Brussels warns Spain on public finances

The European commission supports the raising of taxes and demands the reforms of the social expenses in order to assure the sustainability

Spain should irrevocably go for an important adjustments to assure the sustainability of its long-term public accounts, considered to be of "high risk", as seen by Brussels. The deterioration of the public accounts caused by the economic crisis and the serious problem of the aging would be, as supposed, a serious challenge for Spain. The analysis on the public accounts sustainability amongst EU membering states situates the Spain in the group of countries of a long-term more critical situation.

The study of Brussels indicates that the S2 sustainability indicator, responsible for debt impact measures and the system protection expenses is situated in the 11.8% of the GDP, far above the European average of the 6,5%. The indicator is merely an equivalent of the efforts that has that to do with a country in bringing back its debt and confronting its aging.

The deterioration of Spain remains patent comparing to the 2006. report, in which the S2 was only 3.2% of the GDP. The difference of 8.6 percentage points to deterioration drifts of the budgetary situation (8.9 percentage points) and an improvement in the price of an aging, that has descended 0.5 points.

The current report forecasts a long-term objective by the year 2060, while the one carried out in 2006 refers to the year 2050. Both studies would thus serve as a situation projection in which the public finances would be found in the next 40 or 50 years if they themselves were not subjected to reforms. In the case of Spain, the public debt that in 2009 will be situated in 50.8% of the GDP, would reach an unsustainable level of the 528% in 2050 and of the 766% in 2060.

The commissioner of Monetary and Economic Matters, Joaquín Almunia, indicated: - We need to continue providing a backup to the recovery but, in a context of severe deterioration of the public finances, the measures to enlarge the confidence and to support the demands will remain successful only if perceived by the markets' and the public opinion as temporary and consistent with the long-term sustainability. -

The Commission considers that in the case of Spain, the adjustment - should consider provide a space for the income increase and the expenses decrease. - In addition, it suggests that - the system of social protection (particularly the public pensions and the sanitary system) should be reformed to decelerate the predicted expense increment related to the ageing. -

Spain covers the group of countries that show certain projections of higher risk, in which are also Ireland, Greece, Latvia and United Kingdom. - The report objective is not to cause the alarm -, indicates a common source, - but to prevent the countries of their long-term projections so that can adopt measures that, if applied on time, could go smoothly and provoke less pain. - In relation to 2006, two countries, Portugal and Rumania, clearly show improvements.

The criticisms to the Spanish Government Budgets projections similarly intensify on the business side. - We are not going to succeed neither in the incomes, neither in the expenses, - affirmed yesterday the president of the Circle of Businessmen, Claudio Boada, who branded the "counterproductive" taxes raise that will set the Executive in motion in 2010 to recover incomes, as reports Alejandro Bolaños. - The fiscal consolidation efforts of the highest rank would be the ones done at the current expense, - affirmed the vice president of the Circle of Businessmen, Fernando Eguidazu.