Fernando G. Urbaneja | At the beginning of October, even after the ordinary deadlines have expired, Pedro Sánchez’ s government aspires and hopes to obtain a minimum political agreement allowing for the approval of the 2021 Budget, without which it could not survive. The decisive numbers are not those of the budgetary items (about which almost nothing is known) but those of the parliamentary votes sufficient to approve the law, with the rectifications imposed by the executive’s temporary allies. Sanchez has several alternatives in order to obtain the necessary votes, with or without the centrist Ciudadanos, and with or without some of the Catalan independentists.
Deputy Prime Minister Pablo Iglesias has done his sums
At the headquarters of the government coalition party’s Deputy Prime Minister, they have also done their sums. Their numbers come from the Catalan and Basque separatists (ERC and Bildu) who are part of the “dowry” which Podemos-Pablo Iglesias brings to the alliance with the PSOE-Sanchez. These days, the political game being played is that of the possible and probable numbers which have political consequences for Spain.
The respect for the Budgets is very limited; the last ones approved in time and form (in December of the previous year) were those from 2016, five years ago. Since then, they were only approved outwith the time-frame, with an extension of the previous one, in 2017 and 2018. Add to that the aggravating factor that the budgetary execution in the last five years has been very poor.
The 2018 Budget (which is still in force for the third consecutive year) will become the most fanciful and implausible in history. Proposed by the minority government of the People’s Party (Rajoy-Montoro), it was submitted at the wrong time (in the spring), in the middle of its year of validity. It has been in force for three years with a motion of censure and two general elections in between, and with two budget extensions which is unprecedented. All this is the best indication of the weakness and instability of the governments over the last five years.
Spain’s budgetary credibility in Europe, built up over the past decades, is in tatters; none of the deficit or debt commitments of recent years have been met. However this has had no consequences, given that the European Union’s concerns are not now focused on stability commitments; there are other more urgent and priority issues. That said, everything counts and is recorded. It is essential for both the government and the country to have European blessing to access the recovery funds.
What the budgets have in their favour
The new reality needs an exceptional budgetary policy, supported by extraordinary debt financed by the solidarity of the European Union and by the European Central Bank’s generous monetary policy. But in order to obtain the EU resources a new Budget is essential. Without that piece of the puzzle the Sanchez government is finished. So it will take on all the demands from the parliamentarians needed to obtain its approval. In its favour, its will to last the course is equivalent to the will of the other groups to hold on to their current status. So that both one and the other will approve reasonable, credible and presentable budgets in Europe. Regardless of their subsequent compliance.
Podemos – Pablo Iglesias, the government’s main partner, cannot turn his back on the possible Budget. This could put an end to the government and the legislature by causing elections which are not in anyone’s interest. The nationalist groups (not the Catalans) will be in favour of the new Budget because it is in their political nature and part of their parliamentary objectives: they will put a price on a vote in favour. Sanchez has learned to handle these situations to his own benefit.
The Popular Party could approve Budgets for 2021 because these are exceptional times. But with the condition that the socialists break the coalition with Podemos and move towards a grand coalition model like the German one. Today this is implausible for Sánchez, regardless of his emphatic and rhetorical calls for unity. Therefore, the right will not approve a Budget while Podemos and the separatists remain part of the formula.
The role of Ciudadanos is pragmatic and flexible; its ten seats, which seemed useless a few months ago, may be decisive for Sánchez to push through the 2021 Budget with an emphasis in one sense or another. That typical situation of geometry or variable arithmetic which has been seen in recent months. For example in the successive votes to extend the declaration of a national emergency against the pandemic.
Respect and the dominant culture
The Sanchez government does not have any red lines, it can raise, lower or maintain taxes… as appropriate; it can agree on some spending commitments and then forget about them for unexpected reasons; it can assume a larger or smaller deficit, because once the law is approved it will be seen how it is executed. Budget compliance is not amongst the political priorities, there are other urgent issues. Respect for budgetary commitments is not part of the dominant culture.
What is needed is a budget which can be presented in Brussels, in order to obtain the green light for European financial flows. These are essential and, in large part, have already been spent or are committed.