The Government trusts that European funds will contribute some 2,000 million euros per month to the economy, but the Bank of Spain is more pessimistic
The Government trusts with closed eyes that European funds will be the impetus for the Spanish economy next year. A year in which, although a growth of 2.1% is expected -well below the 4.4% of this- the European economic slowdown will be the common denominator of the main powers. But Spain will be the fastest growing of the large euro countries thanks, in large part, to the arrival of billions from Europe.
The Government is so confident that these funds will – finally – step on the accelerator and begin to be executed at “cruising speed” in projects from all sectors that its GDP growth forecasts for 2023 differ quite a bit from that of national economic organizations and international. The Bank of Spain, the Tax Authority (Airef), the OECD and even the International Monetary Fund (IMF) itself estimate that our country will advance between 1% and 1.5% next year, which represents a considerable difference .
A large part of this gap is due to the little confidence that organizations have for now that European funds will really begin to materialize. The director of Statistics of the Bank of Spain, Ángel Gavilán, explained during the presentation of the last report of the organization that the Spanish economy will suffer a “slowdown” until the spring of 2023, and that it will be that moment in which the activity recovers a ” growing vigor. He therefore delays the recovery of GDP prior to the pandemic until the first quarter of 2024, the year in which the country will advance 2.9% according to his calculations, already with European funds fully installed in the economy.
On the other hand, from the Ministry of Economic Affairs they allude to a more “cyclical” path in the incorporation of funds from Europe. So much so that the first quarter of the year will be very positive for the economy and all the following ones will be based on it.
2 billion a month
According to the figures included in the General Budgets, the EU funds will contribute 2.8 points to the GDP in 2023, which will mean 25,156 million euros. The question is, according to the experts, whether all the resources that Brussels is providing will materialize in specific projects carried out. The “cruising speed” to which the Government refers will be 2,000 million per month. But the Bank of Spain does not trust this rate so optimistic. Gavilán warned that the funds are developing “lag” than what they themselves projected in their previous June report, where they estimated that the funds that would reach the economy this year would be 20,000, and now they project 12,000.
In 2021, the agency projected that the funds would have an impact on GDP growth for that year of approximately one percentage point. But the most recent information has reduced that impact to around 0.2 points. For 2022, the Bank of Spain forecast an impact of 1.4 points, which has now been reduced to 1 point. And for next year, they leave it at 0.6 points. If the deployment of the projects is faster or slower, it will have “relevant” effects on the growth and inflation projection of the organization. For this reason, Gavilán requested that since the execution periods are “limited” until the end of 2023, it would be convenient to “lighten” the management of these funds.
The Tax Authority does not agree with the Government in this either. Their calculations predict that the funds will have a smaller impact on economic growth. The Executive’s estimates suggest that the funds will increase the level of GDP by 2.8 points in 2023, but Airef believes that it will be only 2 points.