Brussels, 12/10/2015 (Agence Europe) - The European Commission believes that Spain will not meet its targets to reduce its public deficit in 2015 and 2016, according to an opinion it adopted on Monday 12 October on the draft budget for 2016, which Madrid has submitted early.
“Overall, the Commission is of the opinion that the draft budgetary plan of Spain, which is currently under the corrective arm, is at risk of non-compliance with the provisions of the Stability and Growth Pact”, the European institution states. It calls on the Spanish authorities to submit a revised draft budget specifying measures for regional expenditure, once the government returned by the elections of late December is in place.
According to the Commission, the headline Spanish budgetary deficit will stand at 4.5% of national GDP in 2015 and 3.5% in 2016, instead of the targets of 4.2% this year and 2.8% the next year agreed at European level. These discrepancies, which have been called into question by the Spanish government, come about for 2015 from a different assessment of the 'public expenditure' plank, notably due to incomplete data on the budgetary situation of the regions and, for 2016, from Madrid's considerable optimism in its growth forecasts. In its 2016 draft budget, the Spanish government forecast that growth will be 3.3% of GDP in 2015 and 3% in 2016, whereas the Commission forecasts wealth creation in the order of 3.1% this year and 2.7% next.
According to the Commission, the structural effort (not including conjunctural effect) of Spain will fall “considerably short of the fiscal effort required” for 2015 and 2016. Madrid believes that the structural deficit will stand at 1.6% both years, whereas the Commission is anticipating a rate of 2.3% in 2015 and 2.5% in 2016.
The macro-economic figures included in the Commission's opinion are identical to those put forward by the Commissioner for Economic and Financial Affairs, Pierre Moscovici, after the Eurogroup meeting on Monday 5 October (see EUROPE 11403 and 11404). “What I did a week ago looks very much like what I did today. They are the same figures, the same procedure”, he said. He hit out at the Spanish press, which has put a political spin on the European institution's delay in adopting its position. This opinion is “objective and factual, neither more nor less”, and was adopted by the Commission “as a whole”, the Commissioner stressed, adding that it is by no means a matter of the Commission interfering in the forthcoming election campaign in Spain.
“Elections affect the procedure, not the substance”, said the Commissioner for the Euro, Valdis Dombrovskis. He went on to explain that the Commission had waited nearly a week to formally adopt its opinion on the Spanish draft budget for 2016, in order to take account of the latest figures collected by the post-'Spanish banking sector bailout plan' monitoring mission carried out by the institutional creditors of Madrid last week.
An internal Commission source, who did not wish to be named, told EUROPE that the Christian Democrat political family, in the majority at the Commission and in power in Spain, had mobilised not to be excessively critical of the draft Spanish budget. Another source who attended Eurogroup discussions in Luxembourg on Monday 5 October noted the benevolence expressed towards Spain by the German finance minister, Wolfgang Schäuble, who is also a member of the Christian Democrat family. “This shows that the EPP is highly organised, highly coordinated, more so than the PES”, this source observed. (Original version in French by Mathieu Bion and Elodie Lamer)