Includes the new ma­cro­eco­nomic fra­me­work of the Government

Spain’s Budget Plan For 2021: 7.3% Increase In Revenue And Expenditure Ceiling Over 50%

Nadia Calviño, minister of Economy.
Nadia Calviño, minister of Economy.

THE CORNER.EU 16TH OCTOBER 2020.- Spain sent yes­terday the Budget Plan for 2021 to the European Commission to­gether with the re­venue fo­re­casts, the new ma­cro­eco­nomic fra­me­work, the de­ficit re­fe­rence rates after ha­ving sus­pended the fiscal rules and the ex­pen­di­ture cei­ling. The draft also in­cludes the basic gui­de­lines of the Recovery, Transformation and Resilience Plan that con­tem­plates an in­vest­ment of 72 bi­llion euros bet­ween 2021 and 2023.

The Budget Plan for 2021 considers revenues of 40.3% of GDP against 41.7% in 2020. The government estimates an increase in absolute terms of 33.44 billion euros (+7.3% per year), although the ratio falls due to the greater increase in GDP. On the side of public revenues, the rise is explained by the increase in activity and by fiscal measures. The Google and Tobin Taxes are foreseen, as well as taxes on single-use plastic containers or the hike in VAT on sugared and sweetened beverages from 10% to 21%, and also measures against tax fraud. Overall, Spain plans to raise taxes for an amount of 6.84 billion euros.

The proposal is based on a non-financial spending limit, known as the ‘spending ceiling’, of 196.09 billion euros, 53.7% higher than that approved in February, and which includes extraordinary transfers to the Autonomous Regions (13.48 billion euros) and Social Security (18.39 billion euros) and part of the European funds (27.436 billion euros).

It also includes the new macroeconomic framework of the Government, which forecasts a fall in GDP of 11.2% this year, with an unemployment rate of 17.1%, and a growth of 7.2% in 2021. This figure could reach 9.8% if European funds are taken into account, while unemployment could drop to 16.9%.

As for the public deficit, the Budget draft estimates that it will climb to 11.3% of GDP this year as a result of the crisis and the greater spending to alleviate the consequences. The deficit reference rate is fixed at 7.7% in 2021, while public debt is expected to rise to 118% of GDP this year.

Artículos relacionados