A possible total cut of Russian gas to Europe and inflation are the two issues that most condition economic estimates. Also those of the Fiscal Authority (Airef), which has presented its report on budget execution, public debt and the 2022 spending rule of Public Administrations, in which it warns that priceson average, will skyrocket to 7.8% this year.
“We have revised the forecasts for economic growth, which would still be slightly above 4%, thanks to the good performance of services and tourism. Where the revision has been greater has been in inflation, which has gone from the 6.5% we expected in May to the current 7.8%“, Cristina Herrero, the president of the institution, has pointed out.
This represents a worsening of the inflation projection of 1.3 points in just two months, to align with the forecasts of other organizations. Without going any further, the European Comission updated its figures yesterday to place the IPC at 8.1% this year, very much in line with the revision now carried out by Airef.
Herrero has highlighted that there is "a total predominance of downward risks" that intensify in the face of forecasts made in the future, which already predicts a new review for when the Government carries out the General State Budgets in the last part of the year. Thus, the organization already introduces the word recession in Europe in its vocabulary in the event of a gas supply cut by Russia to the Old Continent.
More on a domestic scale, the Fiscal Authority focuses on the uncertainty about what may happen to private consumption, due to the decrease in purchasing power suffered by families due to inflation. A fact that worries Airef, which anticipates a possible deterioration in consumption in the coming months.
Likewise, the president of the institution has insisted on the problems derived from the recovery plan, the European Next Generation funds. "We continue to have doubts about the impact of the recovery plan," he said, adding that "there are indications that there could be less execution of the planned investments" by the Government.
In any case, Airef maintains an economic impact of 1.8 points of GDP from the recovery plan this year, but all subject to considerable uncertainty, especially due to the opacity of the Executive. "There is a problem of lack of information," explained Herrero, referring to the fact that the actual execution of European funds is not known.
In terms of deficit, the institution has worsened its estimate for 2022, placing it this year at 4.5% of GDP. This represents three tenths more than the last forecast. Why? The Government's measures to deal with inflation add six tenths to the deficit and there has been an increase of another two tenths in the balance of the autonomies; At the same time, the increase in tax collection due to inflation contributes five tenths of a point down to the deficit, so that the resulting balance between these factors is that it increases three tenths more than expected.
And Airef, as usual, has not missed the opportunity to launch a traditional recommendation to the Executive and the autonomous communities: «The need for a fiscal strategy», now that the administrations have to think about the preparation of the budgets of Looking ahead to 2023, when they could already include a medium-term fiscal strategy to straighten out public accounts "and identify which expenses are structural and which are circumstantial."