The Catalan Government asks the European Commission to guarantee the “fairer” distribution of deficit targets within Spain

Brussels (ACN).- The Catalan Government is trying to involve the European Commission in helping to relax the strict deficit targets, of 0.7%, imposed by the Spanish Government on the Autonomous Communities for 2013. It fears that if Brussels allows Spain greater flexibility, the Spanish Government will keep the extra for itself, as it has already done when Brussels previously gave more breathing space to Spain regarding the 2013 deficit targets. The Catalan Finance Minister, Andreu Mas-Colell, has sent a letter to the European Commissioner for Economic and Monetary Affairs, Olli Rehn, to denounce the fact that the Spanish Government is proportionally imposing much stricter deficit targets on the Autonomous Communities than the deficit it has allowed itself. This obliges the Autonomous Communities, including Catalonia, to implement a much larger and faster adjustment than that carried out by the Spanish Executive. In 2013, the entire Spanish public sector has to meet a total deficit target of 4,5%, a figure imposed by the European Union. The Spanish Government allowed itself a 3.8% target and imposed an objective of 0.7% on the Autonomous Communities. This means that the Spanish Government kept 85% of the deficit allowed by Brussels to Spain as a whole for itself, despite the fact that it only manages 50% of the total public spending. Furthermore it unilaterally allocated 15% of the total deficit allowed to the Autonomous Communities, while they manage 36% of the total public spending in Spain, including the main public services such as healthcare, education and social affairs. Furthermore, this is more dramatic for Catalonia, since the Catalan Government manages an even larger share of public services, as it has more devolved powers, including prisons, police and short-distance trains. Imposing such deficit targets on the public body managing basic Welfare State service inevitably has a great impact on citizens’ lives. In his letter, Mas-Colell explains some of these huge efforts and how the Catalan Government has managed to reduce its current spending by 15.7% in the last two years. This effort has been achieved in a context of economic recession, with a plummeting revenue, and with the Spanish Government not honouring all its debts and legal obligations.

On the 25^th of January, the Catalan Finance Minister, Andreu Mas-Colell – a former Harvard and Berkley professor and one of the most recognised experts in mathematical economics – sent a letter to the European Commissioner for Economic and Monetary Affairs, Olli Rehn. Mas-Colell urged the European Commission to watch over the internal split of fiscal consolidation measures within Spain, in order to guarantee a “fairer and more proportionate” formula. He also asked them to find “a more legally solid” formula, in order to guarantee that the Spanish Government will not keep the extra flexibility allowed by Brussels for itself. Mas-Colell insists that the fiscal consolidation path imposed on the Autonomous Communities is much faster and stricter than that taken by the Spanish Government itself. However, the Catalan Finance Minister has insisted that Catalonia is deeply committed to fiscal consolidation, but carried out at a reasonable pace.

The letter explains that Madrid has not taken into account the European Parliament’s recommendation to split the austerity efforts internally in a fair way, according to the share of public spending. Mas-Colell reminds the Commissioner that 36% of Spain’s public spending is directly managed by the Autonomous Communities. “Unfortunately, these are not the principles followed by the Spanish Government while setting up the regional deficit objectives, contributing to an unnecessary and bitter controversy”, he wrote.

Mas-Colell stated that he would consider it to be logical if the Catalan Government were being asked to meet a 1.6% deficit objective in 2013, as Spain was allowed a deficit corresponding to 4.5% of its GDP in total. In 2012, when Spain was allowed a total deficit of 6.3%, the Spanish Government imposed a deficit of 1.5% on the Autonomous Communities and now the Spanish Executive is going further and imposing an objective of 0.7% for 2013.