Rajoy to once again invest disproportionately low amount in Catalonia in 2016 budget

Barcelona (ACN).- The Spanish Government has presented its budget for 2016 and once again its investment plans in Catalonia are very far from being in line with the Autonomous Community’s GDP or population share within Spain. According to the planned budget for next year presented this Tuesday in Madrid (many months in advance because of electoral reasons), the Spanish Government plans to allocate only 10.7% of its territorial investment to Catalonia, even though the Catalan economy represents 19% of Spain’s overall GDP and Catalans make up 16% of Spain’s population. The amount planned for 2016 is however a bit higher than that allocated for 2015, which was only 9.5% of Spain’s total, the lowest since 1999 and interpreted by many to have been in retaliation for the independence claims shared by many Catalans. Despite the increase, the investment levels for 2016 continue to be among the lowest in the last decades. Therefore, the Spanish Government’s budget for next year confirms that the Executive chaired by Mariano Rajoy, who also leads the People’s Party (PP), is not willing to make any concession to better fit Catalonia within Spain and instead is continuing with its strategy to recentralise powers and reduce Catalonia’s economic weight.

The Spanish Government’s budget for next year continues to provide Catalonia with fewer resources than it needs. The amount of investment planned for 2015 in Catalonia was €1,072.3 million and that for 2016 is €1,179.5 million, which represents a 10% increase (+€107 million) but is still one of the lowest investments in decades, both in percentage and absolute terms. On top of this, the Spanish Government always executes in Catalonia a much lower amount of the budget than it initially planned (less than 40% some years), while in some parts of Spain (like Madrid) it executes almost all of the budget initially planned and some years has even allocated a greater amount of resources.

Despite these facts, all Madrid-based media have focused this Tuesday on the aforementioned 10% increase from 2015 to 2016, presenting Catalonia as a clear winner in the Spanish Government’s budget for next year and forgetting about the extremely low investment levels of 2015, 2016 and many other years. The Spanish Government has decreased the overall territorial investment in 2016, which goes from €11,267 million in 2015 to €11,052.6 million for next year, a 1% decline. Therefore, some Autonomous Communities have seen their overall investment drop, while others have seen it increase, such as Catalonia and the Valencian Country (also called Valencian Community). Andalusia, Galicia and Castile and León lead the ranking of the Autonomous Communities that will receive the highest share of territorial investment.

Catalonia suffers from a continuous fiscal deficit

In fact, Catalonia has been suffering from continuous underfunding for the last three decades at the hands of the Spanish Government, which even failed to respect a Spanish law by which it was obliged to allocate at least the equivalent of Catalonia’s share within Spain’s GDP between 2008 and 2013 to compensate for such a lack of investment. Catalonia has never received a territorial investment in line with its GDP within Spain and most of the years has received a level of investment much lower than its population share warrants.

On top of this, the Catalan institutions are also chronically underfunded and the level of public resources per capita in Catalonia is lower than in many other areas of Spain, despite Catalans paying the highest amount of tax. This results in Catalan public services being underfunded compared to other areas of Spain and in the construction of transport infrastructure being delayed, which hurts the people most in need and the overall Catalan economy. Several studies – including one made by the Spanish Government in 2008 – have shown that Catalonia has each year since at least 1986 been registering a fiscal deficit of around 8% of its annual GDP, an amount representing an annual transfer of €16 billion in 2015 money to pay for services and infrastructure in the rest of Spain. The Catalan Government’s budget, in charge of managing and funding healthcare, education and social services, had a €5 billion deficit in 2015.

Spanish Finance Minister: the budgets “continue to confirm” that Catalonia is “very important”

During the presentation of the Spanish Government’s budget in the Spanish Parliament, the Finance Minister, Cristóbal Montoro, stated that the budgets “continue to confirm” that Catalonia is “very important” for “the whole of Spain and for the whole of Europe”, because the planned territorial investment is “being increased by around 10%”. However, Montoro failed to mention that 2015’s investment was the lowest for the last 16 years and that an increase for next year far from compensates for this, with 2016’s planned investment in Catalonia in fact still being among the lowest of the last decades.

Montoro also said that if Catalonia was not part of Spain, it would grow much less than it is currently doing. The Catalan GDP grew by 3.5% in June in annual terms, above the 3.1% Spanish average (which includes Catalonia). According to Montoro, if Catalonia “is growing it is because it is integrated in an interior market that is called Spain”, and because “the rigorous, serious and committed policies on the funding of Catalans’ public services” carried out by the Spanish Government are “favouring their economic growth”.

Furthermore, Montoro stressed that the Spanish Government “has been guaranteeing the funding of Catalans’ public services since the start of the term”. “Catalonia is one of the [Autonomous] Communities that is growing and creating employment in terms of national average despite the fact that it has a government that is devoting its efforts to something else”, he said referring to the Catalan independence process. Montoro added that if the Catalan Government “would work toward the economic recovery, the results would be better” and accused the President of the Catalan Government of “not doing anything” for the economic recovery “besides complaining and opening a process that he does not know where will lead”.

Ironically, most of Catalonia’s macroeconomic indicators are better than the Spanish average and it is leading the unemployment reduction. In addition, the Catalan Government was among the first to implement severe austerity measures back in 2010 and 2011 and has been reducing its deficit at a higher rate that the Spanish Government for the last 4 years. Meanwhile, Catalonia’s fiscal deficit was continuing and the Spanish Government’s investment in Catalonia was decreasing much more than in most of Spain.