It considers that the Spanish accounts are in line with the Council’s recommendations on the level of government expenditure
The European Commission approved Spain’s general budget for 2023 on Tuesday, but advises the country to remain cautious in fiscal policy. In its report, Brussels ensures that Spain’s plan foresees an increase in government spending below potential GDP growth in the medium term, in line with the Council’s recommendations.
The Spanish Accounts also comply with the Brussels tax guidelines. However, the Community Executive warns of the possibility that the expansion of aid to fight the energy price will contribute to the increase in spending and the government deficit. The high level of Spain’s public debt – which reached 116.1% of GDP in the first quarter of 2022 – remains one of the main concerns of the European institution. “The percentage of public debt is very high and so is the deficit, despite the slight improvement after the pandemic,” the report writes.
Brussels points out that Spain is experiencing “certain macroeconomic imbalances”. The latest forecasts point to the domestic economy ending the year with growth of 4.5%, before slowing to 1% in 2023. Inflation is expected to remain high and prices are expected to grow faster than wages.
There are also lingering concerns about the Spanish labor market, which has one of the highest unemployment rates in the bloc (14.8%) and is more than double the European average. Unemployment is expected to fall slightly before the end of the year, but the EU warns of high unemployment among young people and the long-term unemployed.
Source: La Verdad
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