The State will transfer 20,000 million to Social Security for pensions
The Council of Ministers yesterday approved a spending ceiling of 198,221 million euros, a figure that includes European funds, and which represents an increase of 1.1% compared to this year; a figure that breaks records but that is also contained, in line with the recommendations of the ECB and the European Commission to limit the growth of spending in 2023. This spending ceiling, which will serve to prepare the 2023 Budget, does not include the disbursement in pensions, given that this item is borne by Social Security, but the transfer that the State must make to the institution to cover the so-called improper expenses of the public system, and that next year amounts to almost 20,000 million euros, an 8 ,1 more. Only in pensions, and depending on the evolution of prices in the second half of the year, the analysis houses already place the extra payments that the State will have to make to guarantee the purchasing power of pensions at around 17,000 million . The Independent Authority for Fiscal Responsibility (Airef) has already warned the Government that this expense would hardly leave the Government room to increase spending, given that the Executive must attend to the recommendations that come from Brussels not to increase spending above growth economic, something that the body chaired by Cristina Herrero places at around 15,000 million. Related News standard No The IMF warns of the risk of a global recession and lowers the GDP forecast by 0.8 for Spain Luis García López The agency confirms a sharp slowdown and cuts the forecast advance for 2023 by 1.3 points The pension bill It is marked by the legal obligation to link increases to inflation. Prices went wild in June to 10.2% and Brussels has already placed the inflation with which Spain will close the year at 8%. Bearing in mind that each point of inflation will cost the public coffers some 1,700 million, plus the impact that the incorporation of the first outpost of the 'boomers' will have, the bill for the system will be in the millions and will trigger the pension item above of the 187,000 million, an unprecedented figure in the Social Security scenario. This year the disbursement reached 170,494 million. Thus, the approved spending ceiling includes 25,156 million euros from European funds (between the Recovery Mechanism and React-EU). An amount lower than that of the current year, which was 26,355 million in community money. Excluding European funds, the spending ceiling with exclusively national disbursements increases by 1.9%. "This means that the Government is committed to increasing investment outside European resources with the aim of promoting social policies," they indicated yesterday in the Treasury. Desktop code Image for mobile, amp and app Mobile code AMP 2200 code APP code Increased investment... but always with an eye on the European authorities and their recommendations, thinking about the "fiscal responsibility" that the Government claims to have of face to comply with the recommendations and future community rules, and not to face problems in the face of a possible aid from the ECB to the Spanish risk premium, if the case arises. Now a period of negotiations is opening between the political groups with a view to the approval of the General State Budgets for next year. In this sense, it is worth noting the difficulty that the Government of Pedro Sánchez has in carrying out the Budgets, the last of the legislature of PSOE and United We Can, due to recent tensions with its investiture partners, as is the case with ERC. Reduction of forecasts The economic vice president, Nadia Calviño, had two types of speech yesterday. First, the triumphalist to talk about how the economy is doing in 2022; second, that in 2023 growth will still be "remarkable" but with dark clouds looming. Yesterday, the Government updated its macroeconomic projections with a reduction of eight tenths in next year's growth, and at the same time communicated the spending ceiling, slightly higher than this year. The economic manager of the Executive used all her dialectic arsenal at the opening of the press conference after the Council of Ministers. "Strong growth", "excellent behavior", "favorable evolution"... all are expressions of the Ministry of Economic Affairs to refer to the pace of GDP growth this year. GDP forecast 2.7 percent is what the Government estimates that the economy will grow in 2023, eight tenths less than it forecast in April For 2022, Vice President Nadia Calviño announced that she maintains her growth projection at 4.3% ; She trusts the progress of the economy based on the internal data handled by the ministry during these first seven months. Even so, she did acknowledge that consumption is a concern and that it will slow down over the months. It is for 2023 where she really puts the snip to her GDP projection, specifically eight tenths down, to 2.7%. "The impact of the war will be reflected in lower consumption growth, offset by an evolution of investment in capital goods and exports," she explained. There are several reasons for this reduction in the GDP growth estimate for next year: «Next year we will make this revision as a result of high energy prices and the risks of gas supply to the EU, due to the tightening of monetary conditions and the slowdown in the euro zone economy, in particular the German economy. Slowdown in consumption Going into more detail, it is the final consumption spending figures that set off alarm bells. In the update of the stability program last April, an increase of 4.1% in 2022 and 2.7% in 2023 for consumption was calculated. Now that data has been reduced to 3% and 2.5% respectively. And that 3% is especially relevant since it is expected that the slowdown will be concentrated in the last part of the year, which greatly conditions the start of the following year. Likewise, the Executive is confident that exports will sustain part of the growth this year, with an increase of 10.2%, compared to the 7.8% expected in April. On the other hand, in 2023 they would also suffer a break to a rise of 4.9%, when three months earlier an increase of 6.2% was expected. A considerable increase in investment in capital goods is also expected to boost the economy. In terms of public deficit and debt, the Government has not tweaked the estimates it included in the April stability program update one iota. «The year 2022 will end with a deficit rate of 5% of GDP, compared to 6.76% with which it closed the year 2021. For the following year an additional decrease is expected to 3.9%, to then go back to 3.3% in 2024 and ending in 2025 at 2.9% of GDP, ”the Treasury indicated at the time. Regarding the debt, the objective continues to be to lower it from 110% by 2025. And although the Government does not give inflation estimates, it does provide its forecast of the so-called consumption deflator, similar to the CPI: it would be 7.8% this year, almost two percentage points more than estimated in the month of April.