Brussels, 26/08/2015 (Agence Europe) - On Tuesday 25 August, the Spanish budget minister, Cristóbal Montoro, defended the draft 2016 budget of the government, which continues on the path of budgetary consolidation whilst giving a bit of targeted assistance, in view of the general elections to be held this autumn.
“Why is Spain growing twice as fast as Germany, three times faster than France and more than three times faster than Italy (…)? Because we have made structural reforms”, Montoro said in an address to the national parliament, as reported by the Spanish press (our translation).
According to figures of the statistical office of the EU (Eurostat), Spain recorded growth in its GDP at a level of 1% in the second quarter of 2015 compared to the first quarter, considerably above the equivalent figures in Germany (+0.4%), Italy (+0.2%) and France (0%) (see EUROPE 11372).
The draft Spanish budget for 2016, which was presented at the beginning of August, predicts GDP growth of 3.3% in 2015 and 3% in 2016. Maintaining the aim of cleansing its public finances, it forecasts a reduction in the deficit from 4.2% to 2.8% of GDP. This considerable reduction will be facilitated, amongst other things, by the increase in tax revenue and the reduction in unemployment benefit to be paid out, due to economic recovery. Public debt is expected to peak at 98.7% of GDP in 2015 and start to fall (98.2%) in 2016.
With an eye to this autumn's general elections, the outgoing government of Mariano Rajoy hopes to give the electorate a helping hand. Income and corporation tax cuts have been in place since July. For the first time since 2009, civil servants' salaries are to be increased, albeit by a modest amount (+1%). The share of social expenditure will be increased by 3.8% to support those who are struggling, with unemployment - although falling - still affecting more than 22% of the working-age population.
The opposition has seized the opportunity to highlight the increase in social inequality in Spain since the Spanish property bubble burst and point out that the austerity policy of the Christian Democrat government has not reduced this inequality.
The Spanish government hopes that its draft budget can be adopted quickly before the dissolution of Parliament ahead of the general elections, most probably at the end of September.
In line with the rules of the Stability and Growth Pact, eurozone countries must submit their draft 2016 budgets to the European Commission by mid-October, so that the European institution has time to make non-binding recommendations before the national finance bills can be adopted definitively. (Mathieu Bion)