The European Commission determined on Wednesday that the draft of Spain’s budget for 2018 sent by the Spanish government “complies in general terms” with the criteria established in the Stability and Growth Pact. Despite the fact the public deficit will exceed the target agreed on for next year.
Spain’s 2017 budget leaves little room for manoeuvre. It represents exactly 39%, the percentage the state can freely make decisions on what do with from what it raises and borrows. It shows that, despite the fact the economy is doing well, we have a lot of problems.
The euro’s fourth biggest economy will not be the protagonist in long economic debates in 2017. Spain’s deficit and its domestic politics are no longer a concern for Brussels, now focused on the Brexit negotiations and worried about the complicated elections cycle in various countries.
Rajoy’s minority government will face the first big challenge of its new term in office with the presentation of the 2017 State Budget. This could be a good opportunity to start from scratch and implement much needed reforms.
Up to what point is the lack of a government affecting Spain and its government? Spain’s Stock Market Regulator (the CNMV) now has no visible head. And the number of public sector jobs cannot be increased, nor AENA’s air fares. But perhaps this is due to other reasons which could have equally existed in a normal political situation.
It’s been over 280 days since the general elections on December 20th and Spain is still without a government. This has its consequences. On October 15th the country’s caretaker government is due to present its 2017 Budget to Brussels and provide information on the adjustments and other measures which it plans to implement to correct the public deficit. But BS Markets says this draft can only be, at most, an extension of the 2016 Budget, a document without any changes.
Spain’s socialist party PSOE doesn’t seem to be too worried about the fact the country may not have a 2017 Budget. But it’s increasingly clear to all of us that the lack of a budget will not be without a cost. On the contrary, it will greatly affect a large part of Spanish society. Almost all economists believe that the impossibility of drawing up new accounts, and updating certain items, could mean that the amount spent on civil servants’ salaries will be maintained.
Spain’s public deficit ranks as the highest one in the eurozone, with the exception of Cyprus. Up to now, a set of exceptional circumstances has allowed for a stance of benign neglect at visible cost. But dangers loom ahead if fiscal rectitude is not firmly enforced.
BRUSSELS | July 3, 2015 | By Jacobo de Regoyos | The Greek crisis has sparked an intense debate about the future of the European Union. Spain recently handed Brussels a proposal on a eurozone-level budget for emergency rescues, and the need of issuing eurobonds. Head of Spain’s Economic Office Head Álvaro Nadal spoke to The Corner about competitiveness and solidarity between members. This is the second part of an interview.
BRUSSELS | June 26, 2015 | By Jacobo de Regoyos | Along with other EU state members, Spain called for a eurozone-level budget for emergency rescues, and issue debt in the form of eurobonds. Álvaro Nadal, Director of the Economic Affairs Office of the Spanish Prime Minister explained it for The Corner. This is the first part of the interview.