Wed. Apr 24th, 2019

The rejection of budgets further away the objective of deficit

El rechazo de los presupuestos aleja más el objetivo de déficit



Knock down the first change draft of the general budgets of the State he has undoubted political consequences, but it also affects the economy. The design of the bills, presented just a few weeks ago by the Minister of Finance, María Jesús Montero, contained tax changes with which the Government expected to enter 5,654 million more (see box) this year.

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When disappearing at a stroke, the reduction of the public deficit it depends exclusively on the economic improvement and, therefore, it will be more moderate. And it takes it even further away from official goal fixed by Brussels of 1.3%.


Fewer resources

With the new tax measures, the Treasury wanted to enter 5,564 million more






Above all, the commitments for this year inherited from the executive of Mariano Rajoy (improvement of the salaries of the civil servants and increase in pensions up to 3%) and those acquired with Podemos (compensation payment for the CPI for pensioners and higher contributions for the increase of the SMI up to 900 euros) increases the administration's expense. They are policies included in the budgets but approved with the beginning of the year by decree law. Only the revaluation of the pensions supposes 588 million more of expense, in a game of more than 153,000 million that already supposes 42% of the cost of the State.

The governor of the Bank of Spain, Pablo Hernández de Cos, already explained during his parliamentary appearance to analyze the draft budgets that, with these accounts, the forecast of deficit of the supervising body was equivalent to 2% of GDP. But if they were not approved, he warned, the gap between revenues and expenses of the administrations would rise four tenths, up to 2.4%. In the same sense, the minister of Economy, Nadia Calviño, had repeatedly pronounced -although without providing concrete estimates-.





In any case, the analysis is not unanimous. This same week, the BBVA Research quarterly report argued that, if the budgets were not approved, the public accounts deficit would fall to 2%, compared to the 2.3% expected in case it went ahead. The non-Montero accounts also implied a GDP growth in 2019 higher: 2.4%, two tenths more.

Just at the door of being officially confirmed that Spain leaves the procedure because of excessive deficit because the budget deviation in 2018 was 2.7% - for the first time below the 3% barrier - the signals sent now to the European Commission are not very reassuring. The parliamentary fragility that the proposal of accounts for this year took yesterday also has prevented that the present Government could approve in Congress a more relaxed deficit target, of 1.8% instead of 1.3%.


Government Notices

Calviño had insisted that, without accounts, the budget deviation would be greater

The reverse suffered by the Government of Pedro Sánchez also has its reflection in the territorial accounts. State budgets provided for an increase in transfers of 6,674 million euros. Of them, 1,560 million were destined to the Generalitat de Catalunya.





The withdrawal of budgets implies that deliveries on account of regional governments are based on the accounts extended in 2018. So that the resources to be distributed among all the communities remain in the 103,817 million collected in the budgets of last year, after of the adjustments for the liquidation forecast for the year of 2017 and the returns for negative settlements.


Catalunya

State transfers to the Generalitat fall by 1,500 million with the extension

Only a few days ago, the Independent Authority of Fiscal Responsibility (Airef), in charge of ensuring the sustainability of public accounts, already warned that compliance with the partial objective of deficit for the autonomies would be complicated in the event that they did not receive that additional injection of resources established by the new budgets for 2019. In the case of Catalonia, its opinion on the probability of meeting the goal of 0.1% budget gap change from "feasible" to "unlikely", before a extension for this entire exercise, "without implementing the updating of system resources by another means"

The return of the accounts entails, in addition, fulminar improvements in the social policies, keys as the Government had insisted to recover part of the rights lost with the cuts of the economic crisis. These improvements include fundamental measures for unions, such as the extension of the long-term unemployed benefit to benefit those over 52 years.






Territorial consolidation

Now it is complicated to meet the 0.1% deficit of the autonomies, says Airef

CC.OO. and UGT, that less than a week ago summoned 10,000 delegates in Madrid to pressure the Cabinet of Pedro Sanchez, reaffirms its conviction that the President of the Government has to squeeze the remaining weeks in the Moncloa to dismantle part of the labor reform of the PP and advance other rights, such as the hourly record of the day. Now, defend, you have to pull the decree law. Although it is necessary to know if you are talking about a few weeks or a few months.







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