The Government has increased the forecast deficit of 4.4 to 5.8%, and claims that it is planned VAT hike in 2012 to meet this objective.

The Prime Minister, Mariano Rajoy, has announced that Spain’s public deficit will fall to 5.8% of GDP, a higher deficit target to 4.4% this year committed by the previous government led by José Luis Rodriguez Zapatero to the European Union.

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An adjustment softer than expected

This new deficit target is caused by the mismatch in the accounts of 2011, with a projected deficit of 6% was finished closing the year with 8.5% from GDP. Hence, the present Government has been forced to soften the figure for 2012, in order to avoid the risk of falling into a deep recession. According to M said Arian Rajoy, “I have not consulted the European leaders, and as to the Commission, I will tell in April. No I have to, because it is a sovereign decision of Spain. ” He has also stated that the decision is “comply with the recommendation that the excessive deficit was 1.5% average annual structural deficit,” said the conclusion of the European Council in Brussels.

Sharing percentages between the different administrations

To get the new deficit targets, it is necessary a reduction of approximately 27,000 million in 2012, which already included the 15,000 million announced in December 2011. By 2013, another 28,000 remain outstanding crop million to reach the target of 3% of GDP. As for sharing the deficit between the different administrations, responsible for announcing the figures has been the vice president of Government , Soraya Saenz de Santamaria, who has announced that the Government receives 4% of GDP, whereas the Autonomous Communities may reach a deficit of 1.5% and 0.3% local councils. Social Security is expected to reach total equilibrium.

It is planned VAT hike

As for a possible increase in VAT aims to achieve a reduction in the deficit of 8.51% to 5.8%, Secretary of State for Budget and Expenses, Marta Fernandez, said that fall outside the government’s plans this rise , as it would be advisable. “The rules are clear and balance bet continuous adjustment and too realistic not to sacrifice growth,” said Marta Fernandez.

Marta Fernandez said the government is following “steps corresponding to time” and continue to implement the recommendations of Brussels, among which is to reduce the structural deficit by 1.5% in 2012. Secretary of State has also confirmed the figures provided by Mariano Rajoy and Soraya Saenz de Santamaria: the cut will be about 29,000 million euros, of which 14,000 million are the responsibility of the Autonomous Communities.

In Europe does not end like the 5.8% projected deficit

Before the announcement of Mariano Rajoy of the new deficit target for 2012, fixing it at 5.8% instead of 4.4%, the European Commission has stated that ” it is important for confidence “that Spain complies with the objectives deficit. The spokesman for the Economic Affairs Commissioner Olli Rehn said that “the European Commission’s position has not changed and is vulnerable countries to the markets, as is the case of Spain, must meet the deficit targets” .

By contrast, the conclusions of the European rabbit have been smoothed, and no longer call for the most vulnerable countries to the markets to comply strictly with the objectives of their stability: in principle, may be more important to the final fulfillment of a deficit 3% in 2013 to the intermediate steps taken in 2012. And so far, Rajoy continues to claim that Spain did reach the 3% deficit in 2013. Finally, German Chancellor Angela Merkel said that “it makes sense to relax the deficit target.”