The other bud­ge­tary mi­les­tone will be the sharp in­crease in pu­blic in­vest­ment by 33%

Spain: A Reckless Electioneering Budget

María Jesús Montero, ministra de Hacienda.
María Jesús Montero, minister.

The Council of Ministers on Tuesday ap­proved the draft General State Budget for 2023 agreed by the coali­tion part­ners. The ac­counts are based on a new ma­cro­eco­nomic fra­me­work that re­duces the GDP growth fo­re­cast for 2023 from 2.7% to 2.1%, on a re­cord ex­pen­di­ture cei­ling of 198.221 bi­llion eu­ros. Current spen­ding grows by 6.9% (18.3% if one takes into ac­count that re­fugee aid mea­sures are now sup­ported he­re). Meanwhile, so-­ca­lled “social spen­ding” has grown to a re­cord 266.719 bi­llion eu­ros, in­clu­ding the re­va­lua­tion of pen­sions at around 8.5%, Montero ex­plai­ned. The budget also in­cludes a 3.5% pay rise for civil ser­vants.

The other budgetary milestone will be the sharp increase in public investment by 33%, up to a maximum of 11.8 billion euros, thanks to the addition of European funds for recovery. That said, the main challenge will be to unblock the bureaucratic bottleneck that has held up its implementation until now. On the other hand, defence spending will experience an unprecedented 26% increase in order to fulfil the commitment with NATO to progressively increase the military budget,

The daily Expansión describes the budget as electioneering and reckless: “The drastic worsening of the economic outlook for next year should have led the PSOE and Podemos government to propose austere and responsible budgets.

However, both parties have opted to prioritise their electoral urgencies, drawing up budgets that shoot up social spending to a new all-time high – six out of every ten euros – with reckless measures such as increasing spending on pensions by 8.5 per cent or raising public wages by up to 3.5 per cent next year.

Despite forecasting that revenue will grow by 6% over the record reached this year due to very strong inflation, thanks in part to the new tax hikes, the Treasury is keeping its deficit and public debt reduction targets unchanged. And it is not heeding the requests of the European authorities to speed up the fiscal consolidation path at a time of great uncertainty and when the markets are watching the most indebted countries with a magnifying glass”.

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