The Government says its latest measures will "guarantee" a reduction in the country’s deficit of 4.5% of GDP in 2013 and 2.8% in 2014.
Spanish Government President, Mariano Rajoy. Photo: EFE
The Spanish Government are planning a series of adjustments to its budget worth 13,118 million Euros in 2012, 39,000 million in 2013 and 50,000 million in 2014. This equates to a total of 102,149 million Euros in a space of two years, the equivalent of 10% of GDP.
The latest adjustments include the Royal Decree of December 30th, which was reflected in this year’s annual budget, the Royal Decree of July, which allowed for adjustments worth 65,000 million Euros, as well as plans for rebalancing the books of the country’s autonomous communities and municipalities.
The Budget Plan for 2013 and 2014, issued to Brussels in compensation for a relaxation on deficit repayment objectives, sets out measures adopted to comply with the newest fiscal plan, which made no mention of the need to adopt further measures.
According to the Government, its latest programme of adjustments will “guarantee” a reduction to the deficit of 4.5% of GDP in the coming year and 2.8% in 2014.
Biggest adjustment to taxes
The biggest adjustment in the plan will be to tax contributions, which foresees an increment in treasury income of more than 35,000 million Euros between 2012 and 2014. Increases to VAT are expected to provide an extra 2,300 million Euros this year, 10,134 million in 2013 and 9,670 in 2014.
Adjustments to employment and social spending
Reductions to unemployment benefit as well as to the fight against tax fraud are expected to enable cuts of 1,888 million Euros in 2014, 5,746 million in 2013 and 5,989 million in 2014.
Savings of 70 million Euros are expected in Social Security spending, though gaps of 1,040 million Euros and 2,551 million Euros are foreseen in 2013 and 2014 due to reductions in revenue received by way of social contributions in 2013.
In terms of regional spending, savings of 6,867 million Euros are expected in 2013 and 12,687 in 2014 as a result of agreed budgetary measures in the areas of Health and Education. The overall saving over two years is forecast to reach approximately 15,000 million.