The European Commission has decided to extend the safeguard clause of the stability pact for one more year, so it is not going to sanction countries that exceed the deficit and debt limits, but it imposes the condition that the increase in spending by highly indebted countries like Spain is below the expected growth of the economy.
The Commissioner for the Economy, Paolo Gentiloni, explained in the presentation of the recommendations for the European Semester that with this decision they do not propose “unlimited spending” but that they expect governments to use this budget margin “to allow investments to limit the effects of the crisis of war» and above all in the field of transition and energy independence which, in particular, he points out to Spain as one of its weak points.
The Commission’s spring forecasts foresee growth of 4% this year and 3.5% next year, which would not allow the Government to spend much beyond the usual limits of the stability pact of 3%. The deficit forecast for this year by the Commission is 4.9%.
The specific report on Spain warns that “significant investment is needed to renovate public and private buildings, reduce transport emissions, generate and distribute renewable energies, for water and waste management and support the reconversion and adaptation of workforce”.
He insists that “structural factors continue to hinder productivity growth” and specifically cites the lack of reforms in innovation and digital transformation, the inefficiencies of the internal market and the regulatory barriers that the autonomous communities have erected and that the Commission has spent decades asking for them to be removed.
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