deficit

Spain invested €5bn less than budgeted in Catalonia between 2015 and 2022

Long-standing fiscal deficit complaint of pro-independence parties set to continue, despite more money granted than in 2021

Study claims Spain failed to invest €8bn of budgeted total, which would have created 111,500 jobs

Spanish government trims projections by 0.3% and says it will not meet its deficit target

Catalan exports totalled €65.14 billion in 2016 and set a new record for the sixth consecutive year, according to data released by the Spanish Ministry for Economy and Competitiveness. The figure not only represents a 2% increase in comparison to last year but a higher growth than that registered in the whole of Spain (1.7%) and the Eurozone (0.17%). Thus, Catalonia continues to lead exports in the whole of Spain. This good trend is the result of “the persistent and permanent efforts of Catalan companies, which are amongst the most internationalised in our environs”, explained Catalan Secretary for Business and Competitiveness, Joan Aregio. The sectors which grew the most in 2016 in terms of exports were equipment goods (+10.4%), followed by chemical products (+1.3%). On the other hand, exports in the automotive sector fell by 0.4%.

The Spanish president, Mariano Rajoy, is not going to offer a new fiscal deal to Catalonia similar to the one already enjoyed by the Basque Country and Navarre. In an interview with Spanish radio, Rajoy said that he is against such a deal because it would “create enormous problems” in Spain. The People’s Party leader also confirmed that he will never allow a referendum on independence in Catalonia. “I cannot do it and I don’t want to do it”, he said, after the Catalan President, Carles Puigdemont, stressed in Brussels that his government wants a referendum agreed with Spain. Rajoy warned that he won’t act “against Spanish unity, national sovereignty or the equality of all Spaniards”. “For me, the 7 million Spaniards that live in Catalonia are the same as those in the rest of Spain”, he stated.

The Catalan Vice President and Minister for Economy and Tax Office, Oriol Junqueras, voted against the new regional deficit target of 0.6% of GDP agreed between the Conservative People’s Party (PP) and the Spanish Socialists (PSOE). During the Council on Fiscal and Financial Policies (CPFF, going by its Catalan initials) on Thursday evening, Junqueras said that the target is “absolutely far from what citizens need and deserve”. The Catalan Government had asked for a 1.18% deficit target for 2017, but the Autonomous Communities’ limits were set instead at 0.6% for next year, 0.3% for 2018 and 0% of GDP for 2019. They were accepted despite the opposition of Catalonia, the Balearic Islands and Valencia. The communities led by the PSOE abstained. The Spanish Finance Minister, Cristóbal Montoro, celebrated the fact that only three territories voted against the measure, saying there was a “good atmosphere” at the meeting.

Exports from companies based in Catalonia reached €48.58 billion during the first 9 months of 2016, a 2.1% increase compared to the same period last year. According to the Spanish Ministry for Economy and Competitiveness, this figure sets a new historic high for Catalonia’s export sector, which has been growing strongly over the last few years. Moreover, in September Catalan exports were worth €5.7 billion, which is the highest figure for this month since the beginning of the historic series, in 2000. The sectors that contributed the most to the positive export figures were the chemical sector, which concentrated 60.8% of total exports, followed by equipment goods and the automotive sector. On the other hand, Catalonia’s trade deficit between January and September rose by 0.5% in comparison to the same period in 2015 and totalled €9.2 billion. 

Spain’s effort to reduce its public deficit “has been insufficient”, according to Brussels. Thus, the European Commission (EC) took this Thursday the first step in order to fine Spain, ahead of the Ecofin meeting. The fining process foresees that 20 days after this meeting, the EC could present the suggested fine, which could equal 0.2% of Spain’s GDP. According to a report released this Thursday by the EC, Spain closed 2015 with a 5.1% deficit target, far from the 4.2% established by Brussels. The report concludes that Spain’s fiscal effort fell “significantly short” of what was recommended and even “relaxed in 2015”. “Spain did not reach the intermediate target for the headline deficit in 2015 and is not forecast to put an end to its excessive deficit by 2016”. 

A year’s extension for Spain on its allotted time to meet the public deficit target has been deemed illegal by the lawyers at the European Council. This ruling comes after current Spanish President Mariano Rajoy sent a letter asking for an extension to the European Commission President Jean-Claude Juncker. A legal report to the Council was commissioned by the presidency of the Economic and Financial Affairs Council (Ecofin), after Germany’s complaints of having saved Mariano Rajoy from a sanction during the Spanish electoral campaign. However, the Ministers of Economy and Finance of the EU will not be able to approve this extra year until the European Commission decides whether or not it is punishable by a fine of up to 2 billion euros due to breach of the public deficit target. Despite the ruling, Spanish Deputy Prime Minister Soraya Sáenz de Santamaría has stated that there is “no doubt” that no fine will be issued for missing the deficit in 2015.

The Catalan Government’s total projected spending for 2016 amounts to €23.7 billion, 1.5% higher than last year’s bill and sets a deficit equivalent to 0.7% of Catalonia’s GDP, the same as that for 2015. Catalan Vice President and Minister for Economy Oriol Junqueras handed the proposal this Tuesday to the Parliament’s President, Carme Forcadell.According to Junqueras, the 2016 budget is “the most realistic and social-oriented budget ever”. After presenting the draft, Junqueras met with representatives of all the groups in the Parliament except for pro-independence radical left CUP. The anti-capitalist group, who have a ‘stability agreement’ with the governing party, declined the invitation in protest against the police baton charge that occurred this past Monday in Barcelona’s Gracia neighbourhood after the eviction of a social centre.