Finance Minister María Jesús Montero has announced that the new stability program 2023-2026, expected to be sent to Brussels on Friday, includes a new fiscal consolidation trajectory with more ambitious targets than expected. In concrete terms, the government is committed to reducing the deficit to 3% in 2024, a year earlier than expected. As confirmed by the ministry, the deficit reduction path will continue in the coming years, reaching 2.7% in 2025 (compared to the 2.9% managed so far) and 2.5% in 2026. this year the estimate 3.9%, as already expected. This 3% is the limit set by the fiscal rules – currently suspended – for a country to enter the so-called “fiscal imbalance”. Exactly, Brussels is immersed in the reform of this control system that tries to avoid excessive fiscal ‘gaps’, especially in the most indebted countries, such as Spain. As learned on Wednesday, the new rules applicable from next year will require constant reductions in government deficit and debt ratios, with cumulative penalties for non-compliant countries. Pending the details of the plan, everything indicates that the government has proposed this new path of consolidation to Brussels without reforms, austerity or other additional fiscal measures, as some organizations have long demanded, after two years of strong expansion of public spending to face the pandemic and, later, the consequences of the war in Ukraine and the inflationary crisis. «The deficit reduction is driven by Spain’s solid economic growth, higher than the average of EU countries, and its dynamism in job creation, with a record number of social security affiliations, for which the government is consolidating without apply cuts,” they say from the ministry. It was precisely the inflationary environment that contributed in particular to the increase in tax revenues last year, with an increase of 14.4%. Inflation contributed only five points to this growth in resources. From the executive, at least, they remain cautious, predicting that this sharp rise in income will moderate in the coming years, “although they always maintain growth that exceeds the inflation forecast, showing that the improvement in public resources is supported by the strength of the economy and the dynamism of employment”.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
