The European Commission warns that Spain’s fiscal situation is “very difficult“, with a deficit that will exceed the 3% limit in 2024, and an accumulated public debt “quite high“. Likewise, Brussels confirms that public debt will remain beyond 100% of the gross domestic product (GDP).
Europe states this in its assessment of the Budget Plan that Spain sent to Brussels last October, while asking the Spanish Executive to send an updated document “as soon as possible.” And this is confirmed by community sources collected by Europra Press.
According to Brussels estimates, the budget deviation next year will be 3.2%, while the Spanish Government stated that it would reduce the deficit to 3%. This information is relevant because that is where the limit is located by which Spain should submit to the tutelage of Brussels. In 2024, the fiscal rules that were suspended during the pandemic will be reactivated and their reform must still be defined. But what is clear is that the limit will remain at those three points of GDP.
“Overall, the Commission considers that Spain’s updated draft Budget Plan complies with the Council Recommendation of July 14, 2023,” says Brussels. “However, the Commission foresees that Spain’s deficit will be 3.2% of GDP in 2024, above the reference value of 3% of GDP established in the Treaty, and that the public debt is 106.5% in 2024, above the reference value of 60% of GDP established in the Treaty, and 10 points of GDP below the ratio at the end of 2021,” he adds.
Europe also calls for a “credible” tax strategy in the medium term, exactly the same thing that the Bank of Spain and the Independent Authority for Fiscal Responsibility (AIReF) have asked the Government of Pedro Sánchez on countless occasions. In this sense, the economic vice president, Valdis Dombrovskis, has recommended to all member states that they apply “more prudent” fiscal policies, which “will contribute to reducing inflation, improving debt sustainability and rebuilding reserves after spending public on a large scale during the pandemic and energy crisis. A notice fully applied to the specific case of Spain.