Mas presses Madrid to ease Catalan deficit targets to avoid damaging the Spanish economy

Riudellots de la Selva (ACN).- The Catalan President, Artur Mas, said on Monday that if the Spanish government does not set a more flexible deficit target for Catalonia, the whole of the Spanish economy and that of southern Europe could be damaged. Speaking during the inauguration of a new technological centre and a production plant of the company Comexi, Mas said that Madrid “should not punish” the most economically productive areas in Spain, such as Catalonia.

The Spanish government plans to publish the new regional deficit targets for 2013 in the next few days. Mas argued that the Catalan economy is the only one ready to become a driving force for growth in Spain and southern Europe. However, Catalans expect Spain to offer Catalonia “the deficit target that it needs”, said Mas, rather than a stricter limit that could cause further economic stagnation.

Artur Mas said that the Catalan economy is innovative, industrial and open to the world, and therefore can be considered as one of the “motors” of Spain. “If it is not understood that the big productive motors such as Catalonia should be helped, then things are going wrong”, he stated.

Mas regretted that in Spain less productive regions are “too often” helped more than others that could take the lead and boost the economy of the whole of Spain. The Catalan President said that the central government should guarantee “more or less similar” social services in the 17 autonomous communities, but warned that the most productive and innovative cannot be “punished”.

“We should all have equal opportunities, but not everything has to be exactly the same”, said Mas, referring to Catalonia. According to him, Catalonia is in a “very fragile” situation, considering its economical and political challenges. Things could get worst if it is forced to meet very strict deficit targets.

In May, the European Commission gave Spain more time to meet its own deficit targets, setting the new limit for 2013 at 6.5% of GDP. Some autonomous communities such as Catalonia have urged Spain to share this extra deficit with the regions that invest  most of their spending on healthcare or education.

However, the overall target for autonomous communities in 2013 is 1.3% of GDP. Every autonomous community will have now an individual target, set by Spain and that will be announced in the next few days. Last year, the Catalan deficit was 1.96%, while the limit set by Spain was 1.5%. 

The Catalan Finance Minister, Andreu Mas-Colell, admitted recently that he could not further reduce the budget without seriously compromising the welfare system in Catalonia which would make it impossible to boost the economy and create jobs. Catalonia has reduced public spending dramatically in the last few years, introducing significant austerity measures such as cuts in public sector salaries.

The Catalan Government admits that is quite difficult to expect a more generous limit for Catalonia from Madrid in 2013. According to Mas “things around Spain and in southern Europe would be much better now” if Madrid had understood that setting very strict deficit target for economically active economies makes them less productive as the government does not have the resources to invest in growth and jobs. “But it’s never too late to change”, he added, hoping a last minute decision by the Spanish government could see Catalonia enjoying some more time to reduce its deficit.

Catalan finances are under stress due to the difficult economical situation in Spain, but also because of the so-called fiscal deficit. Last year, Catalonia was the Autonomous Community paying the 3rd most taxes per capita to the Spanish treasury, with a 119.1% rate, with 100% being the average. After redistribution, it was 10^th in terms of spending per capita from Spain, with a 99.4% rate, below the average.

In May, Minister Andreu Mas-Colell published the fiscal balances for 2010. They showed how Catalan citizens contributed €16.5 billion to services and investments made in the rest of Spain. This represents up to 8.5% of Catalonia’s GDP.