The penultimate session of European Parliament was carried out to approve the new fiscal rules that consist of the following: «Countries with excessive debt will have to reduce iton average, one percentage point per year if it is above 90% of GDP, and 0.5 points if it is between 60% and 90% of GDP. If the deficit exceeds 3% of GDP, the country in question will have to reduce it in periods with growth to reach 1.5% and accumulate spending capacity to use it when economic conditions are less favorable. In addition, Member States must submit their first national plans by September 20, 2024.
This means that Spain, which in 2023 closed the year with a 3.6% deficit and 107.4% debt over GDP, has to present a plan by September 20 this year on how it will meet these objectives. Taking into account that the INE of Ms. Manzanera has presented a growth of 0.7%, andis obliged to present a plan on how it will reach 1.5% of deficit in the next 4 years and “accumulate spending capacity to use it when economic conditions are less favorable.”
The situation is becoming very complicated for the Sánchez governmentsince if you force the machine with the INE to get good marks in the GDP, you are hanging yourself by having to reduce the deficit and, therefore, public spending. And, as we have explained on occasion, spending is going to skyrocket by 50,000 million this year due to the 11,000 million more in pensions, the 8,000 million more in salaries, the 7,000 million more in interest, the 12,000 million more in defense and the increases in spending on education and health.
Therefore, Paying attention to the GDP forces you to be much more rigorous with the deficitpotentially forcing the Government to have to either lie, that it is not concerned about anything, or negotiate with his partners face to face, assuming that he will not be able to give Catalonia or the Basque Country what he promisedsomething complicated given the state of rebellion shown by Puigdemont since the beginning of the legislature or the need for PNV to convey to his electorate his worth after the growth of collect.
But, in addition, the data published by the General Intervention of the State Administration by the end of February they are tremendously bad for the Government. The consolidated results of the General Administration, plus the Public Bodies and Agencies, plus Social Security, plus the Autonomous Communities, They add 17.4% more deficit in public finances; Well, despite the higher collection of 5.1% of income over 2023, expenses have skyrocketed by 6.5%.
What’s going on? In the income part we see that Taxes collected grow by 6.2% at a rate of 1,190 million per month. Income from social contributions grew by 7.7% at a rate of 1,204 million, but with many problems in collecting other current income, because The organizations cannot do more and the same thing happens with other capital income, where they decrease by 850 million in the first 2 months.
In any case,Income totals 4,007 million more than in 2023, which means that, at this rate, it will manage to earn 24,000 million more than last year. The problem is not in income, but in expenses. Thus, we have that salaries in 2 months will rise by 5.7%, at a rate of 554 million, which guarantees that the salary item will grow by 7,749 million, plus what the new ones cost. incorporations.
In interest, where we see that the item grows by 25.2% in the first two months, it adds up to increase in monthly spending of 532 million that takes us, at least, to reach 6,378 millions. Social benefits grow by 7.2%, which is equivalent to 1,502 million monthly which will result in an increase in spending of 18,030 million euros at the end of the year.
If we add to this the increase in general expenses, other current expenses and capital expenses, which have a monthly rate of 516 million, which annualized will go to 6,192 million, we can already see that we are at a rate of more than 38,000 million -without including the Local Corporations-. Therefore, At the end of February, expenses increased by 6.5%, leading us to a deficit of 12,031 million. 17.4% more than in 2023.
Things are starting to get tough for a government emotionally destabilized by the crisis generated by the president’s beloved, his unclear business dealings, and what is going to happen to this coalition after the European elections.
