The Spanish government will send its first structural fiscal plan to the European Commission on Tuesday, a document containing concrete commitments to bring the country’s public accounts into line with new European fiscal rules in the coming years.
Spain “is doing its homework on the sustainability of public accounts,” Prime Minister Pedro Sánchez (PSOE/S&D) told parliament last week as he outlined the plan to MPs.
The plan would not involve cuts but would include “commitments to responsible spending,” Sanchez added, recalling that Spain’s tax burden is four GDP points lower than the EU average.
Before sending the document, the government is expected to provide more details at the Council of Ministers meeting on Tuesday morning.
Before the summer, the European Commission provided all EU countries above the deficit and debt thresholds—including Spain—with a projection of the maximum net expenditure they could accept over the next four to seven years to lower public debt.
According to a recent estimate by the Spanish Independent Authority for Fiscal Responsibility (AIReF), the country would need to implement a fiscal adjustment of 0.63 GDP points per year if the cut is implemented over four years, or 0.43 GDP points per year if the adjustment is implemented over seven years, which would imply a reduction in expenditure growth of €10 billion and €7 billion per year respectively.
The European Commission defines fiscal adjustment plans as the cornerstone of its new economic governance framework.
According to experts, the fiscal adjustment plan is the way to implement the new European fiscal rules, which aim to introduce a simpler system to move towards compliance with the European Stability and Growth Pact, whose main objectives are that a member country’s deficit should not exceed 3% of its GDP and its debt should not exceed 60% of its GDP.
The reactivation of the EU fiscal pact is an additional problem for the Spanish government, which has been trying—without success—to pass the 2025 national budget since last summer.
The structural fiscal plans of other EU countries published so far include macroeconomic and fiscal forecasts up to 2028, adapted to the guidelines proposed by the European Commission, and a list of reforms and investments these EU countries intend to implement.
Although Sánchez did not reveal any details of the fiscal plan that Madrid intends to present to the European Commission, the Spanish head of government announced last week that it represents a “new paradigm of fiscal governance, which definitively breaks with neoliberal austerity”.
(Fernando Heller | EuroEFE.Euractiv.es)
Source: euractiv.com
