Starting gun to design the General State Budgets for 2023, the last of the legislature. The Ministry of Finance has activated the mechanism to begin the preparation of the next public accounts, which set the objective of consolidating economic growth and job creation after the pandemic. Among the general allocation criteria, aid to the most vulnerable sectors due to the shock in energy prices and the management of recovery plan programs financed with European funds are prioritized. This is stated in the draft of the Treasury ministerial order that sets the criteria and priorities for preparing the next General State Budgets for 2023, to which EL PAÍS has had access.
This legal text, which will be published imminently in the State official newsletter, supposes the start of the legislative procedure of the last public accounts of the legislature. The road to approve them, however, seems complex. Added to the increasingly difficult parliamentary arithmetic is international uncertainty, crystallized in the war in Ukraine and rampant inflation caused by the sharp rise in energy prices. And that the Executive emphasizes that Brussels has suspended the fiscal rules, which reduce the budget limits, which offers it more margin to design them.
The department headed by María Jesús Montero considers it a priority for the allocation of budget resources to also take into account temporary measures that protect the sectors most affected by rising energy prices. The draft, which consists of 26 pages, highlights the preparation of the accounts should preferably be aimed at “supporting, with specific and temporary measures, the most affected sectors and the most vulnerable groups due to the escalation of energy prices.” This will be done, adds the document, “contributing to reinforcing energy and supply security and interconnection, price stability and reinforcing the foundations of economic recovery and the creation of quality employment, promoting the integration of new renewable technologies, while Spain’s commitment to the protection of human rights, international peace and security is reinforced and support for people fleeing from Ukraine is guaranteed”.
The explanatory statement describes the context under which the next budgets will be drawn up. “The war has had a major impact on the economic prospects of the European Union in terms of lower economic growth and higher inflation and uncertainty. And in our country, the first effects on our economy have been manifested through the unprecedented rise in the prices of energy, raw materials and food”, reads the text, which summons the rest of the ministries to present their spending proposals by June 30.
The Treasury underlines that the Government has already adopted an anti-crisis package to alleviate the impact of the war ―next week the gas price cap agreed with Brussels will also come into force―. The document adds that Spain starts from a “solid” position and that, unlike other crises, the recovery is based on more robust foundations, highlighting that employment levels are the highest since 2008.
“Spain was already able to initiate a significant correction of the fiscal and economic imbalances caused by the pandemic in 2021, showing a structural change in the recovery of the Spanish economy,” indicates the draft of the order, which promises a deficit of less than 3 percent by 2025. % of GDP ―in line with the community fiscal rules, which remain frozen―, and redirect the debt below 110%. “This path is in line with the recommendations that the European authorities have made to Spain on maintaining temporary and specific measures that consolidate the economic recovery and support the households and companies most exposed to the energy crisis, while gradually allowing deficit levels to be reached. accepted by the Stability and Growth Pact”.
He knows in depth all the sides of the coin.
Execution of European funds
Likewise, the document ensures that execution of European funds “will boost the growth of the Spanish economy through all the investments and reforms committed, which during 2022 will be accelerated and completed, giving rise to a very significant macroeconomic impact” . Among the criteria for allocating resources, the draft also points out the measures aimed at promoting the green transition —in the 2023 Budgets a new report, in alignment with the ecological transition, is to be included—, to support digitization and investment in I +D+i, to guarantee full gender equality and provide young people with access to quality jobs and affordable housing.
Reasons for preferential allocation also include increasing recycling rates to meet European Union targets; improve water reuse; reduce overall dependence on fossil fuels; accelerate the deployment of renewable energy, support complementary investment in storage, grid infrastructure, electrification of buildings and transport, and renewable hydrogen; expand the energy interconnection capacity; and increase the availability of energy-efficient affordable and social housing, including through renovation.
“This ministerial order”, states the text, “dictates the rules for the preparation of the General State Budgets for 2023. It regulates the general budgeting criteria, the institutional scope of the budgets, the preparation process and processing of the draft budget, establishing the composition of the participating bodies in its preparation process, the deadlines and documentation for the preparation, and detailing the content of the budget structures”.
One of the novelties that the Budgets for 2023 will include is that they will include an analysis on “alignment with the ecological transition, which, in addition to meeting one of the milestones included in the framework of component 29 of the recovery plan, will accompany the analysis of alignment with the Sustainable Development Goals of the 2030 Agenda, gender impact and the impact on childhood, adolescence and the family, and budget information on youth and on actions related to the demographic challenge and the fight against depopulation.
The truth is that the economic outlook has cooled and has left less room for maneuver for the Government, which has also received a recommendation from Brussels to contain current spending in the face of a debt and a deficit that have skyrocketed with the pandemic. Little by little, all the agencies, including the Executive ―estimate a rise in GDP of 4.3% for this year, compared to the previous 7%, and 3.5% for 2023―, have been cutting points to the advance of the economy.
There is no single person responsible for this slowdown, which is affecting the world economy. The recovery in demand after the pandemic had already increased the cost of raw materials and caused short circuits in supply chains, and the war in Ukraine has been the final straw. The conflict has caused rising prices to spill over from energy to other sectors, particularly food.
In Spain, the rise in prices reached 8.7% in May, becoming one of the biggest setbacks for the Government. In the euro zone the rise reached 8.1%, the highest increase since the creation of the single currency and the reason why the European Central Bank has decided to raise rates for the first time in 11 years.
The economic clouds are also not helping to garner internal support, especially for a coalition Executive that is in the minority. And that, furthermore, there is a series of milestones of a political and legislative nature ahead of it that could shake it.
On the one hand, there are the reforms that the Government has promised to carry out to unlock community funds, which can generate collisions in the parliamentary arc. One above all: the second part of the pension reform, which has already had a tumultuous start and has raised doubts in Brussels. On the other hand, there are the political tensions between the government and its partners and within the coalition itself. Although the President of the Government, Pedro Sánchez, has become an expert in variable geometries ―that is, in passing laws with increasingly different majorities―, there are relations that have worn out, such as with ERC, and that threaten to ruin the bobbin lace of the Budget.
Without forgetting the electoral calls. The Andalusian elections next Sunday, in which the polls give victory to the PP, will only be the first test bench. Regional and municipal elections will be held next spring and, around November if the deadline is short, then it will be the turn of the general elections.
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