The acting Government reduces the growth of the Spanish economy to close to 2%, four tenths less than the advance contemplated in the April stability program. The Executive, on the other hand, raises the economic evolution for the current year to 2.4%, three tenths more than the spring scenario. The Ministry of Finance, together with the Ministry of Economy, sent the Budget Plan to Brussels this Sunday, which contemplates that "Spain will continue to lead the economic growth of the euro zone in 2023 and 2024."
The economic policy roadmap sent to the European Commission presents an “inertial” scenario as the Government is in office. For this reason, the Budget Plan does not contemplate the possible extension of measures to combat inflation, such as tax reductions on energy production or certain foods, which expire on December 31. The only two measures that the acting coalition Executive undertakes to apply in 2024 are “the revaluation of pensions [with the CPI] to guarantee the maintenance of their purchasing power” and “the increase in the remuneration of public employees” .
In a scenario of return to fiscal rules, although not yet specified, Spain is committed to reducing the public deficit to 3% in 2024. To comply with this path, the roadmap of the acting Government contemplates that this year be closed with a gap of 3.9%.
The debt, for its part, will continue a progressive decrease, always according to the Budget Plan sent by the Government and which is partial, since no specific measures are contemplated that will affect income and expenses due to the current functions. The public debt will be 108.1% of GDP this year and 106.3% in 2024.
The Government admits that the high uncertainty that hangs over the Spanish economy. In this sense, the Budget Plan, with which the first Budgets of the legislature are intended to be prepared, if Pedro Sánchez manages to carry out the investiture, explains that "the two factors that will mark the macroeconomic environment are the international context and the impact of the contractionary monetary policy of the European Central Bank". Even so, the Treasury and Economy highlight the strengths of the Spanish economy: "The financial solvency of Spanish companies, job creation and the deployment of the Recovery Plan funds."
Regarding inflation, and with aid measures in the air, the Government assures that "food inflation continues to reduce in 2023 and contributes to accelerating the convergence of inflation towards 2 percent." And he adds: 2The disturbance in energy prices caused by the invasion of Ukraine has been overcome without any second round effects having occurred so far."
The Spanish labor market will be one of the strengths of the Spanish economy during the coming months. The acting Government contemplates the creation of more than 700,000 full-time jobs during 2023 and 2024, which will leave the unemployment rate below 11%. "The labor market will maintain its dynamism also in 2024, placing full-time employment close to 20 million," can be read in the Budget Plan.
The acting Ministry of Finance estimates that in 2024 the collection record will be broken again. For this year, it expects tax revenues of 356,052 million and for next year that figure is expected to rise to 382,755 million, 7.5% more. That is, the Government would have sufficient fiscal margin to approve measures to combat inflation.
