- Coronavirus.The Fiscal Authority corrects the Government: the deficit will be greater and the recovery of GDP and employment slower
- Covid-19. The Government foresees a recession of 9.2% and an increase in unemployment to 19% that will not recover in 2021
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The economic crisis unleashed by the coronavirus pandemic will be more intense and will leave more consequences than the Government presumes. In terms of deficit, growth and, also, in the labor market, with 1.2 million workers in a situation of temporary employment regulation (ERTE) who will not be able to recover their jobs in 2020. They will end the year, therefore Therefore, unemployed or inactive.
The harsh estimate comes from the Independent Authority for Fiscal Responsibility (AIReF), which yesterday published the examination to which it has submitted the stability plan sent by the Executive to Brussels and the result of which is a notable correction. For starters, for employment and for that 30% of workers affected by an ERTE , out of a total of four million provided by the Government, who will not be able to return to work. They will be, for the most part, employees from sectors such as tourism and hospitality, areas that AIReF estimates will be far from returning to normal by the end of the year. And the figures confirm that although the regulatory files have prevented the loss of a very significant number of jobs, they also show that the crisis is of such magnitude that many others are doomed to unemployment.
The organization led by Cristina Herrero preferred not to offer an estimate of the unemployment rate that can be compared with the 19% on average that the Executive estimates, but it did make clear that the labor market will behave worse than the government predicts -or announces- . To capture its estimates, the Tax Authority has developed two scenarios, the first of which is the most "benign" and in which all the phases and assumptions of the Executive are met, and a second in which the end of confinement is delayed and A seasonal outbreak of the virus occurs in the fall. Ultimately, complications arise that do not seem at all disposable. Well, neither of the two simulations matches the rate of recovery of employment maintained by the Government, and only in the first, in the most positive, the fall this year coincides with that indicated in the stability plan. In the second, the pullback is markedly more negative.
The growth forecast shows a scenario very similar to that drawn by the labor market, with a fall in Gross Domestic Product (GDP) that is only in line with that of the Government in its most positive scenario and only for the first year. In the event that the situation is distorted, the Tax Authority estimates that the collapse would touch 12% . And in any case, the rebound next year will not reach the 6.8% advanced by the Ministry of Economy.
"The macro picture of the stability program foresees a stronger recovery in employment", point out the first aspect. “Our recovery estimate is somewhat more skewed. At the end of 2021, GDP would be around 5 percentage points of what was observed before the crisis ”, they add regarding the second.
The numbers of the Treasury are also not saved from the correction of the Fiscal Authority. As for the deficit, as has already been pointed out, but also in projected income. The budget deviation of 10.9% of GDP managed by the Government remains, in all cases, below the figures of AIReF, whose worst case scenario goes beyond 13%. More than 140,000 million euros .
The debt, therefore, would also be higher and the income forecast by the Government is also wrong in AIReF's eyes. They are inflated , a situation that was already pointed out from some areas after knowing the content of the stability program and which the Fiscal Authority now corroborates. "AIReF estimates that revenues in 2020 will be between 39.5% and 39.4% of GDP, both scenarios below the 41.2% forecast in the update of the stability plan", with tax differences in " all the main tax figures ». In VAT, for example, the expected drop is "5.2% in collection while private consumption falls 10.2%", and in personal income tax, "The drop in updating the stability plan is only 2.4% ”, they emphasize.
But the nuances that Minister Montero suffered yesterday did not end here. What's more, not even in this organism. The Bank of Spain, in the analysis it published on the evolution of the Spanish economy in 2019, concluded that the redoubling increase in the deficit registered last year is due to the increase in the pensions and salaries of officials .
The Minister of Finance, in the appearance that she carried out last week in Congress, maintained that the main responsible for the deficit to rise to 2.8% in 2019 were the communities, whose Government had to attend to numerous electoral commitments . Instead, the BdE said yesterday that "the worsening was due to an increase in expenses greater than that of income" and, specifically, that "the greatest increases were in social benefits [which grew 6.3% by the increase in family deductions and unemployment benefits, and by the revaluation of pensions with the CPI] and in the remuneration of employees ".
And back to AIReF, the press conference still left one last and very significant reproach or, at least, request. Herrero was asked about the plausibility of the 3,000 million in which José Luis Escrivá, Minister of Social Security and his predecessor at the head of AIReF, has estimated the cost of the minimum vital income. At this point, the president referred to the study that last year, still with Escrivá in front and with her as number two, developed the Fiscal Authority and which produced a figure of 3,500 million; that is, very similar. However, Herrero did not want to miss the opportunity to point out that AIReF has not included this expense in its examination because neither did the Government in its report to Brussels, something that he described as "surprising" since Escrivá maintains that it will enter into force imminently .
According to the criteria of The Trust ProjectKnow more
- Covid 19
Employment Castellón added employed and reduced unemployed until March according to the EPA because the ERTE of the Covid-19 are not counted
Health crisis Much uncertainty and some picaresque: X-ray of the ERTE to save (or not) almost 100,000 companies
Unemployed, civil servants and pensioners21 million people already receive from the State: 44% of the population of Spain