Fedea warns that the current dynamics of public spending in Spain are unsustainable
Next year, the state, social security, the group of autonomous objects and public entities dependent on the central administration will consume for the first time in history More than half a billion euros To meet all of its spending commitments, equivalent to 39% of GDP. The general income dimness provided by inflation and good employment performance in the past two years has pumped €60,000 million more into the state treasury than in 2018 to cover these expenditures, but that will not, on paper, prevent the imbalance. Between income and expenses next year about Red numbers around 50,000 million euros.
The size of the loophole in the context of unprecedented revenue generation has put analysts on alert. Fedea, one of the institutes of economic analysis with which the European Commission, the International Monetary Fund or the Organization for Economic Co-operation and Development regularly consults to form an opinion on the progress of the Spanish economy, issued this Thursday an analytical note on budgets in which it warned. : «The numbers are certainly striking and indicate a A clearly unsustainable pattern over timealthough perhaps understandably in a turbulent period like that of recent years, marked by the Covid pandemic, the war in Ukraine and the need to confront crises and mitigate their economic and social consequences.
The report by the institute reveals that while the average GDP growth in 2018-2023 was 1%, revenues increased by 15% and expenses by 18%. From another perspective, the The increase in real spending was 6.6 times greater than GDP The tax rate on the increase in income was above 500%.”
Study author, Fedea CEO, Fountain AngelA few days ago, he warned in comments to ABC that the budget exception created as a result of the pandemic is something that “can be maintained for a year or two, but cannot be maintained forever,” regarding the 2023 budget project which again maintains a profile expansive.
A call to financial prudence
The Federalist urges the government to restore a certain normality in both the development of public spending and the fiscal pressure on economic agents. “It will take wiser fiscal policy In the coming years, this puts more emphasis on containing spending growth and reducing deficits to ensure the sustainability of our public accounts,” the report says, and is also in line with the demand in the latest IMF report, where governments were asked to adopt fiscal prudence so as not to encourage a downward spiral. inflation.
Image created by Fedea from comparing the 2023 draft budget to the PP government’s recent budget figures, which were designed by Mariano Rajoy’s team, although already agreed with Sánchez in the government. , notes that while state revenues in this period increased by 61,845 million euros – an unprecedented figure in the history of Spain’s budget – expenditures increased by 78,930 million euros. In this period, the imbalance in the accounts widened from 31,242 million to 48,427 million projected for 2023.
The bulk of this additional spending has been embodied in new pensions and social benefits, while measures to boost the economy of the productive sectors have been frozen when not cut, except for public transport subsidies, in part due to the approval of bonds to make rail transport cheaper.