Enemy CPI: AIRef raises inflation forecast to 7.8% this year

Presenting the report on budget execution, public debt and the 2022 spending rule of public administrations and updating the macroeconomic and financial forecasts, the President of AIRef called on the administrations to prepare a plan. medium and long term tax strategy given the laxity of the rules for the short term.

In the presentation, Herrero the presence of both external and internal risks for the economy. In the first, most notably, a Russia cuts gas supplyIt could cause a recession in the European Union (EU). In fact, the EU already has a roadmap planned to deal with this possibility.

They increase internally Less savings and tighter financing due to interest rate hikes and doubts about private consumption. And also Doubts about the recovery plan. He explained that the government expects an impact of 1.8 percentage points this year, with “signs that planned investments may be less realised”, but a lack of information.

No salary pressure

Inflation, which exceeds all EU levels together with the Netherlands, continues to be a major problem for Turkey. Do not Pull energy prices or food. And at once”no discretion of wages negotiated in the agreement“.

when it comes public accountsAIRef increased the estimate by three-tenths, up to 4.5% of GDP, still below 5% predicted by the Administrator. Additional measures and disruption of autonomy balance for families and companies balanced by economic growth and tax collection, explained. Moreover debt It is entering a downward phase of up to 114% of GDP thanks to economic growth. In any case, this dynamic will wear off in the medium term, “marking the beginning of an uptrend if the primary structural deficit is maintained”.

this public deficit It increased from 10.3% of GDP to 6.9% in 2021 thanks to the cost of Covid and tax measures being reduced to 4.5% of GDP. Personal income tax and corporate income criteria stand out. Measures to mitigate the effects of the energy crisis and the war in Ukraine affect nine-tenths of GDP.

The central government deficit was determined by AIRef as 3.3% of GDP for this year. Social Security, on the other hand, remains at 0.5%. in autonomous communities, the estimate rises by two-tenths to reach 0.9% of GDP. On the expenditure side, an upward revision of public consumption due to measures aimed at reducing covid and a lower income forecast due to fewer resources than traditional European funds. Almost all autonomies worsen closing forecasts for 2022. Local entities retain an overestimation of 0.2% of GDP.

reroute the debt

Although the exemption from fiscal rules remains, Herrero warned that the Government “should complete a medium-term fiscal strategy to achieve a level of deficit sufficient to divert debt into more sustainable ways that reduce the vulnerability of the Spanish economy”.

It warns that it should be taken into account in this sense. “fictitious financial margins”, not only because of the laxity of the tax reference rate, but also because increase in resources produced by the effect of high inflation, at the same time, “the next one will have an increase in expenses, especially Re-evaluation of pensions”.

In this sense, it demands that administrations include a medium-term fiscal strategy in their next year’s budgets and that the autonomies adjust their debt transactions according to their real financing needs.

“He said that even without fiscal rules, oversight is necessary in the medium and long term. Herrero was accompanied by Ignacio Fernández-Huertas, Director of the Division of Budget Analysis, and Esther Gordo, Director of the Division of Economic Analysis.