The European Commission (EC) approved this Tuesday the fiscal plan sent in mid-October by the Spanish Government to clean up its public accounts over the next seven years and comply with the deficit and debt limits established by community standards.
He Executive community indicated in its evaluation that the Spanish plan meets the criteria of these budget surveillance rules and “establishes a credible fiscal path to ensure the fiscal sustainability in the medium term”.
It is the first time that the Commission analyzes these adjustment paths that the Member States are obliged to send under the new fiscal rules approved this year, which focus on the control of net public spending, which excludes certain items such as interest on debt, investments financed with Europeans or part of unemployment benefits.
In this exercise, the European institution also examines the budget drafts sent by the countries, but does not include a valuation of Spanish because the Government has not sent any document to the European capital pending negotiations at the national level.
The Commission, in this way, gives the green light to the Spanish fiscal plan despite the fact that in June it recommended to Spain a path for public spending slightly more restrictive than the one finally adopted by the Executive of Pedro Sanchez.
Specifically, the European Commission suggested an average increase in public spending for the period 2025-2031 of 2.8% and the tax plan approved this Tuesday includes an increase of 3%, which implies an additional spending margin of two tenths compared to the reference trajectory (about 3,000 million).
He also approves that the adjustment path be seven years (instead of the reference four) in exchange for adopting a series of reforms and investments that “are expected to improve the growth potential and resilience of the Spanish economy in a sustainable manner”, according to the Commission.
For years, the Government plans to increase public spending by 3.7% in 2025 (compared to the 3.2% recommended by Brussels), 3.5% in 2026 (2.8%), 3.2% in 2027 (2.7%), 3% in 2028 (2.7%), 3% in 2029 (2.7%), 2.5% in 2030 (2.6%) and 2.4% in 2031 (2.5%).
This path implies an average annual structural adjustment of the public deficit of 0.4 points of GDP, which would allow the public deficit to be reduced to 3.0% of GDP this year, to 1.6% in 2028 and to 0.8% in 2031, according to the plan.
In this sense, the Community Executive confirmed in this Tuesday’s evaluation that it is not justified to open a file against Spain for excessive deficit given that “is still valid” the analysis that the institution did in spring. In it, the Commission ruled out this procedure since it expected that Spain would comply with the 3% deficit this year without the need for additional measures.
Twenty plans approved in the EU
In addition to the Spanish fiscal plan, the EC approved the adjustment paths of the other 20 Member States that presented them with the exception of the Netherlands, for which it recommends that the Council establish a path that respects the reference trajectory proposed by the Commission.
The Netherlands is also the only State whose budget has been rejected by the Community Executive, which has instead endorsed those of the rest of the eurozone countries except those of Spain, Austria and Belgiumwho have not yet submitted their project for 2025.
The EC approved without reservations the accounts of France, Italy, Greece, Cyprus, Latvia, Slovenia, Slovakia and Croatiawhile in the case of Germany, Finland, Ireland and Estonia he warned that the drafts “are not totally in line” since their net spending will exceed the ceilings set in the fiscal plan.
The budgets of Portugal, Malta and Luxembourg They do not fully comply either, although they will respect the spending limit because they do not plan to eliminate energy aid next winter, as recommended by the EU, while in the case of Lithuania Brussels appreciates “risk” that it does not comply.
Following the endorsement of the Commission, the fiscal plans must also be validated by the Council of the EU (the Member States) in January.
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