If you invest Pedro Sánchez Once the president steps forward, one of the first decisions the newly formed government will have to make will be what to do about anti-inflation measures that expire on December 31. These are the measures the Government has adopted to combat the rising cost since June 2021 (almost €50,000 million since then). energy -made worse by the war in Ukraine- and food and to mitigate the consequences for Spanish families, as other countries in the eurozone have done. The third vice-president, Teresa Ribera, while serving in the Government, is in favor of extending the VAT reduction on electricity and gas and other shock measures until 2024 (with an impact of up to 15,000 million, according to the Tax Office’s calculations). Organizations such as the European Commission or the IMF urge Spain to put an end to all this. and urges us to continue only well-targeted aid, if at all. most vulnerable groups.
In this context, a recently published study European Central Bank He points out that anti-inflation measures in the Eurozone generally serve to compensate for the inflation loss (by a third). purchasing power reduce the number of houses and inequality between low- and high-income families; but even the second one wasn’t like that Spain nor Germany.
Reduce prices or provide assistance
The main reason explaining this is this: Spain, Unlike other countries, it has preferred it more than others. generalized indirect tax credits lowering energy and food prices rather than prioritizing subsidies or direct aid to low-income families, as was done for example Portugal. So this It draws attention to the authors of the ‘occasional article’ published by the ECB on 16 October under the title ‘Inflation, fiscal policy and inequality’.
calls ‘price measures’ They undertook more than 80% of Spain’s budget efforts, compared to an average of 50% in the eurozone. This includes general measures such as reducing VAT on electricity and gas. 20 cents discount per liter of fuel Some subsidies in effect in 2022 or for specific sectors.
But calls ‘income measures’, Because they have a greater potential for redistribution, they represent only 20% of the total budget effort in Spain (compared to an average of 50% in the Eurozone). This includes certain discounts. Income tax, help 200 euros homes or 15% increase non-contributory retirement And minimum vital income.
” price measures Untargeted measures slow down price increases for all consumers and result in high financial costs compared to other products. income measures. “Also, it is not entirely clear whether they have achieved their initial goal of controlling prices, as much depends on companies deciding to pass the discount on to consumers.”
comparison study
The lack of focus on the measures taken against inflation in Spain was an issue that both the Bank of Spain and the Financial Authority (Airef) drew attention to. The innovation is that the ‘article’ published by the ECB allows comparison with other countries.
“Governments’ responses to rising inflation vary greatly between countries. Some have focused on: include price increases (For example, Greece), others have taken further steps support households through transfer payments (e.g. Portugal). In particular, the negative impact of the inflation shock on inequality was largely offset in all countries. except Germany and Spain“Conclude the authors of the European study.
The report examines the dampening effect of anti-inflation measures in different economies in the euro area. The analysis focuses on: Germany, France, Italy, Spain, Portugal and Greece – representing 80% of the euro area population and three-quarters of GDP – and in total 56 measurements fight against inflation Implemented in 2022 for all.
Inflation in the Eurozone increased from 2.6 percent in 2021 to 8.4 percent in 2022, and measures were taken against the shock in energy prices in general. Equivalent to 2% of GDP According to ECB research, EMU’s To prevent inflation from being 1.6 percentage points higher. (For the Spanish example, Bank of Spain Anti-inflation measures are estimated to represent approximately 1.3% of GDP in 2022 and serve to reduce 2.3 percentage points from average inflation, which results in 8.4%.
Inequality
To begin with, the thirteen authors of the ECB ‘article’ confirm that: the inflation energy and food The year 2022 will be more seriously affected purchasing power and prosperity low income households. There were two reasons for this: Because these families spent almost all of their income (but could save), and because energy and food carried more weight in their shopping carts than higher-income households. For example, in the case of Spain, the Bank of Spain estimated that: supported inflation Between August 2021 and September 2022, this rate was 11.3% in the shopping basket of households with the lowest income levels, while this rate was 9.7% in the shopping basket of higher-income families.
In the report published by the ECB, it is estimated that, in general, anti-inflation measures compensate for one-third of the loss in inflation. purchasing power Number of households in the eurozone and in addition Close nearly 60% of the inequality gap Between the lowest and highest income households. But this was not the case neither in Spain nor in GermanyThe measures adopted by the respective governments served to contain inflation, but did not do so more intensively for lower-income households.
In the case of Germany, It is emphasized that inflation is largely balanced nominal wage increaseespecially preferred households with high income levels. The report points out that “low-income households in Germany and Spain have lost a large share of their disposable income.”