European Commission endorses Spain's 2022 Budget Plan

The European Commission has endorsed Spain's 2022 Budget Plan sent to Brussels on 15 October, which included the main lines of the public accounts that are currently being finalised in the Spanish Lower House of Parliament. In fact, the EU authorities, in a report published today, estimate that the recovery of the Spanish economy in 2022 will be driven by the investments and reforms included in the Recovery, Transformation and Resilience Plan.

"The European Commission endorses the 2022 Budget Plan, which lays the foundations for a fair recovery, incorporates European funds to boost investment and balanced and inclusive economic growth and, at the same time, allows Spain to continue reducing the deficit and public debt", said the Minister for Treasury and Public Function, María Jesús Montero.

The EU's endorsement comes in a key week for processing the General State Budget for 2022, which will be submitted this week to a vote in the Plenary of the Lower House of Parliament. These are public accounts that incorporate an unprecedented social investment with 240.375 billion euros in the national budget - six out of every ten euros of expenditure - a figure that rises to 248.391 billion when European funds are included.

Public accounts that have the largest allocation for pensions, scholarships or dependency in history and that also seek to boost the competitiveness of the productive fabric with record funding for research, as well as to promote digitalisation and ecological transformation thanks to the 27.633 billion euros from European funds.

In line with European recommendations

The European Commission considers Spain's 2022 Budget Plan to be in line with the recommendation adopted by the Council on 18 June 2021. In other words, European funds from the Recovery Facility will be used to "finance additional investment to support the recovery, while pursuing a prudent fiscal policy".

Specifically, the document signed by the Commissioner for the Economy, Paolo Gentiloni, explains that the European funds will allow for a potential increase in Spain's GDP of between 1.8% and 2.5% by 2024, without including the possible positive impact of structural reforms, which could be significant.

The Commission recalls that Recovery Facility grants allow for high quality investments and productivity-enhancing reforms without direct impact on general government deficits and debt. These measures should foster growth by supporting, in particular, the green and digital transition.

In this regard, Brussels recognises and appreciates that Spain's Budget Plan contains detailed measures that go in this direction and "promote the digital transition, increasing connectivity and reinforcing cybersecurity through different action plans" such as the Connectivity and Digital Infrastructure Plan for Society.

It also points out that the green transition "is contemplated" in the new Law on Climate Change and Energy Transition and in the National Hydrological Plan 2021-2027. It also highlights that the public accounts will increase public support for R&D and knowledge transfer through the Spanish Research Agency and the Cervera Network, among other actions.

It should be remembered that the Recovery Plan designed by the Government of Spain received the highest possible score from the European Commission's technical services in ten of the eleven variables they studied. The Plan contains more than 210 reforms and investments that will lay the foundations for a transformation of the Spanish economy based on four pillars: ecological transition, digitalisation, social and territorial cohesion and equality.

Deficit reduction

Moreover, the European Commission considers that the "macroeconomic assumptions" on which the Budget Plan is based are "favourable" in both 2021 and 2022.

In addition, the opinion endorses the deficit projections for these two years in the public accounts, which imply reducing the deficit from almost 11% in 2020 due to the measures adopted to deal with the global pandemic, to 8.4% in 2021 and 5% in 2022. In other words, a reduction of more than half of the deficit that the EU authorities consider to be "in line" with their autumn forecast.

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