July 3, 2020

The Government tries to extinguish the doubts of the investors

“Fiscal responsibility is compatible with economic growth and with the reduction of the deficit”, they affirm from the Treasury. The CEOE warns of the coming deficit

The new Executive formed by PSOE and Podemos plans to carry out a “comprehensive” reform of the labor market to tackle the problem of unemployment. This initiative will be accompanied by a “more social” taxation and consensus with Brussels on “Responsible” Budgets with fiscal consolidation. This was explained by the Secretary General of the Treasury and International Financing, Carlos San Basilio, in the X edition of Spain Investors Day, the economic measures that will support the roadmap of the new Government. In his opinion, “fiscal responsibility is compatible with economic growth and deficit reduction,” said San Basilio, who in addition to showing the Executive’s commitment to these areas, defended the public debt ratio below 95% of GDP. In labor matters, the intention is to implement a “comprehensive” reform of the labor market, with the aim of reducing the high unemployment rate, one of the highest in Europe, addressing precariousness and temporality and increasing investment in human capital, as well as taking measures for the sustainability of the pension system.

CEOE: “The next deficit is scary»

On the other hand, businessmen see with amazement the frenzy of spending foreseen by the new coalition of social-communist government and warn that it can lead to a hole in public accounts even greater than the current one. In this regard, the president of the Spanish Confederation of Business Organizations (CEOE), Antonio Garamendi, warned yesterday that the measures included in the government agreement between PSOE and Podemos can lead to a public deficit of 3.5% of the Gross Domestic Product (GDP) That is, 42,000 million euros of mismatch this year, which is almost equal to the cost of building five AVE lines Madrid-Barcelona (9,000 million). The head of the employer said that the expenditure items increase by almost 25,000 million euros, while revenues increase 6,300 million, according to CEOE calculations. “It’s scary,” said Garamendi. The President of the Government, Pedro Sánchez, advanced in that the Executive will renegotiate with the EU a new path of public deficit, more flexible, before a new economic situation. The official target for this year is still 0.5% (6,000 million euros).

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