The first decision of the Council of Ministers after the investiture of Pedro Sánchez was to approve yesterday the Ministerial Order of the Treasury in which the general rules for the preparation of the 2024 budgets are dictated. The ministries open their legislature by beginning the preparation of the most recent bill. important of the political course. The fourth vice president and Minister of Finance, María Jesús Montero, is aware, however, of the difficulty that it will mean to approve in the Senate, controlled by the PP with an absolute majority, the new path of deficit and public debt in a scenario of return of the tax rules.
The problem is not validating the spending ceiling, which will once again be historic, government sources explain. The limit to spend is a decision that corresponds to the Council of Ministers and that does not need to go through the Cortes. The main obstacle to overcome is to validate the budget stability and debt objectives for all public administrations for the period 2024-2026, which do need to pass the procedure in the Upper House.
The Senate, controlled by the PP, already overturned in 2018 the fiscal objectives of the first Sánchez government formed after the motion of censure. The decision that the Treasury made then was to extend the path set by Mariano Rajoy's government and not update it in the bill that he registered in Congress. Weeks later, that budget would be rejected by ERC, and Sánchez called elections.
On this occasion, the Treasury cannot extend any deficit and debt objectives because the fiscal rules are suspended and, therefore, there is no stability path in force. It is an unprecedented scenario. But the Government necessarily needs to establish a fiscal plan for the next three years to comply with the demands of the European Commission. Given the possibility of a PP blockade of the fiscal path, Montero's department is already working on formulas to save that situation.
One possibility, which the minister already handled in 2019, would be to reform the Budget Stability and Financial Sustainability law, which is organic and for which an absolute majority would be needed. Article 15.6 of the norm states that “the Congress and the Senate will rule approving or rejecting the objectives proposed by the Government.” The problem is that such a reform would take several months and the Government urgently needs to approve the 2024 PGE.
In the budget plan sent to Brussels in October, which has already received criticism from the PP, the Treasury forecast a global fiscal balance of 3% of GDP and a debt-to-GDP ratio of 106.3% in 2024.
The Treasury announced yesterday that the next budgets will foresee a disbursement schedule of up to 25.6 billion in 2024 from European funds, between transfers and loans, and warned that the forecast is that the geopolitical instability derived from the war in Ukraine, now also aggravated over the conflict between Israel and Hamas, will continue over the next year. A complex context in which the Spanish economy will grow above the EU average, according to all national and international organizations.
An inertial economic scenario was reflected in the budget plan endorsed this week by Brussels. But the Government has announced new measures that will increase spending. For example, the extension of the VAT reduction on some foods until June, which will cost about 700 million, or free public transport for young people, retirees and the unemployed. The extra collection will cover this aid.
Housing, with its own ministry, will be one of the priorities of the next public accounts. Specifically, they will influence “the right to housing by increasing the public stock for affordable rentals through a public investment policy.” Also the decarbonization of the economy or the reinforcement of employment policies. The ministerial order also includes the promotion of "a great income pact for price stability that guarantees the recovery of the purchasing power of salaries", a shock plan against long-term unemployment, improving and simplifying the level of unemployment assistance and consolidate improvements in social protection and benefits for the self-employed.
Pedro Sánchez took advantage yesterday of the first meeting with the ministers of his new mandate to deliver a personalized letter, signed by the head of the Executive, in which he urged them to act "with unity, solvency and determination, in the shared desire to contribute to progress social, coexistence, institutional stability and dialogue between different people.” The priorities of the new legislature that he cited in the letter include “completing the modernization and transformation of the productive fabric, in a green and digital key”; further strengthen the welfare state to “reduce inequality with more resources allocated to education, health and dependency”; continue promoting a “just ecological transition”; consolidate Spain as a “world benchmark in real and effective equality between men and women”; strengthen territorial cohesion and face the demographic challenge; “advance the agenda of the reunion to guarantee harmony in our country,” and “continue to strengthen Spain's leadership in the European and international arena.”
“We are no strangers to the current political climate,” Sánchez noted in the letter. A climate exacerbated by those who not only deny the original legitimacy of this Executive, but also seek to question its legitimacy of exercise. To the tension, we will respond with work. To interested noise, with dialogue and outstretched hand. "To disqualification and insult, with a sincere appeal to the harmony and coexistence that the vast majority of society longs for."
The Minister Spokesperson for the Government, Pilar Alegría, also made her debut yesterday at the Moncloa. Asked about the criticisms of the PP, she stated that they respond to the sole objective of “for Pedro Sánchez to stop being president of the Government.” The Minister of Education, Vocational Training and Sports also expressed the Government's “full respect” for the decision of the judge of the National Court Manuel García-Castellón, who has asked Switzerland to collaborate in locating the general secretary of ERC, Marta Rovira. And she wished the former Podemos ministers, Irene Montero and Ione Belarra, “the best.”
