In this period, the state presented a budget framework that aligns with the European Commission’s latest timing and standards. As a new element this year, two scenarios were introduced. An online draft of the 2023 General Government Budgets was circulated to the Congress of Deputies a few weeks prior, accompanied by additional precautions aimed at safeguarding households amid the ongoing energy challenge. Source: European Commission.
Both scenarios share an open forecast showing 5% growth in 2022 and 3.9% in 2023 as part of the Stabilization Program discussed last April and the 2023 General Government Budget Plan. The divergence between the two paths centers on higher anticipated expenditures and revenue, reflecting different policy emphases and risk assumptions.
In the second scenario, the revenue outlook strengthens for 2022, with revenue reaching 42.9% of GDP compared with 42.1% in the first scenario, signaling an expected improvement driven by better economic performance and a projected GDP expansion around 4.4% for the year. The 2023 outlook emphasizes greater financial space to implement measures that cushion families, workers, and businesses most affected by energy market volatility. Source: European Commission.
Consequently, the executive unveiled a plan with a package valued at 3,000 million euros, to be financed within the budgetary framework. Key components include extending the social bond program and, as an innovation, introducing a crisis tariff mechanism for natural gas to address the arrears that have built up in the gas market. These adjustments target both households and neighboring community energy suppliers, aiming to smooth transitions for consumers facing price spikes. Source: European Commission.
Additionally, the text proposes a more flexible approach to energy contracts through the end of 2023, enabling changes to electricity and gas contract terms and allowing adjustments every 12 months. The goal is to help consumers adapt to price volatility more effectively, with particular emphasis on larger energy users. This flexibility is intended to support continuity in energy supply while safeguarding consumer spending. Source: European Commission.
This scenario remains a projection. Spending levels for next year are forecast to reach 46.9% of GDP, slightly below the 47.9% target set for 2022. The measures proposed have shown greater effectiveness in targeted protection for vulnerable groups as the energy crisis continues. They include extending tax relief on electricity and gas bills, with VAT reductions and special relief for electricity, plus the suspension of electricity generation taxes. A separate proposal mentions a 20 cent per liter discount for fuel, though subsequent use of that measure is not explicitly noted. Source: European Commission.
Under this scenario, tax income is estimated at 43% of GDP, compared with 42.9% in the current year and 42.3% in the earlier scenario, yielding a total tax burden around 39.2% of GDP, versus 39.5% this year. This taxation mix translates to revenues of approximately 354,283 million euros as the economy slows and tax measures are extended. The financial outlook also anticipates a positive effect from measures carried forward along with new policies, including limits on compensation within corporate tax and the collection of the solidarity tax on very high wealth. Source: European Commission.
According to the government, all steps taken so far to address the energy crisis have required more than 30,000 million euros. This level of support marks the largest energy-related tax relief in history, underscoring the scale of the response. Since its June 2021 implementation, the program has already delivered more than 10,000 million euros in impact, reinforcing the commitment to shield the most exposed groups while the energy situation is stabilized. Source: European Commission.