Funcas sees “progress and limitations” in the Budgets and foresees more spending
The director of the Economic Situation of Funcas, Raymond Torreshas assured this Tuesday that the General State Budgets (PGE) for 2023 contain “progress and limitations” and has anticipated that the growth in spending budgeted by the Government (+2.7%) is greater and is closer to around 5%, which would place it in line with the advance in revenues projected by Funcas. In an appearance together with other experts to analyze next year’s public accounts organized by Funcas, Torres pointed out that the figures “do not support a correction in the medium and long term of the budgetary imbalances”since its forecasts indicate that expenses and income will grow more or less the same, of the order of 5%.
As the cost of debt rises, a path of more balanced public accounts is required what we have seen in recent years”, he emphasized. In this way, beyond what happens in 2023, Torres has defended the need to “place the imbalances on a path of correction”. In this sense, he has warned that Spain and France are the only two EU countries that registered a primary deficit in the economic expansion stage of 2014-2019, without this negative balance being resolved in subsequent years either.
Thus, he emphasized that Spain presents a “high” structural deficit, close to 4% of GDP, which shows that there are problems in balancing public accounts. “At the moment no market pressurebut it would be desirable to place the accounts on a path to correct imbalances in the medium term”, he opined. Torres has indicated that in order to assess the 2023 Budgets it is necessary to take into account that the current economic moment is “very complicated”, since an energy and supply crisis is taking placean inflation unknown in more than 30 years and a “very pronounced” loss of purchasing power, with a decline in the disposable income of households in €34 billion in real terms.
Added to this is “a very intense shift” in monetary policy that has resulted in a rise in interest rates, which is leading to higher financing costs. Thus, he considers that, in this context, the fiscal policy that is required at this time should “focus” on alleviating the impact of the inflation crisis and energy in homes and also in electro-intensive companies, “which are in danger of disappearing” and causing a “tear” in the productive fabric.
In this sense, Torres explained that there are some measures in the Budgets that are focused, such as the reduction of personal income tax for incomes below €21,000 annuals; social bonds for the payment of electricity bills or a new line of guarantees from the ICO. Another of the objectives of the budgetary fiscal policy would pass, in his opinion, by also grant incentives to change the production model and there he sees “signs, but more tenuous” in the public accounts of 2023, especially due to the lack of incentives for households and companies to contribute to the change in the energy model.
Wait for incentives
“I hope that the Contingency Plan build in incentives for the future and say how it will be financed. We could redirect European funds to establish those incentives. remain €80 billion that we can still request for that change in the production model”, he pointed out. Torres has also stated that he is concerned about what the European funds are spent on, because the execution of the Perte, which add up to €32 billion among all the projects, it is being “very unequal”, with some “at zero”, such as the semiconductor project, and others with a better evolution, such as the renewable energies or the electric vehicle project.
“But it would be necessary to see if these funds really serve to change the productive model or if they function as a quasi subsidy. My feeling is that at this moment we are in a very incipient stage for these funds to have had an impact on the productive transformation of the country, but the best is yet to come“, has indicated Torres, who has added that what really can change society and the productive fabric is the combination of investments and reforms.
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