2023-04-28 19:32:46
The Government foresees that the Spanish economy will maintain “a robust growth path” during the period between 2023 and 2026 that will allow the creation of 1.1 million jobs in these four years (up to around 21.6 million people), as well as reduce theat unemployment rate up to 9.8% of the active population in the last year of the projection (three points below the 12.9% with which 2022 closed).
These are some of the guidelines of the macroeconomic picture document that the Spanish Government has sent to Brussels this Friday, within the mandatory Update of the Stability Plan 2023-2026 that all member states must send to the European Commission before April 31. In the document, the Government commits Spain to a primary structural adjustment of its budget of 1.6 points of GDP throughout this period (equivalent to just over 21,000 million today in four years) to reduce the public deficit to 2.5% of GDP in 2026.
“With all the precautions derived from the current high uncertainty, the Spanish economy will remain on a path of robust growth during the 2023-2026 period, driven by employment and private consumption, as well as by the investments and reforms of the Recovery Plan “, maintains the Executive. The macroeconomic scenario designed in the Stability Plan maintains the growth forecast for the economy for 2023 at 2.1%, as well as that of the 2.4% by the year 2024. For the next two years, a more moderate advance is projected -from 1.8% in 2025 and 1.7% in 2026-, closer to what is now estimated to be the potential growth of the Spanish economy in 2026 (1.6%).
Inflation, wages and deficit
In its projections, the Government anticipates that the so-called ‘private consumption deflator’ (a concept that is close to inflation), will decrease from 6.8% in 2022 (an exercise in which average inflation reached 8.5%) to 3.9% in 2023; 3.2% in 2024; 2% in 2025 and 1.9% in 2026. “The fall in energy prices and the drop in inflation will allow the extraordinary support measures to be withdrawn during 2023 and 2024 in response to the impact of the war”, it is stated in the document.
In parallel, for this same period, it is expected that the average remuneration per employee it will chain increases of 4.7% in 2023; 3.3% in 2024; 2.4% in 2025 and 1.7% in 2026. “The evolution of salaries and margins does not point to possible second round effects” that feed a spiral of inflation, is noted in the document.
Related news
The Stability Plan is the document that is considered as the starting point for the elaboration of the 2024 Budgets. In it, in addition to including the macroeconomic growth scenario for this year and the next three, the Government incorporates its budget consolidation targets for the period. As Vice President Nadia Calviño anticipated this Thursday, the Executive has brought forward to 2024 the objective of reducing the public deficit to 3% of GDP, a goal that would allow Spain to avoid the reinforced budgetary discipline that Brussels plans to incorporate into the new fiscal rules to bridle the public accounts of the countries with the greatest imbalances. In addition, a drop in the public debt ratio to below 110% of GDP is expected for 2024.
The fiscal path proposed for the period between 2023 and 2026 includes a gradual reduction of the deficit, from 3.9% of GDP forecast for 2023 to 2.5% in the last year of the projection (2022 ended with a lag of 4.8%). According to the Government’s calculations, this path includes a correction of the so-called ‘primary structural balance’ of 1.6 points of GDP (equivalent to some 21,233 million euros in 2023). In other words: the Government estimates that to reduce the deficit to 2.5% of GDP in 2026 it will be necessary a structural adjustment of more than 21,000 million in the expenditure of the administrations as a whole (without counting interest on the public debt or variations in income and expenses linked to the economic cycle). The adjustment can be achieved by way of structural spending cuts with tax increases of the same type. For the period between 2022 and 2050, the Government foresees that the gasto in pensions will reach an average of 14% of GDP.
#Government #foresees #million #jobs #years #adjustment #million