Funcas demands to include pensions in the income pact by triggering inflation to 8.8%


Economists consider that Spain will remain this year "bordering on recession" and are suspicious that the new taxes on electricity companies and banks will be applied

Edurne Martinez

The extremely high inflation has gone from being a circumstantial event to becoming "chronified" over time. Vice President Calviño already acknowledged last week that the Government will have to revise its CPI forecasts upwards and economic organizations are already making their calculations with a much more pessimistic view of the future. This Monday it was Funcas' turn, who revised upwards the average inflation estimate for this year to 8.8%, the highest given so far after 8.1% from the OECD and the
European Comission.

For this reason, they demand that pensions be included in the "necessary" income agreement between employers and workers, currently paralyzed until after the summer after two meetings without agreement. "The income pact should definitely consider pensions because it is the income received by 9 million Spaniards and it is a very large component of total public spending," explained Carlos Ocaña, director general of Funcas, during the presentation of the report.

In his opinion, the income pact is "necessary" to "avoid the inflationary spiral." In addition, raising pensions linked to an average inflation of 8.8% would mean increasing public spending by 1%, which is a "very significant burden for State Budgets that will have to face higher expenses due to the accumulated debt with a rise in interest rates," said Ocaña.

Inflation, which next year will continue at 5% according to their forecasts, will weigh down the economy as a whole. Although the 'think tank' continues to calculate that GDP will grow by 4.2% this year, there is a "substantial change" in the components that explain this progress. Domestic demand, until now the mainstay of the economy, will plummet to 2.1% this year, 1.7 points less than the previous forecast. What balances these accounts is that foreign demand advanced by 1.7 points to 2.1%, above all due to the pull in tourism expected for this summer.

In this way, what is revised downwards is the growth forecast for 2023, which remains at 2% instead of the 3.3% previously estimated. "Between 2022 and 2023 the contribution of consumption will have been reduced by three points, it is very significant," revealed Raymond Torres, director of the Funcas situation.

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