Brussels approves the Spanish Budget without hindrance but recommends that the aid be focused on vulnerable households and companies

Absolute relaxation, or almost, until the end of the year.

After cutting its growth estimate for the Spanish economy in 2023 by almost half a few days ago, the European Commission has published this Tuesday

And unlike what was the norm for almost a decade, The evaluation is positive and says that the direction and objectives are

, although the macroeconomic pictures are "markedly" optimistic.

Which paves the way for a few months, until Brussels has to rule on the next disbursement of the Recovery Funds, which the Executive of Pedro Sánchez formally requested on Friday.

"In general terms, the European Commission is of the opinion that the draft Budget Plan for Spain for 2023 conforms to the budget guidelines contained in the Council recommendation. According to our forecasts, and including the information incorporated in the draft, we project that the growth of the current spending financed with national funds will be lower than potential growth in the medium term. Therefore, the growth of current primary spending with national financing

, "says the key paragraph of the document.

Community rules say that each Member State must submit its budget draft before October 15 for a detailed study.

If the alarms do not go off, and this has not been the case, the Commission will pronounce itself after a few weeks.

You can approve, you can fail, or you can call attention to deficiencies, asking for changes to be made.

Today's analysis

, at least not any new ones.

He stresses the differences in estimates for growth for the next academic year, given that Spain expects "a greater contribution from private consumption and investment than in the Commission's forecast."

Due to these differences, the technicians indicate that "in general, the macroeconomic assumptions that support the Draft Budget Plan are credible in 2022",

". AIReF, the Bank of Spain, the IMF and the Commission believe that growth will not be 2.1%, as Nadia Calviño still maintains, but 1% next year.

This year's evaluation continues to be marked by the fact that the Stability and Growth Pact continues to be suspended and will be so until 2024. Thus, even if the deficit or debt are above the traditional maximum thresholds, there is still no pressure.

The position in the EU has begun to turn, but little by little.

The official discourse says that the situation will still provide the space

, "while ensuring a smooth transition from blanket support for the economy during pandemic times to a focused approach more and more in temporary and specific measures and the necessary fiscal prudence to ensure sustainability in the medium term".

The consensus in the Eurozone is that fiscal plans for 2023 must be based on "prudent medium-term adjustment paths that reflect the fiscal sustainability challenges associated with high debt/GDP levels that have increased further due to the pandemic", as well as the reform and investment challenges "associated with the twin transition, energy security, and social and economic resilience."

And the Spanish Budget, believes the Commission, complies with this, since it

.

From 5 to 3.9% in the deficit, and from 115% to 112% of GDP in debt.

In July, Ecofin recommended that Spain take the necessary measures to guarantee a prudent fiscal policy in 2023, in particular by "limiting the growth of primary current spending financed with national funds below potential growth in the medium term, taking into account the support temporary and concentrated to the households and companies most vulnerable to the rise in energy prices".

Spain should, the Council said in summer, "be prepared to adjust current spending to the evolution of the situation", although we were recommended

.

For the period after 2023, Spain should follow a fiscal policy aimed at achieving prudent fiscal positions in the medium term and ensuring credible and gradual debt reduction and fiscal sustainability in the medium term through gradual consolidation, investment and reforms.

But that goes beyond the Budget and its scope.

ONLY THE CONTAINED MEASURES

The document published today analyzes the Budget and the information submitted,

.

This means that if Spain decides to approve new measures, or extend some that it is not supposed to extend, the result could be different.

"A continuation of existing support measures and/or the enactment of new support measures in response to high energy prices would contribute to higher growth in domestically financed net current spending and an increase in the projected deficit and public debt in 2023. It is therefore important that Member States

, to preserve incentives to reduce energy demand and withdraw them as energy price pressure subsides," the text urges.

Thus, for example, the evaluation recalls that on October 18, one day after the presentation of the Draft Budget Plan, the Government approved another set of measures that involve subsidies through the natural gas bill with an estimated cost of 0 .3% of GDP in 2022. A cost partially offset by the new taxes on windfall profits, which the Executive expects will generate budget revenue of 0.1% of GDP in 2023. Taking these revenues into account, the net budget cost of all energy-related measures in the Commission's autumn 2022 forecast is 1.6% of GDP in 2022 and, since most of the measures have been legislated as temporary and expire at the end of 2022, 0 0.0% of GDP in 2023. But

.

Likewise, the technicians point out, in the most critical element in an already aseptic wording, that "most of the measures do not seem to be aimed at vulnerable households or companies, and they do not fully preserve the price signal to reduce energy demand and increase energy efficiency.

There are, however, in the package presented today by commissioners Dombrovskis and Gentiloni, more documents.

In one of them, which analyzes the general situation of the Eurozone, it is summarized for our country that some concerns persist related to the debt ratios of households and non-financial companies, public administrations and abroad, "although they have resumed their declining path after the Covid-19 crisis with a sharp drop in foreign and private debt in a context of strong nominal GDP growth The public debt/GDP ratio is very high

, despite a slight improvement.

The unemployment rate, although still high, is already below pre-crisis levels and is expected to remain stable next year," says the paper, noting that sustainability risks are high in the medium term and medium to long, largely due to the costs generated by the aging of the population and spending on pensions.

According to the criteria of The Trust Project

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• European Comission

• Nadia Calvino

• Pedro Sanchez