Surprise call for general elections to be held on 23 July following the defeat of PSOE in regional and municipal elections held this Sunday, financial difficultiesmust face the next government (whatever that may be) out of the polls. Beyond laws that are changed, promoted or repealed internally, three big challenges come from Europe.
1.- Accelerate the implementation of European funds
They were, and should be, destined to be the major driving force behind the Spanish economy after the pandemic. 144,000 million euros from Europe, 69,000 million of which are non-repayable loans, the rest to be paid in 2058 on very advantageous terms. These funds do not come into or enter the economy. Generally speaking, only 9.111 million out of the 23,500 transferred to Spain so far have been awarded, according to government data at the end of March. Moreover, not a single one of the 84,000 million loans available has yet been requested. Why? They are summarized excessive bureaucracy To cite two examples, only 1.550 million of the 6,800 million budget allocated for the rehabilitation of buildings was agreed at the end of March; and of the 6,000 million budgeted for the national and trans-European rail transport network, only 2,600 million have been resolved.
Improvements in the allocation of European money will be left to the next Administrator and yes, the EU will have to add a list of reforms it is willing to undertake in order to be granted, as requested. And he will have to do it knowing that he is being looked at through a magnifying glass. Head of the European Parliament’s Budget Control Commission, Monika Hohlmeier, harshly criticized the management of these funds by the current government.
2.- Adhere to the Stability Pact in 2024
After recent years when spending and debt were ignored due to the pandemic, it’s time to adapt. Europe has already said that the Stability and Growth Pact (SGP) needs to be respected once again, so basically public deficit should return to 3%, compared to 4.8% at the close of 2022. Is it applicable? The Manager, led by Pedro Sánchez and economically led by Nadia Calviño, not only saw it possible, but also promised to reach 3% by 2024, one year ahead of schedule, It should be noted that the Bank of Spain has requested that the adjustments be made now, in the same year. This 1.8 percentage point decrease is equivalent to a 23,000 million adjustment that the Government wants to make in order to generate more revenue rather than cut expenses. For this, they relied on extraordinary income, which would once again bring very high inflation. Let’s remember that in 2022 these additional revenues add 30,000 million to the public coffers.
But the main economic institutions do not quite believe in this optimism. The Independent Accountability Authority (AIReF) has warned that the gap will end at 4.2% this year, compared to the 3.9% predicted by Moncloa, making it difficult to tackle a 3% deficit in 2024.
Concerning the debt currently approaching 115%, no one, not even the Sánchez-Calviño duo, thinks that 60% debt of GDP will be reached in 2024 or 2025 as the fiscal rules stipulate. It should be noted that the European Union is working on a change in requirements, so what matters here is whether States with very high debt guarantees have plans to reduce it sufficiently.
3.- Manage stimulus withdrawal and help against inflation
Temporary employment regulation files (Ertes), cessation of activity, professional diesel subsidies, train discounts, on the electricity bill… The list of aids and incentives to combat inflation and its effects on the working-citizen’s pocket is still vast. Some sources close to the economy estimate the impact of these measures at 37,000 million. But in reality, as Brussels has demanded, the management of its withdrawal will first and foremost have an impact on the next Government on a social and political level. must face the wear and tear of withdrawing aid Like the VAT cut on electricity and gas, which will cause more than 3 billion reductions in revenue this year, or the VAT cut on food, which will mean 650 million less revenue. Not to mention what extending delays and halting activity could mean, they are all measures aimed at protecting a business that will break all negative records due to the pandemic. Let’s remember that there are mechanisms used to secure the employment of more than 3 million people in 2020. Let’s not forget that, despite this, the unemployment rate in Spain is around 13%, almost twice the Euro Area average.
Source: Informacion
James Sean is a writer for “Social Bites”. He covers a wide range of topics, bringing the latest news and developments to his readers. With a keen sense of what’s important and a passion for writing, James delivers unique and insightful articles that keep his readers informed and engaged.