The Minister of Finance has stated this Wednesday that the Spanish economy will experience a cooling in the next year, although the recession leaves it for other countries in our environment. On the occasion of the debate on the amendments to the entire General State Budget, María Jesús Montero has predicted that our country will reach up to 21 million workers by 2023, with an unemployment rate that will be below 12%.
With the absence of the President of the Government -on a trip to Kenya with a group of businessmen and accompanied by his wife-, the Treasury Minister today defended the General State Budgets in which the increase in public spending and the reinforcement of taxes are keys in these public accounts, raised largely to respond to the effects caused by “Putin’s blackmail” with the gas blockade.
Despite this situation of vulnerability, Montero has pondered a macroeconomic picture, “from realism and without falling into the shock doctrine”, with economic growth of 2.1% for 2023 – while maintaining 4.4% for this exercise -.
Likewise, it has placed special emphasis on job creation, reaching up to 21 million workers, with unemployment rates that, according to its forecasts, will be below 12%, also indicating that one of every two jobs is already permanent in Spain, and we are currently facing record lows for unemployment in those under 25 years of age .
The scenario handled by the minister – endorsed according to her criteria by the assessments of national and international organizations – is that we are facing a slowdown or cooling of the economy, and the recession will end up affecting some countries in our environment , without specifying which ones.
Montero has insisted from the rostrum of the Congress of Deputies, that all the organizations also emphasize that Spain will be the economy that grows the most in the Eurozone, not without praising the international weight of Pedro Sánchez, and the leadership of our country in solutions against the rising energy prices or charging companies that have business profits.
With these wickers, and as she had already done in other interventions, the Minister of Finance – like Nadia Calviño – maintains that Spain has already “bent the inflation curve, as all the data forcefully reveal” and will come out of the deficit excessive , marked by the Commission -below 3%-, in 2025; as well as the public debt, which will be 110% of GDP that year.
Likewise, Montero pointed out the “continued effort” directed especially at the most vulnerable and the working classes and middle class – to whom he has dedicated a large part of the measures – and which will mean a 3.5% reduction in the inflation rate YoY
The last announced package is not incorporated into the 2023 General Budgets
Mixing measures with forecasts, and acknowledging that the last announced package is not incorporated into the 2023 General Budgets, the head of the Ministry of Finance highlighted her fiscal policy, beginning by describing the 6% that non-financial growth in revenue will have as prudent and, noting that inflation only explains about 25% of the increase in tax collection and that the rest is due to the improvement of tax bases.
“Laffer’s napkin or drip economy, they don’t work”
In this sense, Montero stuck his neck out with the new tax rates in his eagerness to defend fair and progressive taxation, relying on the support of organizations such as the IMF, the EU and the OECD -he said-, therefore, “the napkin of Laffer or the trickle down economy, they don’t work,” he added.
The study that rejects tax cuts
Thus, he stated that there is a study that has shown that reducing the tax on the rich by 1% does not raise GDP or lower unemployment, and ultimately increases inequality. A report that contrasts with the one recently published by the TAX Foundation , where it is ensured that Spain has come to occupy position 34 of the 38 in the OECD in fiscal competitiveness.
In fiscal key, Montero has highlighted the increase in the tax rate of capital income , the limitations of possibility of the large consolidated groups that invoice more than 200 million and, the Solidarity of the Great Fortunes tax, a formula that the minister considers necessary to compensate or face the war, along the lines advocated by the EU, he repeated again in his arguments.
In addition, María Jesús Montero has also spoken of tax reductions such as the one that refers to the reduction in work performance up to 21,086 euros , which according to the minister’s estimates will benefit 50% of Spanish workers with savings of 1,881 million.
With regard to this reduction, the person in charge of the Treasury defended her measure against the demand made by the Popular Party and that it has already approved in some Autonomous Communities, and that it is the deflation of personal income tax.
In this sense, Montero maintains that in a family of two adults and up to two children, with the reduction of the Government of Pedro Sánchez, the savings calculated by the INE is 746 euros per year . On the contrary, he stressed, if the PP measure was applied, a family with this prototype would only save 30 or 35 euros.
So, Montero colluded, with this and other aid such as that channeled to the self-employed and SMEs, “where is the tax blow to the middle and working classes,” he questioned.
Defense of public spending
Finally, and in the block of public spending, the minister defended that spending on a welfare state does not imply a waste that we cannot afford. What’s more, she remarked, “it’s the best investment.”
Thus, in this last section, the increase in spending on public services stood out, including pensions with 11.4% -with pensions indexed to the CPI- ; the Minimum Vital Income (8.5% more); the IPREM (3.6% more), Dependency (600 million more); Education (6% more); Health (7.6% more); salary of public employees (3.5% more in 2023); Promotion of employment (5% more); Infrastructures (12,635 million more); Commerce, Industry and SMEs (3,000 million “for the first time); Culture (13.5% more) and Resources for territorial administrations (3% more, with 13,443 million euros).
“These General State Budgets are “an antidote against inequality”
Nobody, concluded the Minister of Finance, “knows what is going to happen in the coming months, but these are resources to boost the economy and protect the middle and working class,” which constitute the majority.
Ultimately, concluded Montero, these General State Budgets are “an antidote to inequality.”