. Instead, the documentation confirms it Germany will spend 1.8% of GDP on energy measures in 2023, France 0.7%, Austria 1.1% and Holland 1.9%
Most of the budget plans designed by Eurozone countries, marked by the suspension of Stability and Growth Pact rules, much more positive macroeconomic scenario It is among those included in the latest growth forecasts for autumn, when Brussels revises growth downwards. In the case of Spain, the macroeconomic picture sent to Brussels starts from a growth of 2.1% in 2023, with autumn forecasts capping Gross Domestic Product at 1%, the public deficit four-tenths higher, and inflation 1%. The Spanish budget also ensures that the deficit is reduced from 5% in 2022 to 3.9% in 2023 and in the case of debt from 115.2% to 112.4%, which is “in line” with the Brussels proposals. Although the analysis acknowledges that macroeconomic projections are subject to a lot of uncertainty.
macroeconomic imbalances
opinion is part of annual economic policy coordination exercise Conducted by the European Commission and accompanied by an analysis of macroeconomic imbalances. The report concludes that it is “justified” to review the situation in countries that have already experienced imbalances in the past year, such as Spain, “to update whether these imbalances are worsening, in the process of being corrected, or have they been corrected,” to update “existing assessments and to assess the remaining potential political needs”, the credit received by the rescued countries. He draws attention to the Commission, which also removes doubts about its ability to repay.
“The Spanish economy continued to grow in 2022 despite increased disruptions caused by Russia’s aggressive war against Ukraine, but a rapid slowdown is expected in 2023 amid great uncertainty with downside risks. Balance of public administrations improved in 2022however, the high fundamental deficit and high debt level continue to be a source of fragility”, and thinks that the banking sector “remains resilient” despite this environment.
Overall, the overall assessment shows that projects sent by eurozone countries will strengthen the quality and structure of public finances and contribute to a sustainable and inclusive recovery through investments through the recovery mechanism. Next Generation EU will promote growth, particularly the ecological and digital transition, and energy security. But the analysis hides the clouds due to the uncertainty of Russia’s war in Ukraine and the impact of energy prices.
Source: Informacion
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