Spanish government gives green light to 0.9% pension increase

Spain's pensions debt to rise over 200% of GDP by the end of 60s

The first ministers cabinet meeting in Spain on Tuesday approved the rise in pensions by 0.9%. The increase will be applied retroactively from January 1 and will affect and will affect more than 10 million Spaniards, both contributory and non-contributory and passive class pensions.

The 0.9% rise coincides with the average CPI estimate. If prices rise above that figure, the Government will compensate pensioners for the difference in a single payment before April 2021.

This is the second consecutive year in which pensions in Spain increase above the expected legal minimum (0.25%). Last year they increased by 1.6% in general and 3% in the case of minimum and non-contributory.

The cost of this revaluation amounts to 1.406 bn euros. Prime Minister Pedro Sánchez assured after the announcement of the measure that he intends to negotiate a new deficit path with Brussels. At this time, the deficit commitment agreed in the last legislature ontemplates a deficit of 1.1% for this year.

Mr Sanchez now wants to renegotiate this figure with Brussels, as well as the horizon for the coming years. For 2019, the objective was to close with a deficit of 2%, data that the Government has not yet contributed, although almost all national and international organizations assume that this figure will be higher.

As for public debt, the government estimates it could have ended 2019 at 95.9% of GDP, and sets the goal of lowering it to 94.6% this year.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.