The Organization for Economic Cooperation and Development (OECD) recommends that Spain raise VAT and green taxation to improve revenues and thus correct its deviations in the deficit and high debt. This is reflected in the World Economic Outlook presented this Thursday, in which it warns of the weight of spending on pensions and the aging of the population, which will make it grow even more.
The report serves to improve growth forecasts, on a positive note. The OECD predicts that private consumption will serve as an engine for the growth of the economy, with the support of a "resilient labor market" and increased income, which will allow growth of 1.8% in 2024 - three tenths more than planned before - and 2% in 2025.
Spain is well above its European peers, although this panorama does not hide the pending duties. The OECD recognizes that the deficit is going down, but "it is necessary to strengthen fiscal consolidation" so that the debt falls and space is created for expenses due to the aging of the population - the pension bill does not stop rising - and to encourage growth.
The deficit comes from 3.6% in 2023, it will fall to 3.3% this year and 2.6% the next. The renunciation of budgets for this year and the extension of measures to alleviate the impact of inflation - such as reduced VAT on certain foods - "slow down fiscal consolidation."
"The public debt/GDP ratio is high and spending is heavily weighted towards pensions, to the detriment of elements that improve growth, and spending related to aging will increase," it warns. "Stronger and sustained fiscal consolidation will be needed in the medium term to keep debt on a downward path." To achieve more revenue, the recipe is to increase the base of products subject to VAT, increase green taxation and improve spending efficiency.
"The aging of the population, the slow growth of productivity and low investment weigh on Spain's growth potential," it is insisted. To give a boost to productivity, greater innovation, improved work skills and education and correct deployment of European funds are urged.
The growth forecasts are in line with those of other entities. The Government has just improved its forecasts for 2025, leaving this year's growth at 2% and 1.9% for the following year. In the case of the IMF, it foresees a rebound of 1.9% for 2024 and 2.1% for 2025, after revising the projections less than a month ago.
