The deficit reduction measures announced by Madrid are “a step in the right direction”. But the European Commission is not convinced they will solve Spain’s economic problems. EurActiv Spain reports.
The EU executive stressed in a statement that Spain’s progress towards budgetary consolidation was slowing, and that some of the structural adjustments made in recent years were even being overturned.
In 2015, most of Spain’s regions, as well as the country’s social security system, fell far short of their budgetary objectives. The Commission said that the advantages of economic growth and low interest rates “have not been used to accelerate the deficit reduction”.
France’s budget deficit is unlikely to fall below 3% of GDP by 2017. But the deterioration of Spain’s public finances may save Paris the worst criticisms. EurActiv France reports.
As a result, Spain has failed “by a wide margin” to meet its deficit target of 4.2% of GDP, and its 2015 general government deficit is still among the highest in the eurozone, the executive stated.
In its recommendations, the Juncker Commission urged Spain to adopt measures to reduce its excessive deficit over time and in a sustainable way.
Madrid has cut €2 billion from its 2016 budget and has reduced the budgets of the autonomous regions.
Minister of Economic Affairs and Competitiveness, Luis de Guindos, will present a new deficit reduction programme, a calendar of reforms and a new macroeconomic framework to the Spanish senate’s Economy committee, aimed at satisfying the demands of Brussels.
The European Commission will send a series of warnings to Spain, Italy, Finland, Romania and Belgium today (8 March) because of their “serious” deviations from agreed-on fiscal paths, EurActiv.com has learned.
The Commission also called for continued action on unemployment, which has remained above 20%, despite a strong reduction in 2015. With a high number of people out of work for more than two years, long-term unemployment risks becoming a structural part of the Spanish economy, according to the executive, which noted that “labour market duality between permanent and temporary contracts remains high”.
Concerning the stabilisation of the financial sector, the executive said that Spanish banks had “ample access to liquidity, and their solvency and the quality of their assets have further strengthened”.
The medium-term priority should now be to privatise the banks BMN and Bankia, which are currently controlled by the Spanish state.