Tax reform and European elections complicate the fifth payment of EU funds

Spain is waiting for the European Commission to verify that it has met all the milestones and objectives linked to the fourth of the next generation European funds, of 10,000 million euros, and to make that disbursement effective, in all probability, at the beginning of the year that comes. The request was made this week, half a year late compared to what was foreseen in the Recovery, Transformation and Resilience Plan due to the early elections and the difficulties that the formation of a new government has entailed.

A very complex calendar awaits the fifth payment, which should be requested during the first half of next year, marked by the approval of the budgets, which are in the process of being prepared, by the tax reform necessary for it to occur. . This disbursement and the coincidence of this entire process with the European elections, which will be held between June 6 and 9, with the consequent legislative stoppage already before that date.

Only the processing of next year’s accounts, which the Ministry of Finance intends to approve as soon as possible, will take at least the entire first quarter – and probably a few more weeks, confirm the sources consulted. The Government still has to overcome the obstacle of voting on the stability objectives (the distribution of the deficit between administrations) in the Senate, where the PP has an absolute majority and the ability to block. His rejection of the new path would, however, have negative consequences.

If they do not receive approval, autonomies and city councils must adhere to the objectives incorporated in the 2023-2026 Stability Program sent to Brussels in April, since that document is the one that links Spain to the European Commission. However, the new objectives are less demanding than those incorporated in that document, so the regional executives would be harmed – and the PP governs once out of the seventeen. Instead of having a tenth of a deficit, they would have to end next year with their accounts in balance.

The impact of a correct deployment of EU funds

The Bank of Spain and other organizations have made it very clear to what extent the correct deployment of European funds will be important for a Spanish economy in full deceleration and in which, it is expected, household consumption will lose strength in the coming quarters. . . The slowdown of our main trading partners and the fact that rates are going to remain high longer than expected does not help. The entity maintains that, if both EU funds and structural reforms are used to the maximum, the growth potential of the Spanish economy, currently at 1% inertially, could rise to 2% in the coming years.

For now, Italy could be the first country to request the fifth tranche of the NGEU, worth 10.5 billion, before December 31, after Brussels has verified that it has met the 52 objectives linked to the fourth, which amounts to 16.5 billion. The government of Giorgia Meloni hopes to receive that design at the end of the year, reports EFE.

For Spain that moment is further away. The PSOE and Sumar included the tax reform – which Europe demands to disburse the next tranche – within their pact for a coalition government. The divergence of opinions between the partners suggests a complex negotiation. And there is the fact that the opposition is also pressing for Moncloa to once and for all pick up the gauntlet of regional financing which, in principle, should also be linked to the tax reform.

Waiting for the fourth design, worth 10,000 million

The Government practically fulfilled the last reform milestone ‘in extremis’, which kept the presentation of the request for the fourth payment paralyzed until last Wednesday, December 20, after the last council of ministers of the year. It was the reform of the unemployment benefit, over which there were discrepancies between the Ministry of Economy and the Ministry of Labor. The Executive achieved that another of the pending milestones, the approval of the Public Service law, was softened, for lation s. Editions on this area are based on a royal decree law that has also just been approved.

Last Thursday, the first vice president and Minister of Economy, Commerce and Business, Nadia Calviño, acknowledged that there have been calls for funds that have been left empty in different autonomous communities, which is why they asked for “more will” to take advantage of these resources. Specifically, Calviño was concerned about the different rates of execution between autonomies, with special mention to those governed by the PP.

“The pace of execution is very different and there are some autonomous communities that have not had a strong will to take advantage of European funds,” lamented Calviño. Specifically, he appreciates a “notable lack of capacity when it comes to executing” the projects on the part of the Andalusian Government chaired by Juanma Moreno. Thus, he assured that the region has only allocated 55% of the funds that have been transferred to it from the State.