The Independent Authority for Fiscal Responsibility (Airef) does not like the budget bill or the macro framework on which it is based. The president of the supervisor, Cristina Herrero, used yesterday in the Congress of Deputies her usual critical tone with the Government's economic policy to denounce that next year's public accounts suffer from "notable shortcomings" and that they are born "flawed".
More curves to come. The Government does not hide it and the Airef raised the voice of alert in the budget commission. The supervisor has validated the macro table for next year after an internal "deep debate", Herrero revealed yesterday, due to the lack of information with which they have had to work. Specifically, the Authority had to carry out its work with outdated data on budget targets, payments on account and the spending ceiling. Therefore, the president called for changing the law to avoid these "deficiencies" that are becoming "budget practice."
Airef maintains its growth forecast for next year at 1.5%, well below the government estimate of 2.1%, and considers that the revenue forecast made by the Government is not real. The main discrepancy is found in the "dynamism of investment and exports", where the Authority is not as optimistic as the Executive due to the international situation of great uncertainty. As the governor of the Bank of Spain did on Monday, Cristina Herrero points out that the worsening of the forecasts for the second half of this year compared to what was forecast in May, added to a stagnation in this third quarter, will cause a drag effect on the start of 2023.
The economic scenario drawn by Airef is gloomy. According to his forecasts, and also in line with those of Pablo Hernández de Cos, Spanish finances will not recover their pre-pandemic level until the first quarter of 2024. Specifically, GDP will moderate to 1.5% in 2023, after having grown by 4.4% in 2022.
The main risks for the Spanish economy are inflation, which will close the year at 8.9% according to Airef estimates, the price of gas, the rise in interest rates; and the reduction of consumption. And also "as usual", the delay in the execution of the recovery funds, although the Authority appreciates an acceleration during the month of September of this year because part of the distribution is made by the regional and local authorities.
Regarding the deficit, Airef considers that the Government should reduce it next year to 3.3%, but warns that if all the activated anti-inflation measures are extended (the regulator calculates a cost of 18,528 million) or new ones are undertaken, as contemplated in the budget plan, the hole would increase to 4.6%.
These are notices that coincide with a very pessimistic forecast from the Savings Banks Foundation (Funcas), the most pessimistic to date, which cuts next year's growth to 0.7%, well below the Authority's figures Prosecutor, and of course, even more than those of the Government. Funcas numbers represent a cut of 1.3 points compared to his previous forecast.
In addition, Funcas points to a technical recession that could occur by chaining negative growth in the last quarter of this year and the first of 2023. "A short recession," they say, which would be followed by a slight recovery from the second quarter of next year when the pressure of energy prices is reduced and the process of raising interest rates is paused.
In the Spanish case, the weakening of the economy is due to three factors. The main one is the stagnation of private consumption, severely affected by inflation; To which is added the increase in interest rates, which Funcas estimates will rise to 2.5% to stabilize at that level; and the deterioration of the international environment.
