The agency emphasizes that packages of these types of measures should be temporary and aimed at the most vulnerable group. In addition, it warns of the medium-term effects that the Housing Act or the pension reform may have.
He Bank of Spain has recommended to the Spanish government that anti-crisis measures to tackle inflation should be concentrated on the most vulnerable people and gradually phased out. Indeed, the regulator believes that the start of the fiscal consolidation process could take place this year.
“In the current climate of high inflation, it is crucial that the tone of fiscal policy is not incompatible with the tightening of our monetary policy,” Bank of Spain Governor Pablo Hernández de Cos stressed in the statement. ‘Annual Report 2022’ Posted this Wednesday.
The entity defends that such support should be temporarybe very focused in most most vulnerable people. He also believes that incentives to use less energy should be maintained.
For example, it considers that measures such as the abolition or reduction of VAT on certain products, family checks or certain aids to businesses should be phased out, in parallel with the reduction in international prices already noted.
The Bank of Spain believes that the package of measures taken in 2022 and 2023 has helped support activity and contain inflation in 2022 and is expected to continue in 2023, although the its repeal will drive up consumer prices in the coming years, especially in 2024. Specifically, the Bank of Spain estimates that reversing measures in 2023 will mean an increase in inflation in 2024 of 1.5 percentage points.
Adverse effects of the Housing Act
In addition, it has warned that some of the measures to be included in the future Housing Right Act, such as rent control, could have “undesirable” effects in the medium term and could affect the supply and quality of housing in rent.
He explains that the economics literature shows that while price controls show that it is possible to reduce rents in regulated areas in the short term, these policies can have adverse effects on rental supply, as well as segmentation in the real estate market.
Apart from the necessary boost to public rental supply, the Bank of Spain argues that the “significant” current imbalance between supply and demand could also require decisive support from private rental supply.
pensions
Finally, Hernández de Cos has estimated that “it will be necessary” to adopt New measures to strengthen the financial sustainability of the pension system 2025. He argues that after the pension reforms passed since 2021, the system “will have to cope higher spending obligations in the long run, which have not been fully offset on the revenue side.
To this we must add the “uncertainty” that the impact of increases in pension reform contributions may have on employment, wages and competitiveness, and Cos therefore calls for a “rigorous, continuous and transparent evaluation” of the effects of these reforms. reforms, including their impact on intergenerational justice.
Source: EITB
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.
