the NATO World Summit in Madrid, on July 28 and 29, and given the eminent vote in the Congress of Deputies this week on the spending or non-financial spending ceiling, the Government of Pedro Sánchez now sees itself in need to qualify the commitments reached at that meeting, and which included increasing the item to 2% of GDP, before 2030. That is, some 1,200 million euros a year, as eE already calculated.
The reason for this change in concept is none other than the strong opposition that Unidas Podemos shows to allocate more money to this task, and therefore, to put stones in the way of the spending ceiling, which is the step prior to the General Budgets of the State. Hence, the Socialist Executive wants to please Yolanda Díaz and the podemite ministers, moving the game from one side to another.
Thus, and in the face of the opposition of United We Can, the Government will leave out the chapter on current spending. And in any case, it will include it in the Investment chapter, but already within next year’s Public Accounts, the draft of which is expected to reach the Council of Ministers on the first Tuesday of October.
The change of concept is not trivial. United We Can only support games to increase the salary of the military, but in no case to improve material. The underlying issue is that when going from current spending to chapter VI of investments, the discretionary commitment of the President of the Government makes it lose solidity, because the investments can be carried out yes or no in the budget year.
Of course, there are also expert economists who understand that this change may be due to the fact that, for a long time, Brussels has wanted items that compute deficits to be excluded from the stability pacts and are directly substantiated in strategic investments.
However, it should be remembered that it was Pedro Sánchez who, at the NATO Summit in Madrid, announced the commitment to the Atlantic Organization to increase Spain’s defense spending from the current 1.3% of GDP to 2%.
So, in his argument, he argued for the need to guarantee and reinforce security in Europe, assuming that “we must protect it and dedicate economic resources”, given the current geopolitical scenario and Russia’s invasion of Ukraine.
But his partner in the Government does not share this position. And precisely this past week he made it clear by abstaining in Parliament from the incorporation of Sweden and Finland into NATO.
Moncloa is confident that the increase in defense spending will not pose a stumbling block
Not surprisingly, the socialist wing of the Government trusts that the increase in Defense spending planned for the next General Budgets will not pose an obstacle to reaching an agreement with its coalition partner, while United We Can alleges that a large part of this increase it will remain outside the spending ceiling and therefore does not compete with social spending.
For United We Can, this increase could be done “in the medium term” or by allocating investment to raise the salary of the troops (which is a proposal by Podemos) instead of “spending it on American arms companies.” However, in the socialist part of the Executive they point out that for their coalition partner the most important thing is that defense spending does not collide with social spending and therefore they trust that this formula is satisfactory and allows them to reach an agreement.
budget review
The sources consulted rule out moving forward with this chapter of the PGE with the support of the PP, in case an agreement is not reached within the Government, despite the fact that the popular a priori are in favor of increasing defense spending. In this sense, they think that if the PP “smells blood”, seeing internal discrepancies, it will take the opportunity to overthrow the PGE.
The red line of the Housing Law is still there
The truth is that, with regard to the Budgets, Unidas Podemos has already expressed its complaint that the negotiations are stuck, and that the red line of .
Meanwhile, the Socialists want Unidas Podemos to park the long list of amendments that are slowing down the process of the Housing Law, but they understand that it is an instrument of pressure, and that is why they do not drop the rent freeze from their demands. , priority demand.
On the other hand, although already within the definitive contingency plan that the Government has to present shortly before the Congress of Deputies -and which may well coincide with the negotiation period of the 2023 Budgets-, the purple formation insists on taking forward variables.
non-financial keys
No tax rules. Last July, the Government approved in the Council of Ministers the spending ceiling, or rather reference rates, which once again escape fiscal rules, due to the fact that the EU safeguard clause is maintained. On this occasion, the amount rises to 198,221 million, 1.1% more than in 2022.
Next Generation. The non-financial expense item also includes 25,156 million euros from the Next Generation Funds.
By subsectors. With the flexibility given by Brussels, the CCAA will be able to reach a deficit of 0.3%; the General Administration at 3.2% of GDP; local entities at 0.2% and Social Security at 0.5%, with a game of 19,888 million euros.
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