The government will increase that amount by 1% for the 2023 budget, to 198,221 million, cut growth to 2.7% and urge the deficit to be reduced to 3.9%
The Council of Ministers has already taken the first step towards drawing up the General State Budget for 2023 by approving a spending ceiling – the maximum that the administrations can absorb, except for the debt or credits of social security – of almost 200,000 million euros. . It is also doing so in view of the various electoral elections that will take place in 2023, which are very focused on communities and municipalities. Specifically, that limit has been set at 198,221 million, which is a record figure for Spain, and 1.1% for the start-up for this year. Despite this increase in a context of crisis and economic uncertainty, the Finance Minister, María Jesús Montero, insists that this record “will not prevent us from continuing to reduce the fiscal imbalances” looming for Spain.
Most notably, the Treasury will give more room to the autonomous communities and municipalities, as well as to social security, to increase their spending, albeit at the expense of the central government. “We appreciate a different distribution of budgetary efforts,” Montero said. In fact, the communities’ deficit margin will be 0.3% compared to the current 0.1%, “two tenths of the difference deducted” from the state. “The cabinet assumes a greater commitment so that the communities have more spending capacity,” said the Minister of Finance. She is doing so to prepare public bills that will take effect in mid-election year, with regional and local elections scheduled for the end of May 2023. The municipalities will also have more leeway due to their budgetary capacity and deficit, as well as social security, to which a payment of almost 20,000 million euros will be injected in an extraordinary way.
Despite this squandering, the Treasury insists that Spain will cut its government deficit in 2023, as it has done since the pandemic’s all-time high of 2020, when it was well above 10%. The executive’s calculation is to reduce the deficit to 3.9% of GDP next year, compared to the 5% it is estimated to close in 2022 and 6.8% in 2021. “We maintain our commitment for Brussels,” Montero has indicated. “Tax rules are still suspended, but fiscal responsibility is not,” said the finance minister, referring to the freedom states still enjoy vis-à-vis the EU not to meet the historic target of a deficit of 3 %, which is not visible in the Executive’s medium-term forecasts for now, despite being reduced by 60% since the worst moment of the pandemic.
The spending cap, which will be 173,000 million if European funds are not taken into account, serves to start preparing the public accounts of the state that, according to Montero, will “maintain the investment effort” with “historic milestones” in things like science, scholarships, health or education. This budget will be strongly determined by the decision to revalue pensions with last year’s average CPI, which could increase this item by a maximum of 15,000 million euros.
In order to prepare for this spending ceiling, the government has updated its economic forecasts for this year and next, with calculations that practically maintain GDP (gross domestic product) growth at 4.3%, the same level that has been estimated so far. despite the “complex environment” facing Spain. For 2023, however, the Executive has significantly reduced its calculation by anticipating economic growth of 2.7%, which is eight tenths less than what has been indicated in its macroeconomic forecasts so far.
The forecasts are similar to those of recent weeks by several organizations such as the European Commission for this year, which indicated Spanish GDP growth of 4%; although they differ in optimism for 2023, when the EU forecasts an increase of 2.1%, six-tenths less than the Economy.
Economic Vice President Nadia Calviño has stated that “the impact of the war is reflected in lower consumption growth in the second half of the year,” a circumstance that will be offset “by investment in capital goods and exports.” , which will be “more favorable than we expected for 2022, although less so for 2023”. For now, the government is ruling out a recession – understood as two or more quarters of negative GDP. “All organizations expect Spain to maintain strong growth in 2022 and remarkable growth above the EU in 2023” in both cases.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
