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Without a deficit path, there can be no budget and probably no legislature. The bill was approved yesterday in Congress, which makes it possible that the public accounts will be ready in June. The abstention of the ERC and EH Bildu is decisive and removes many unknowns in the government coalition. With the Catalan dialogue just announced, the Esquerra vote is a clear gesture in favor of political stability. There is no similar situation with the Catalan Council, which voted against fiscal policy, which angered the Republicans. The opposition denounced the so-called “concessions” to the independence movement in exchange for the budget.
First step approval The general state budget has been given. Yesterday, Congress approved the deficit target for 2020, at 1.8% of gross domestic product, and the rest of the fiscal targets, which are to be gradually reduced until 2023. The abstentions of ERC and Bildu were crucial, so that the votes in favor outnumbered those against: 168 in favor, 150 against, with 19 abstentions. At least a dozen right-wing lawmakers did not attend the congressional vote, which could be crucial for the future of the legislature. However, Republicans warned that their abstention was not to help publish the state’s accounts, but to “provide an opportunity”. The negotiating table between the Spanish government and the government began on Wednesday. Despite this table, the Junts of Catalonia voted against it. Nothing the two groups, the ERC and the Junts, did could leave the other indifferent: the deputies refused to follow the guidelines of the president of the parliament, Quim Torra, causing consternation in the Republican ranks, who had not expected this move. As a result, the ERC was portrayed as a “group supporting Pedro Sánchez”, a source in the party told El País: Republicans believe that the Junts’ position is aimed at exposing them to voters who support independence.
Indeed, the wild cards for Spain’s fragile political stability are beginning to be cleared away in the first real serious test of the legislature. Yesterday, Spain’s Socialist Workers’ Party (PSOE) received one more vote than it did last year. Award Ceremony Just a few weeks ago, the number of votes in favor was 167. With this support, Pedro Sánchez clears the first hurdle in the race for a budget that replaces the one prepared by the PP government and will be extended for the second time. The PTS and Podemos de Canarias deputies, who opposed the appointment in January, were joined in the vote by Canarias Alliance deputy Ana Oramas and Cantabrian MP José María Masson. Pedro Quevedo from the New Canary Islands and Tomas Guitart, deputy from Teruel’s Existential Party, also supported the new deficit target.
With these exceptions, the arguments of the Minister of Finance, María Jesús Montero, can only convince those who are already convinced. Montero stressed the need to update the accounts of central, regional or local governments, as the economic cycle is still far from the expansion of 2017. The Minister of Finance also asked for a certain confidence from the independentists so that the government can continue the dialogue on Catalonia. “If you vote against it, do not incite the government to be insensitive to the need for autonomy,” he warned. Support for the deficit path lays the foundation for many measures such as the renewal of non-contributory pensions and the extension of paternity leave.
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The right-wing bench did not go off script. Elvira Rodríguez, the PP’s economic spokeswoman, said the reason for voting against the PP was that the party did not trust the government’s forecasts, especially those for revenues and the deficit. Ciudadanos’ economic spokesperson Marcos de Quinto and Vox MP Inés Cañizares also did not see any positive signs. The right argues that Brussels will not accept Spain’s public accounts because they are not credible. CUP also joined the opposition; Bildu was among those who abstained.
After the plenary session, the popular president Pablo Casado announced in a serious tone that Pedro Sánchez was asked to explain “the concessions made to the independents in exchange for the budget”. Sánchez thanked the votes for the yes votes and declared that these figures would boost the economy “and make progress in social justice”..
The stability of fiscal targets is under the roof
Congress approved on Thursday the new stabilization path, the first step in advancing the budget. No one is ringing the deficit cat: at the end of 2019, the gap was about 2.5% of GDP (in other words, Spain spent almost 3 billion more than it earned), and the target for 2020 is a little softer than expected (1.8% of GDP, a figure that will gradually decrease in the future). The government may be guilty of a certain optimism – especially in terms of what it hopes to collect – due to the virus cloud that threatens the economy.
There is no way Spain can indulge in merriment, but the executive also announced a new spending ceiling that will allow it to spend a little more: an extra 6 billion. The spending ceiling is a limit on the amount of non-financial spending (excluding interest on the debt) that the government can achieve by meeting its fiscal targets. Spending can only increase if revenues rise, and the government plans to increase personal income taxes, corporate taxes, green taxes, and to set up a Google tax and a Tobin tax. It is unclear how revenues will grow, given that the budget will not be approved until the summer at the earliest. As for expenses, yes: open your mouth, pensions and wages for civil servants have already increased in January (5 billion more), and commitments with the nationalists may force the threshold to rise further.
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