Brussels · WhyBrussels' grace is gone, and Spain continues to run a very high deficit. The EU reactivates fiscal rules in 2024 after four exceptional years of expansive economic policies to deal with the Covid crisis, and will open files to all Community Partners that do not record an overall deficit of less than 3%. One of them is the Spanish state, which in 2023 was six tenths (3.6%) above the set limit, as confirmed on Monday by the European Commission's statistical institute, Eurostat.
In addition, the country also exceeds, by a significant margin, the maximum public debt allowed by the European Union, which amounts to 60% of the GDP of the country in question. In fact, Spain is the fourth worst European partner in this regard, last year recording a debt of 107.5%, behind Greece (161.9%), Italy (137.3%) and France (110.6%). In total, thirteen EU countries have exceeded the debt ceiling.
As for the deficit, there are as many as eleven member states violating the limits. Italy comes after Spain, which is the European partner with the highest deficit, at 7.4% of GDP. France (5.5%), Poland (5.1%) or, among others, Belgium (4.4%).
We must remember that the European Commission has already announced that next June, immediately after the European elections, it will open the files on all non-compliant countries, and that this will be based on the data confirmed by Eurostat on Monday. In this way, the public accounts of Spain and a large number of European partners are subject to periodic and strict oversight by the European Commission, popularly known as Men in black From Brussels.
3,6%
This is the deficit rate recorded by Spain in 2023
In this sense, the European Union's executive authority will ensure that state budgets that exceed the deficit limit must reduce it by at least 0.5% annually until they comply with the limits approved by the European Union. In the case of Spain, it amounts to about 7.3 billion euros. Countries that, according to the European Commission, do not take steps to reduce the deficit could face semi-annual fines of up to 0.05% of their GDP, as stipulated in new tax rules that the European Parliament is expected to ratify this week. It will enter into force soon.
However, the Spanish government plans to reduce the deficit rate by six-tenths in 2024, thus reaching the desired 3% already this year and complying with EU standards in the face of controls in 2025. For this reason, there is a possibility that Brussels will turn a blind eye, and with expectations that Spain Will reach the target next year, will not finally open the case for sanctions against him this summer.
3%
This is the deficit rate that the Spanish government expects to reach this year
In addition, Eurostat succeeded in reducing by three-tenths (3.6%) the deficit that the Pedro Sánchez government had committed to the European Commission to reach by 2023, which had been 3.9%. In 2022, Spain also recorded a significant drop in this rate, lowering it by 1.1 points compared to 2021. So, it is a clear downward trend that Moncloa hopes will influence Brussels' decision to send them or not. Men in black Madrid.
In any case, this will not be the first time that Spain has faced a sanctions file from the European Commission. Between 2009 and 2019, during the end of José Luis Rodríguez Zapatero's term and most of the years of Mariano Rajoy's rule, the state's public accounts were under the guardianship of Brussels, which was about to impose a $2,000 million fine. euro. Finally, he forgave him for the punishment, which was very heavy and unprecedented.
Back to the pre-Covid era
With the exception of Spain, a large number of member states and the EU as a whole remain on track to reduce the deficits they reached during the most difficult years of the Covid crisis and the beginning of the Ukraine war. Indeed, there are partners, such as France, Spain or Italy, who would have preferred to make the new fiscal rules more flexible and allow more years of expansionary budgets. Now, the will of the largest and most influential country in the bloc, Germany, and the will of its usual partners, such as the Netherlands, have once again prevailed and they want to return to greater austerity, although in 2023 the German state entered a phase of technical recession and the eurozone narrowly avoided it.
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