The Budget Stability Law created in 2012 for serious sanitation of public accounts has become completely wet paper. The Independent Authority for Fiscal Responsibility (AIReF) certifies in its examination of the budget plan that the Government has sent to Brussels that Spain will fail to comply this year with all the key objectives of the Law - the deficit, the debt and the spending rule - and also the which are derived from the rules of the euro - structural deficit, cost containment - provided for in the Stability Pact . All this despite the fact that it is still a year of robust economic growth of around 2%.

This report follows the blow given by the European Commission to the acting Minister of Economy, Nadia Calviño , last Tuesday, which warns of the risk of "significant deviation from the rules of the euro."

AIReF sources regret the deterioration of these regulations aimed at preventing new crises in Spain and admit that, although their obligation is to examine the government's budget plans, the objectives are so volatile that they are limited to describing the last ones that are feasible or unlikely they put on the table, but not the ones that should be applied. Already the previous Government of the PP breached the Law, but that of Pedro Sánchez , who promised not to repeat that error when he took possession, has skipped all the traffic lights of the regulations.

In fact, AIReF said yesterday in its Report on Fundamental Lines of the Public Administration budgets 2020 that although it sees that "the fiscal path is feasible" for the coming years - which means in its jargon that there are deviation risks - it He opts to rule out that he will be respected this year.

But what fiscal path? The current official who planned for this year to reduce the deficit to 1.3% is not even on the exam table since it is impossible to respect. What has been examined is the 2% softened objective that the acting Minister of Finance, María Jesús Montero, set herself, and which, according to her accounts, will also be breached . The deficit will fall from 2.5% of 2018 to 2.1% of the Gross Domestic Product this year. The AIReF ensures that public spending will reach the level of 41.6% of GDP after increasing by 2,200 million current spending.

This includes bad news . Expenditure on unemployment benefits grows again when the slowdown in the fight against unemployment is confirmed. Augura "an expense in benefits close to 18.3 billion for 2019 and almost 19,000 million in 2020" . «The decrease in this item recorded in previous years is slowed down in 2018 and begins to grow in 2019 due to the increase in spending on contributory benefits and the foreseeable slowdown in the decrease in subsidy spending, due to long-term unemployment following the crisis », Says in the document.

In addition, there have been non-recurring expenses much higher than in previous years amounting to 6,296 million that include payments to the bank derived from the so-called Asset Protection Scheme (EPA) for 1,793 million and income from Corporate Taxes that have had to be return and amount to 1,600 million. The deviation also includes that of the autonomous communities and the AIReF is waiting for the result of the requests of the Ministry of Finance for regional adjustment plans.

Regarding the structural deficit, essential for the European Commission, AIReF says that "the effort has been zero in the last five years." The current Government also expects a zero improvement in 2020 in the challenge of trying to make permanent adjustments to the public accounts.

Regarding the debt, AIReF rules out that the State achieves this year the 95.8% debt objective and, ensures that in the future, "to constant policies", there will be "non-sustainable debt growth paths".

AIReF stresses that the budget plan presented by the Government to Brussels is "inertial" when it is in office and does not include the measures that the Executive leaving the polls on November 10 will have to take in the field of tax increases or cuts of expenses.

And the spending rule? As for the Spanish rule "in 2019, the breach is widespread", say AIReF sources , which are more optimistic for 2020. The violation of the European rule is total in the two years, although the AIReF questions the logic of applying it for considering it "very demanding" and "inconsistent." The rule aims to prevent expenses that countries cannot afford.

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Know more

  • Spain
  • European Comission
  • Pedro Sanchez
  • PP
  • GDP
  • Nadia Calviño
  • Maria Jesus Montero
  • Unemployment

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