Sánchez recoils from 23-J and will not cut aid from the anti-crisis decree as demanded by Brussels

The electoral advance has led the Government to reconsider the extension of the measures of the anti-crisis decree that expire at the end of this month. The intention to lift structural aid, as demanded by Brussels to adapt to the future recovery of fiscal rules in the next budgets, clashes with electoralism and the pressure on the left and right of the Socialists due to the increase in the cost of the life. Mainly, in relation to the price of food, for which reason the economic vice president, Nadia Calviño, has already dropped that the suppression or reduction of VAT on certain basic products would be maintained. From their environment they avoid confirming the extension of this action before closing the final text of the decree, but they do convey the intention of maintaining it “until the prices are adequate”.

This same week, the President of the Executive, Pedro Sánchez, acknowledged in an interview that the price of the shopping basket continued to be high and highlighted the tax cuts as the measures that were in his power to tackle inflation. Waiting to close the fringes of the decree for the next six months, on which the purple wing of the Government has redoubled the pressure to avoid the suppression of aid and even add some new ones, the Government seems willing to back down. Ignore the “appeals” of the European Commission with which they had already committed themselves and, in addition to suppressing the VAT reduction, withdraw the aid of 20 cents for fuel from carriers and professionals. In fact, on January 1, the general bonus for all drivers was already withdrawn.

The priority is the general elections and anticipating cuts would not be the best cover letter. Moncloa sources acknowledge, regarding the withdrawal of the VAT reduction for certain foods, that it would negatively affect the price of the shopping basket. From the Ministry of Agriculture they have also been recognizing that the drought could stop the downward trend of the price in the shopping basket “by the law of supply and demand”. Drought is detrimental to the former, as is beginning to be reflected in rainfed crops. Sánchez thus delays the commitments by way of a pulse with Brussels, which had asked to begin to “disconnect”, according to the terminology of the economic ministries of Moncloa, the structural measures adopted after the pandemic.

The return of the fiscal rules is scheduled for 2025, but the Community Executive has sued the member countries to adjust their accounts for next year. The Spanish Government, through a negotiation led by the first vice president, Nadia Calviño, promised to comply with the 3% deficit for the next financial year and hence the intention, before 28-M, to gradually raise some of general tax cuts and direct aid.

The calculations of the Government, between fiscal commitments and electoralism, keep the drafting of the decree open. So much so that it is not even ruled out that instead of being approved next Tuesday in the Council of Ministers, it can go to an extraordinary one to speed up the deadline until next Thursday or Friday. The measures must be published in the BOE on July 1. In addition, the introduction of other pending issues from different departments is being studied to guarantee their approval before the elections, through a kind of omnibus decree.. The decree that is approved must be validated in the Permanent Deputation of Congress in a short space of time due to the proximity of the general ones.

In the economic departments of the Executive branch, they assume that the impact on the surplus will depend mainly on the measures to extend the social shield and others recently approved, such as those related to the fight against fires and drought.. The 4.8% public deficit with which last year closed, two tenths below the 5% that the Executive sent to Brussels, has allowed the Government, however, to have some 3,000 million surplus.

From Economy the thesis of “applying the measures that are most effective at all times” is maintained. The rest of the aid from the last anti-crisis decree that was in the eaves were, together with the VAT reduction on food and fuel discounts for professionals, discounts on urban and interurban public transport, which depends on the autonomous communities, the cap of the price of the butane bottle or aid to the electro-intensive industry. Among the actions planned until the end of the year, the continuation of the gratuity transport season tickets under the jurisdiction of the State —Cercanías and Media Distancia— or the VAT reduction on the electricity bill stand out..

Pressure from other candidates

While the Government exploits in its speech the good progress of the economy despite the international turmoil —Spain grew by 0.6% up to March, more than expected, recovering pre-pandemic GDP—, both Sumar and the PP are alert with not to confuse macroeconomic data with the situation of domestic economies. The second vice president, Yolanda Díaz, contradicted Moncloa's triumphalism this week, warning that “we must not confuse macroeconomic data with people's lives”.

The space candidate to the left of the PSOE emphasized that “there is social unrest”. A marking with a view to the extension of the anti-crisis decree because “the cost of living is the main problem the country has”, as he denounced, to argue that “there is more citizen disaffection than in 2015”. The leader of the popular has abandoned his speech on the ghost of the recession months ago, but he does speak of stagnation and has adopted positions similar to those of Díaz when influencing family economies.

During an act of the think tank Reformismo 21, held last Thursday, the PP candidate focused on the concern of households about the rise in food or mortgages and stressed that “Spain is the OECD country where there has been the most fallen the power of families”. That was the most repeated concept, looking more at the micro than at the macro, anticipating an economic electoral program “designed for families” and “the competitiveness of families”. The elimination of tax rebates or the cut in aid in the anti-crisis decree would be a throwing weapon in the campaign for which the Government is reconsidering the content of the anti-crisis decree, which will be approved by the Council of Ministers next week.