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Brussels foresees that Spain's public investment remains at minimum in 2018 and 2019

The European Commission claims that the expenditure will be 40% below the average of the last 23 years, affecting R amp; D, schools and hospitals

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Brussels foresees that Spain's public investment remains at minimum in 2018 and 2019

Public investment in Spain has recorded an average of 3.6% of GDP between 1995 and 2017, a figure above EU weighting for same period, located at 3.1%. The European funds and effervescence of bubble caused Spain to have a higher investment growth than in rest of countries as its economy convergía with euro zone. These were very concentrated disbursements in infrastructure because Community aid was designed primarily for public works.

And despite prevailing sense of corruption, se resources were spent. However, once crisis has arrived, this rubric has fallen from 55,142,000,000 euros scored in 2007 to 21.59 billion of 2016. A close of 2017 goes up a bit and reaches 23,286,000,000, largely because communities and municipalities fattened ir investment last year by 9% with view placed in spring elections of 2019.

These items range from investment in education and sanitation through infrastructure, defense, public order, housing or social affairs. According to a report by Bank of Spain, this chapter accounts for around 10% of total public expenditure, but during crisis embedded 60% of entire cut made to budgets of administrations.

The BBVA Foundation-Ivie data reveals that in education it has fallen to half maximum of 2009; In health almost 40% and infrastructures 60% compared to 2007 and 80% over 2009, exercise in which this expenditure was furr promoted by plan E. Only railroad has recovered something, which has regained 20 points after losing a 60%. With spending figures executed, R D still throws a 60% crash.

"Among euro countries, fall in public investment related to precrisis period has been considerable in Spain and Portugal (about two points less than GDP), Ireland and Malta (about 1.5 points less) and Greece and Italy (one point less)," says forecast report Prepared by Commission's services. These numbers do not envisage in case of Spain some of investments of defense, ADIF, water services and ports, whose items do not consolidate accountingly in whole of administrations. However, y do not add up in or countries such as France or Italy. In general, y are quite homogeneous but not exactly same data, emphasize several experts.

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The investment dimensions reached in 2009 corresponded to a bubble that inflated incomes and thus allowed greater disbursements. Between 2004 and 2008 around 4.3% of GDP. However, Spain has given a strong lurches to or end. When in midst of crisis public deficit was rioted and cuts were produced, investments did not have names and surnames as is case with social benefits. Nor were y an inescapable commitment like interest of debt, an essential payment to continue obtaining financing of markets. In addition, much of cut to public accounts was made by not executing scheduled games in budgets. Officials ' salaries, for example, could not be postponed. But investments do. The government even lowered taxes in 2015 and 2016 without explaining that, through back door, it would stop investing.

To EU's tail

Thus, Spain now belongs to group that less invests in relation to its GDP and, refore, to its economic capacity. It spends same as Germany in proportion to GDP, always criticized for its low level of investment and suffering from a deterioration in part of its infrastructure. It invests same as Portugal and Ireland, two countries hit hard by euro crisis. And only Italy, with a stagnant economy with no vision of laziness, destines less than Spain across EU: 2% of GDP. According to Commission, EU average is now 2.8%.

According to economists consulted, se levels do not seem so troubling to extent that during bonanza was built a endowment of infrastructures, according to Bank of Spain, is superior to European average. Anor question is wher that does not give enough for maintenance of se infrastructures and facilities, as supervisor himself has denounced.

"Not all cuts have same consequences. The fall in R D investment has additional costs because road can wait, but if you stop investing in research staff goes to anor country and you lose human capital you've formed, "explains Matilde more, professor at University of Valencia-Ivie.

But he adds that from now on we will have to "carefully examine costs and benefits of projects, valuing that y solvent specific problems". Very clear examples quoted by experts are Mediterranean corridor, or lack of treatment plants for which Brussels threatens to sanction Spain. A report by Sener Engineering Company and employers of construction companies Seopan identifies priority actions for next few years for a value of 114 billion in integral cycle of water, environment, health and education, accessibility and Urban mobility, intercity transport and logistics.

Tax sales and pension increases slow spending

In stability plan referred to Brussels, government concedes that public investment will stagnate in 2.1% of GDP up to 2021. That means that amount in euros can grow as GDP improves. However, this heading will not improve its weight in economy despite fact that, in proportion to GDP, it is at levels close to historical lows. As economists point out, investment is only part of public budget that helps to raise growth as long as it is well-designed.

And problem that experts point out is that public accounts are confronted with several restrictions that prevent more investment from rising. On one hand, debt and consequent payment of interest. On or, spending on pensions and health, which goes up by demographics. And, finally, re are electoral needs of governments in face of street pressures: These budgets collect a tax discount of 835 million this year and 1.373 billion one coming; An increase in remuneration of public employees in amount of 2.691 billion; and a pension improvement that will cost only this year 2.631 billion.

And all this despite fact that European Commission points out in its forecasts that Spain is one of countries with a "considerable" structural public deficit and, refore, "pending adjustment needs". That is to say, although with growth of activity re is more income, y should devote mselves to greater extent to correct budgetary gap. Despite importance attached to it, investment will remain at lowest historical levels in proportion to GDP, a victim of a still complicated political and economic environment.

"Investing in R D is a bet that needs stability to produce results. In or EU countries it is considered strategic and has been preserved from economic cycle, says Aleix Pons, director of economics at Cotec Foundation.


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