Despite a 4.6% reduction in revenue, the Finance Department has been able to cut spending by €283 million when compared to 2010. The government had a deficit of €3.798 billion in the eleventh month of the year, equivalent to 1.9% of GDP. The aim of the Catalan Government is to close 2011 with a 2.66% budget deficit.
The Catalan Government will reduce department expenditure by 3.8%, public sector prices will increase and real estate assets will be sold. In addition, a symbolic tourist tax and a universal fee for each drug prescription will be introduced. The Catalan Finance Minister, Andreu Mas-Colell, insisted that next year’s budget continues with the two-year adjustment plan, which has been designed to reach a 1.3% deficit objective in 2012. Basic welfare services and security and judicial policies are the areas least affected by the reductions. In the next few weeks, parliamentary negotiations will take place to approve the final budget.
In order to foster transparency, almost all the Catalan Members of the European Parliament have asked the European Commission to supervise the Catalan Government's budget, and other “regions of systemic importance”. Catalonia’s GDP is as big as that of Finland and Portugal. MEPs from CiU, ERC, ICV, and the PP believe that this procedure will prove Catalonia’s reliability and rigour, and will subsequently have a positive effect on the international financial markets. The PSC is looking at possibly joining the initiative.
The winner of the Spanish Elections, Mariano Rajoy, outlined his government programme at the parliamentary debate on his approval before being officially appointed Prime Minister. Rajoy, without revealing any details, talked about redefining public powers, reforming public administrations, homogenising welfare policies and ensuring market unity. The Centre-Right Catalan Nationalist Coalition (CiU), the Catalan Socialist Party (PSC), the Catalan Green Socialist and Communist Coalition (ICV-EUiA) and the Left-Wing Catalan Independence Party (ERC) warned Rajoy of not affecting Catalonia’s self-government with his reforms.
The Catalan Minister for Finance, Andreu Mas-Colell stated in a press conference that because of the Spanish Government’s refusal to pay them the promised €759 million, the Catalan Government will be short of cash for the remainder of the year. Mas-Colell explained that Catalan public employees would receive most of their Christmas bonus with a one week delay. In addition, service providers will also be paid later. Visibly angry and arguing that they had not been previously informed about the measures, union representatives decided to leave the negotiation table with the Catalan Government where talks had been taking place about next year’s salaries, working conditions and staff numbers.
Public employees have taken to the streets to put pressure on the Catalan Government during the negotiation of next year’s budget. The Government proposed 19 measures affecting public employees and aimed at saving €625 million in 2012. They include salary reductions, modifications in working conditions and review “of temporary staff”. Negotiations began on November 30th and, despite some temporary suspensions, they are on-going. The Catalan Government wants to close a deal as soon as possible, and unions want to keep negotiating until next year’s budget approval.
The outgoing Spanish Government has refused to pay Catalonia €759 million this year despite being legally obliged to do so and having stated publicly on several occasions it would pay the money. The Spokesperson for the Catalan Government announced Catalonia is risking to miss the deficit objective for 2011 without the funds. Facing this situation and the damage caused by it, the Catalan Government has decided to take the Spanish State to court and explain the issue to European institutions. Mariano Rajoy, Spain’s future Prime Minister, has said that he is not aware of the issue.
The Spanish Government refuses to transfer some of the funds that it is legally obliged to pay Catalonia in 2011. Without this money, the Catalan Government will have difficulties meeting the deficit objective for this year. The Catalan Minister for Finance, Andreu Mas-Colell, considers the stance of the Zapatero Government to be “rude” and ignorant to the needs of Catalonia. Furthermore it forces the finances of Catalonia to be put in the spotlight. Every single Catalan political group, including the Socialists and the People’s Party, have criticised the decision of the soon to be former Spanish Prime Minister, and have expressed their support for Mas-Colell.
The Catalan Government has signed an agreement with the main trade unions and business association to foster “negotiated flexibility” within the labour market. The aim is to provide companies with a greater flexibility framework while securing jobs. The President of the Catalan Government, Artur Mas, suggested the new Spanish Government follow Catalonia’s example of reaching an agreement with the social agents to improve the labour market.
Both governments are currently defining their strategies and building their respective cases in preparation for a discussion on the issue in the coming months. The Spokesperson for the Catalan Government, Francesc Homs, has sent a clear message to the next Spanish Prime Minister: Catalonia will only accept a negotiation on a new fiscal model, which would reduce the financial transfers to Spain’s poorer regions. If the Spanish Government refuses to discuss about it, Catalonia will organise a citizen vote on it. Over the past few days, the People’s Party has hinted that the Catalan Government’s main claim is not a matter for discussion.
In a meeting at the Parliament of Catalonia, the Catalan Government has announced that it will reduce its budget contribution to the Catalan public television and radio broadcaster (CCRTV) by 13.3%. As a consequence, the entire CCRTV budget will drop and two of the six digital TV channels will be closed. However, the Government’s Spokesperson, Francesc Homs, in charge of public media, said no staff would be laid off.
Artur Mas, the President of the Catalan Government, has announced the main austerity measures to reduce Catalonia’s public deficit and meet the 1.3% objective for 2012. Mas stressed that these measures are to be taken in order to reduce the deficit and not harm social policies. The Catalan People’s Party was satisfied with the plans, while the Left-Wing parties warned that they would harm the middle classes. The Catalan President also sent a warning to the next Spanish Prime Minister: a new “fiscal agreement” for Catalonia might be “one of the few opportunities left” to rebuild relations with the rest of Spain.
The conservative People’s Party (PP) has won the Spanish General Election with an absolute majority. The PP obtained 186 MPs in the 350-seat Spanish Parliament, its best ever result. The Socialist Party (PSOE), who are the current Spanish Government, obtained the worst results in its history, winning just 110 MPs. In Catalonia, another historical change has taken place: the Centre-Right Catalan Nationalists (CiU) have won in the Spanish elections for the first time. The Socialists lose 44% of their MPs in Catalonia, and their main candidate Carme Chacón, is in a bad position to lead the PSOE after Zapatero. The PP continues as Catalonia’s third party, despite an improvement in its results.
Catalonia is the only autonomous community where the Socialist Party has clearly won, but has lost around 35% of its MPs, according to the exit poll released by TV3. The People’s Party (PP) will remain Catalonia’s third biggest force, behind the Centre-Right Catalan Nationalists (CiU), who will increase their share by some 40%. The exit polls released at 20.00 CET, when the polls closed, indicate an absolute majority for the PP and an historical defeat for the Socialists throughout Spain. The PP will get between 181 and 185 MPs, when the absolute majority is 176 seats. The election day has been calm, with a lower turnout than in the 2008 elections, particularly in Catalonia.
Catalonia and the Basque Country might be the only Autonomous Communities in Spain without a victory for the People’s Party (PP). The Socialists are likely to win once again in Catalonia, but they risk loosing 40% of their seats. If they slump even further then they risk being overtaken by the Centre-Right Catalan Nationalist Coalition (CiU) or even the PP. A quiet electoral campaign has come to an end, with three main unknown answers: if the Socialist party will get its worst results over the past few decades, if they will also lose in their stronghold of Catalonia, and how the international financial markets will react in the coming days.