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The government softens the deficit target of 2018 and postpones an adjustment of 6 billion

The Minister of Economy, Nadia Calviño, raises the deficit target in 2018 to 2.7% of GDP and 1.8% in 2019, five tenths more than expected

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The government softens the deficit target of 2018 and postpones an adjustment of 6 billion

After meeting with Finance Commissioner, Pierre Moscovici, minister of Economy and Business, Nadia Calviño, announced on Thursday in Brussels that government will raise deficit target to 2.7% of GDP this year and 1.8% in 2019, compared to 2.2% and 1 , 3% that had agreed executive of Mariano Rajoy. The European Commission's welcome to this proposal has been good, emphasizing sources from Ministry of Economy. In principle, approval of this new consolidation path will be made later, when budgets of 2019 are reviewed.

Although Rajoy's cabinet pledged to place deficit at 2.2% this year, budgets it left threatened with a gap in accounts in environment of 2.7%, according to community executive's own forecasts. According to calculations made by this newspaper, budget hole of whole administrations as of May is placed close to 2.9% of GDP. And that is not counting on salaries of staff and improvement of pensions, which will be paid from July. All this meant that this same year we had to address an adjustment of at least 6 billion euros.

"If we strive to maintain our predecessors ' objective, we would be obliged to take large adjustment measures that would be extremely damaging to recovery," he said.

The custom of team of Montoro was to leave without spending many games at end of year to be able to redirect accounts. But government of Pedro Sanchez wanted to make a clean slate. You don't want to start with defaults or adjustments. And he's asked for Arnica for this year. To a large extent because it will be difficult in just six months to approve taxes you have in mind. It will be difficult to collect parliamentary support for diesel tax. The banking tax has yet to be designed. The rise in corporate taxation presents technical obstacles that are difficult to resolve. Some experts indicate that it is a very difficult task to make companies pay a minimum of 15% cash. And Google rate must be defined legally to prevent it from being knocked down in court.

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To defend postponement of deficit targets, Ministry of Economy has wielded a report from Fiscal Authority (AIREF). This says deficit will be 2.7% this year and 2.2% is coming. Which meant that previously established objectives were impossible to achieve. That's what Calviño argued. According to minister's explanations, re was no room for compliance. And this had nothing to do with all government spending ads. The problem is that relaxation of effort is only made for this year. The required adjustment level is maintained for next one. Although not in structural part, which was 0.65 points of GDP instead of 0.4 that executive proposes now. In any case, this means that government announcements will be difficult to marry with accounts committed to Brussels.

Co-payments for retirees. Universal health. Social quotes for dependent caregivers. Increase defense spending. Shut down nukes and charcoal. More money for housing policy. Free highways... All this will be a little more complicated to fit into budgets of 2019 that executive prepares.

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