Europe warns that the deficit will exceed the limit of 2% in 2024 and 2025, and debts will remain above 100% of GDP
The European Commission has warned that the financial situation in Spain is “very difficult“, with a deficit that will exceed the limit of 3% in 2024, and an accumulated public debt “quite high“. Also, Brussels confirmed that the public debt will remain above 100% of the gross domestic product (GDP).
Europe expressed this in its review of the Budget Plan that Spain sent to Brussels in October, while asking the Spanish Executive to send an updated document “as soon as possible.” And this is confirmed by community sources collected by Europra Press.
According to Brussels estimates, the budget deviation next year be 3.2%, while the Spanish Government says it will reduce the deficit to 3%. This information is relevant because it is where the limit is located where Spain must submit to the management of Brussels. In 2024, the fiscal rules suspended during the pandemic will be reactivated and their reform still needs to be explained. But what is clear is that the limit will remain at three points of GDP.
“In general, the Commission considers that Spain’s draft updated Budget Plan complies with the Council’s Recommendation of July 14, 2023,” said Brussels. “However, the Commission foresees that Spain’s deficit will be 3.2% of GDP in 2024, above the reference value of 3% of GDP established by the Treaty, and that the Public debt 106.5% in 2024, above the reference value of 60% of GDP established by the Treaty, and 10 points of GDP below the ratio at the end of 2021,” he added.
Europe is also calling for a “plausible” tax strategy in the medium term, the same thing asked by the Bank of Spain and the Independent Authority for Fiscal Responsibility (AIReF) of the Government of Pedro Sánchez on countless occasions. In this sense, the vice president of the economy, Valdis Dombrovskis, recommends to all member states that they apply “more cautious” fiscal policies, which “will contribute to reducing inflation, improving debt sustainability and reconstituting reserves after spending. public on a large scale. during the pandemic and energy crisis. A warning that is fully applied to the specific case of Spain.
The Commission also said that, according to the information submitted, Spain will not extend fiscal measures to support inflation. However, Sánchez promised in his investiture speech that he will continue to reduce the VAT on food, a point that Europe has requested “details“.