• General elections.Sanchez puts pensions in campaign and will raise them December with the CPI with the government in office
  • General elections.Sanchez squeezes the 'working economy' to put it at the service of its electoral plans

The Government of Pedro Sánchez will fail to meet all deficit targets this year. The very unlikely 1.3% set by the previous Executive, 1.8% as soon as he arrived, the Socialist Government said, and also the 2% later announced by the Minister of Economy, Nadia Calviño. The question only seems to be what the final figure will be. However, Funcas yesterday paid attention to another point that seems even more worrisome: in 2020 that non-compliance will not only be repeated, but there is a real risk that the deviation will grow , something that would go just in the opposite direction of the goals set by Brussels and not registered in Spain since the worst years of the crisis.

According to the estimates of the Foundation of Savings Banks (Funcas), the deficit this year will be 2.4%, a figure that is in line with that estimated by the Bank of Spain. But for next year, the expected data is 2.5% , while in 2021 the figure would be 2.4%.

To obtain this estimate of two and a half points of deviation, Funcas analysts start from the basis that the Government will raise the salary of officials by 2%, as set out in the multi-year agreement signed with the union representatives, and that pensions will increase 0.7% . This figure, explained by the Foundation, responds to the commitment announced by Sánchez to increase benefits with average annual inflation, a variable that according to the estimates of the entity itself will be of those seven tenths.

"What we see is that the deficit, with current economic policies, if no other measures are taken, will stabilize above 2% of GDP, " said Carlos Ocaña, general director of Funcas and Secretary of State for Finance and Budgets between 2006 and 2011 in the Government of José Luis Rodríguez Zapatero.

In his harsh warning to the current Socialist Executive, Ocaña also made it clear that "the slowdown in the economy will slow the progress in reducing the deficit", and that the combination of the factors indicated will mean that, in 2021, the debt will still exceed the 96% of the Gross Domestic Product (GDP). The Bank of Spain has already pointed out recently that such a high level represents a great weakness in the event of an economic crisis, and Funcas had an impact on that same message yesterday.

Regarding the evolution of growth, Ocaña also stressed that Spain is facing an “end of cycle” , although it ruled out that a recession will occur and denied that the situation is comparable to that of 2008. In this context, Funcas estimates that GDP will grow less than 2% already this year, something that most analysts and agencies considered would not happen until 2020.

To explain this downward revision, the Savings Banks Foundation initially points to the National Accounting review conducted by the National Statistics Institute (INE). This action, which concluded that in 2018 the rebound was really 2.4% instead of the 2.6% previously estimated, has caused a massive reduction in forecasts. But, in addition, Funcas stresses that family consumption is suffering and that the slowdown is also evident in the investment .

« The growth of the economy in the first half of the year has been significantly lower than previously estimated . The GDP growth rates of the first and second quarters have been cut from 0.7% and 0.5%, to 0.5% and 0.4% respectively. The slowdown in the second quarter came from private consumption, which stagnated, and from investment in capital goods and intangible assets. Investment in construction maintained a moderate tone, ”he says.

This moderation will continue to 2020, the year in which the estimate of progress is 1.5%, to later register a certain reactivation in 2021 with a growth of 1.8%. And in terms of unemployment, Funcas also worsened its estimate of the rate of job creation , an aspect that, once again, coincides with what was warned by the Bank of Spain, but that from the Government still do not want to accept since it is not, nor much less, the desired argument for the election campaign.

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