The Government lowers growth to 2.1% for next year

The First Vice President and Minister of Economy, Nadia Calviño, advanced yesterday the review of the growth data when the two formations of the Government finalized the approval of the budgets, which are expected to be approved in the Council of Ministers today.

NewsEditor
NewsEditor
03 October 2022 Monday 18:33
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The Government lowers growth to 2.1% for next year

The First Vice President and Minister of Economy, Nadia Calviño, advanced yesterday the review of the growth data when the two formations of the Government finalized the approval of the budgets, which are expected to be approved in the Council of Ministers today. This is the intention, and these are the data that Calviño offered: a drop of six tenths of the growth forecast for next year, to 2.1%, and instead, an upward correction of one tenth for this exercise, which would end at 4.4%.

For the next year, the continuation of the war, high inflation and especially the prevailing uncertainty slow down growth. Hence this drop of six tenths, which leaves growth around 2%. Most organizations are also correcting downwards the increase in GDP for the next financial year.

On the other hand, for this year as a whole, growth is holding up and even improves the forecast, thanks to the momentum of the first semester, which allows the Government's calculation to be increased by one tenth to 4.4%. Last week, the INE raised growth for the second quarter to 1.5 points, thanks in large part to the boom in exports. With the momentum of the first part of the year, it was already taken for granted that, even with zero growth in the second half, the target of 4.3% would be reached. Now, Economy rises even one tenth, up to 4.4%

“All the indicators show a strong growth of the Spanish economy until September, economic activity, tax revenues, the evolution of the labor market, investment, everything points to this growth and in line with the OECD and other organizations, we expect a growth in 2022 of 4.4%”, said Calviño in Luxembourg, where he participated in a meeting of the Eurogroup.

The vice president insists that they are prudent data and that they are also the ones that will be used for next year's budgets, both in forecasting growth and income. “This same prudence has guided the tax revenue forecast that we are incorporating in the preparation of the budget proposal. We are giving the final touches, I hope that soon we will have the budget project, which will be the basis of the budget plan that we will send to Brussels before October 15,” said Calviño.

Some budgets that last night still had fringes to resolve. There are points that seemed critical that have been overcome, such as the increase in defense spending, with the PSOE convincing Podemos that it would not compromise any social item and that it was outside the spending ceiling.

Regarding labor matters, the agreement was practically sealed. The Government will raise the IPREM, the index with which social benefits, non-contributory pensions or the Minimum Income are calculated. Without linking it to the CPI, it will have an amount of around 600 euros, compared to the current 579.02.

There are also advanced talks to recover that the unemployment benefit from the seventh month is once again 60% of the salary regulatory base, when the Rajoy government lowered it to 50% in 2012.

Until the end, the main stumbling block has been the Family Law, a rule that should have been approved in September and that has been linked to the budgets due to the expense that some measures will entail. The coalition has agreed to strengthen the rights of single-mother families but it was not clear last night how to define the child-rearing benefit for unemployed mothers and whether maternity and paternity leave will finally be progressively extended. The Executive was in tune to design a special permit for family care.

Yesterday there was also an intense discussion about the housing law, which is in parliamentary process. UP wanted to join it to the budget negotiation but the Minister of Transport, Raquel Sánchez, cooled down this possibility by recalling that the rule that came out of the Council of Ministers already contemplates measures to contain rental prices, which is the contentious issue.

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