The European Commission has given its approval to the draft of the Spanish budget plan for 2024, a document in which the Government summarizes the fundamental lines of the budgets of all administrations for 2024. Of course, the approval comes with nuances and asterisks and a clear warning: next year will be “very difficult” in fiscal matters for Spain.

This Tuesday, Brussels presented its evaluation of the budget plans of the twenty-seven member states that make up the EU. In the case of Spain, since the processing of the General State Budgets for 2024 has not yet begun, the Commission's assessment remains incomplete and waiting for the Executive to present something more tangible.

For now, the European Commission believes that Spain has responded to the recommendations it made last spring.. The Spanish budget plan complies with the maximum limit on the increase in spending of 2.4% established for Spain and also with the request to eliminate all energy support measures.

However, as the Government already explained in October when it sent the document to Brussels, the scenario was one of constant policies given the interim situation in which it found itself.. Now, with an Executive already formed, the situation changes. It must be taken into account that the social agenda that Pedro Sánchez outlined during his inauguration will have a cost.

Although Sánchez's promises would not have, in principle, a particularly high impact in budgetary terms, they do add extra spending that was not planned until now.. Above all, the extension of the VAT reduction on certain basic foods until mid-2024 or the promised free public transport for minors, young people and the unemployed. Likewise, although Sánchez did not mention anything about the anti-crisis energy support package during his investiture speech, he has not confirmed that these are going to disappear completely.

“Very difficult” tax situation

Although Brussels has given its approval to the Spanish budget plan, something it has only done with six other countries, the fiscal horizon is far from being clear.. Community sources warn that Spain faces the return of European fiscal rules in a “very difficult” fiscal situation. Consequently, Brussels calls for a credible medium-term fiscal strategy. That is, an adjustment plan in which the Government details how it will ensure that the debt and deficit are on a downward path in the coming years.

The Government has committed to reducing the imbalance in public accounts to 3.9% of GDP in 2023 and to 3% in 2024. For its part, public debt would be reduced from 108.1% of GDP in 2023 to 106% in 2024. The forecasts published last week by the European Commission give some credibility to this scenario, although they place the deficit at 3.2% of GDP next year.

Spain's problem is that it has practically zero margin to balance the accounts without applying fiscal adjustments. That is, without raising taxes or cutting spending, two decisions that are often equally unpopular.. The high public debt that the country has been accumulating since the great recession and which skyrocketed even more during the pandemic has triggered the interest expense that the State has to face.

So much so that, if the interest expense is discounted, the Spanish public accounts would be practically in balance next year. The primary deficit would barely reach 0.4% of GDP in 2024 if the forecasts are met. The problem is that the State will have to face an interest burden equivalent to 2.5% of GDP next year. An unavoidable expense that will increase little by little in the coming years due to the increase in interest rates.

It plays in the Government's favor that, in general, the public finances of the rest of the EU countries are in a delicate situation. The European Commission believes that there are four countries at risk of not complying with the recommendations made by Brussels last spring. These are France, Belgium, Finland and Croatia. In addition, Brussels points out that there are nine other States – Germany, Italy, Austria, Luxembourg, Latvia, Malta, Portugal, Netherlands, Slovakia – that are not completely in line with the Commission's recommendations.

The economic promises made by the recently re-elected president, Pedro Sánchez, during his investiture session will be borne mainly by the richest taxpayers.. The socialist leader has committed, among other measures, to forgiving part of the regional debt, to make public transport free throughout Spain in 2024 or to extend the reduction in food VAT. A series of measures that will increase spending or reduce State income in a year in which Brussels will once again look at the Spanish public accounts with a magnifying glass.

Although the fine print of the Government's social agenda still needs to be known, the margin to draw on the checkbook without the EU taking action on the matter is limited.. Spain has committed to reducing the deficit to 3% of GDP next year and the Airef and the European Commission have already warned that to achieve this, the energy support package will have to be withdrawn completely.. Even so, in Brussels they believe that even a small additional adjustment would be necessary.

The only alternative to be able to adopt new measures is, then, to cut spending or increase income and the Government seems to be leaning towards this second path. “The rich, I'm sorry, have to pay more taxes than they pay until now. As long as we govern, they will pay more than the rest,” Sánchez concluded after announcing his economic proposals.

But how? Sánchez limited himself to saying that he will combat the underground economy, broaden the tax bases, increase the progressivity of personal income tax and apply a minimum of 15% in corporate tax on the accounting result.. Measures that appear already included in the Government agreement between PSOE and Sumar.

Increasing the progressivity of personal income tax will likely involve an increase in the rates paid by the highest incomes.. Last year, the Government already raised the rates on capital income above 200,000 euros. However, with this tax increase the expectation was to raise just 200 million euros more. The maximum rate that applies to these earnings reaches only 28%, compared to the 47% that applies to income from work that exceeds 300,000 euros.

PSOE and Sumar have also already announced that they intend to maintain banking and energy taxes beyond their validity period, which ends in 2024.. These two taxes have collected 2.9 billion this year, but it was already taken for granted that they would continue in 2024, so the fiscal impact of making them permanent would be perceived in 2025.. Furthermore, we must not forget that the two taxes are being appealed in the Constitutional Court, which has not yet ruled.

Regarding applying the 15% in Companies to large companies on the accounting result and not on the tax base, it is also not clear what effects it could have on collection.. The acting Secretary of the Treasury, Jesús Gascón, recently acknowledged that it is very difficult to make numbers given that this accounting base is agreed upon internationally and the results depend on what the different countries agree to.

It will be enough?

Although many details are still missing, the commitments made by Sánchez so far will have a limited cost. Of the more than 14 measures announced on Wednesday, those that will have a clearer impact a priori are free public transport for young people, minors and the unemployed and the extension of the food VAT reduction until June 2024.

The impact of expanding the food tax relief could be around 1.1 billion euros if we take as a reference the cost expected by Airef for 2023. The result of free all public transport is more difficult to estimate. The Government already counted in its calculations to balance the accounts with the fact that state-owned public transport will be free in 2024 and with another package of subsidies to reduce the prices of regional and local public transport. Together, these two measures amounted to around 1,440 million. For them, the free cost should be extended to the groups indicated, which without more details is difficult to approximate.

The forgiveness of part of the debt to the autonomous communities will not have immediate effects on Spain's deficit because the financial movements occur within the public sector. The fiscal rules measure the deficit of all administrations and not just that of the State, so transferring part of the burden to the central administration should not impact the imbalance in the accounts.

However, it may have indirect effects if Spain's credit quality is harmed by the decision.. Several credit rating agencies have warned of the “moral risk” posed by the precedent of forgiving regional debt.

María Jesús Montero will once again be Minister of Finance for the third consecutive time and this time, with the additional position of fourth vice president. Since Pedro Sánchez took the Presidency of the Government from Mariano Rajoy in the 2018 motion of censure, the president has always trusted her to direct the country's fiscal and budgetary policy.. A task that Montero has combined since July of last year with the management of Ferraz's affairs as 'number two' of the PSOE.

After a particularly turbulent legislature marked by a pandemic and the war in Ukraine, the Minister of Finance faces a new mandate with her sights set on the puzzle of regional financing and the return to fiscal discipline in the European Union.

The story of how a Sevillian doctor ended up in charge of the fourth largest public treasury in the euro begins in the Sevillian neighborhood of Triana in 1966.. Daughter of teachers and politicized from a young age, she began management in the healthcare world in the nineties, where she held management positions in two Sevillian hospitals.. In the 2000s she jumped into party politics, first as number two in Health of the Board and then as a counselor in the sector, a position she would hold between 2004 and 2012.. In 2013 she would leave health management to make the leap to the Treasury Department, which she led for five years until Sánchez took her to Madrid.

In Andalusia, Montero forged her reputation as a skilled negotiator, a virtue that over time has become her great political asset.. His role in the conversations with Unidas Podemos was key to forming the coalition. “The number of times I have gone to fight with you about so many things and you have ended up disarming me with your sympathy,” Pablo Iglesias would admit to him the day he left the Council of Ministers to run in the Madrid elections.

That ability to reach agreements would give Sánchez the confidence to be part of the PSOE negotiating teams for some of the most important agreements of the legislature.. Her last service has been the complicated pacts to achieve the inauguration of the president, where the minister has played a prominent role.

Those who know her say that Montero is an affable and close person with her collaborators, but also with representatives of other political forces.. A private tone that contrasts with the harshness of some of his public interventions, often riddled with harsh reproaches of the Popular Party.

Sánchez opted for her as minister spokesperson in 2020, a job that she had to perform during the hardest moments of the pandemic and that she handed over to Isabel Rodríguez in mid-2021.. After removing her spokesperson, the president reinforced her organic role in the PSOE – to which she has been affiliated for 16 years – and appointed her deputy secretary general in July 2022.

Montero is one of the few ministers who has always had a seat in the Council of Ministers since Sánchez governed. Only Nadia Calviño (Economy), Margarita Robles (Defense), Fernando Grande-Marlaska (Interior), Luis Planas (Agriculture) and Teresa Ribera (Ecological Transition) have systematically repeated with the socialist leader.

Budgets, fiscal discipline and autonomy

After a turbulent legislature marked by the fiscal response to a pandemic, European recovery funds and then a war in Ukraine, Montero now faces a mandate marked by the return of Brussels discipline and an even more complex balance of parliamentary forces.

The first challenge that your department will have to address will be the approval of General State Budgets for 2024 that are capable of bringing at least seven different parties (PSOE, Sumar, ERC, PNV, EH Bildu and Junts) to agreement and that convince to the European Union. Montero has slipped on previous occasions that the Treasury has been working privately for months to prepare the new public accounts.

The second challenge will be to convince the European Union that Spanish public finances are sustainable. The Government committed in the last legislature to reduce the deficit to 3% of GDP in 2024, an objective that will be difficult to combine with the social agenda that the president intends to deploy during his renewed mandate. In the European section, it is still not clear whether the Treasury will propose a more in-depth tax reform or will be content with the package of measures that accompanied the 2023 budgets (including the three special taxes on large fortunes, banking and energy).

But the most complex challenge that a priori awaits Montero in the next four years is the reform of the regional financing system.. A pending issue since 2014 that has come to the fore again after the compromises reached between the PSOE and the Catalan nationalists. On this front, the minister will have to draw up a program to forgive part of the regional debt in the hands of the State.

But the real challenge will be to design a new system for distributing regional resources that leaves the current one behind.. A tricky issue in which Montero will have to deal with the autonomous power of the PP, which governs in eleven of the 17 autonomies, and with the pressure of Junts, which claims a special status with its own estate in the style of the Basque Country and Navarra.

Nadia Calviño will once again be at the helm of the Ministry of Economy for one more term. Pedro Sánchez has once again opted for one of his most technical profiles to direct Spain's economic policy, although the number two in the Government has been cultivating an increasingly political side, especially in the final stretch of the previous legislature.. Calviño inaugurates a renewed mandate that, however, could be brief. His candidacy to preside over the European Investment Bank (EIB) is about to be decided and if he obtains the necessary support he will head to Luxembourg, leaving the head of economic policy vacant.

Calviño (A Coruña, 1968) has one of the most extensive resumes of the entire Council of Ministers. Graduated first in Economics and then in Law, she has known the ministry she has directed for many years.. In it she has held a deputy directorship and a general directorship and, in addition, she is a career civil servant. He is part of the body of Commercial Technicians and State Economists, one of the elite groups of the public administration.

His dizzying civil servant career continued in the European Commission, where he held several senior positions during the twelve years he was in Brussels and learned how the ins and outs of community institutions work.. In Brussels, she became the highest-ranking Spanish official in the European institutions.

However, her debut in politics did not occur until 2018, when Sánchez claimed her to direct the Ministry of Economy.. Calviño is also one of the few ministers who has always repeated in the Councils of Ministers since 2018. Only Margarita Robles, Fernando Grande-Marlaska, Luis Planas, Teresa Ribera and María Jesús Montero share that milestone.

His marked technical profile and deep knowledge of the European institutions are his two great political assets, facets that would ultimately prove key during the fire-plagued legislature.. The pandemic was the first of them. Calviño was in charge of piloting the recovery of an economy that sank more than any other in Europe, harmed by the great weight of sectors with high human contact such as tourism or hospitality.

Then the recovery funds and the reform agenda that accompany them would arrive.. In this section, Calviño's European experience was crucial for Spain to obtain 160,000 million from the recovery and resilience mechanism. His contacts in the Commission have also been key to agreeing on the plan and closing the committed reforms, which have all passed through his table.. The ERTE, the minimum vital income, the increases in the minimum wage also bear Calviño's imprint, say those who know her.

The complete closure of the pandemic wound would not come until well into 2022, making Spain one of the countries that tried the hardest to return to the EU's pre-pandemic GDP level.. After the pandemic would come the war in Ukraine and the decrees in response to the inflationary crisis that worsened after the Russian invasion. Since March 2022, the Government has approved seven packages of measures to mitigate the effects of the war, all of them coordinated by the department headed by Calviño.

The central role of her ministry as director of the country's economic policy has caused Calviño to be one of the ministers who has clashed the most with the coalition partners.. Especially with the second vice president, Yolanda Díaz. Calviño and Díaz have had notable clashes and have often found themselves in antagonistic positions.. The scope of the mortgage relief measures, the profit margins of supermarkets, the increases in the minimum wage or the labor reform itself have been a source of discord between the two vice presidents, with Sánchez as arbitrator.

Those who know the minister say that Calviño is very far from the gray bureaucrat image that is often projected of her.. They highlight her affability, her rigorous way of working and define her as a person who rolls up her sleeves until things go well.

In the final stretch of the legislature, Calviño cultivated a more political and belligerent image, with notable parliamentary interventions and a prominent role in the campaign for Sánchez's re-election.. In her history, however, there remains the stain of her husband's controversial signing attempt by National Heritage, who had to resign from the position amid accusations of nepotism.

Minister with international aspirations

The minister who piloted the recovery after the pandemic and designed the response to the war in Ukraine now faces the challenge of keeping track of the Spanish economy in a Europe that has been stagnant for a year now.. With the pandemic gap already overcome, forecasts place the Spanish economy as one of those that will grow the most in the entire EU in the next two years. If the latest EU projections come true, in 2025 Spain will become the large Spanish economy that will have grown the most since the pandemic.

However, the situation remains fraught with risks.. Spanish households are fully suffering the impact of interest rates in the form of increasingly expensive mortgages and inflation that has not yet disappeared from the map. Furthermore, the minister will have to face this situation under the restraint of the European fiscal rules that will be back in force in 2024.. From Brussels they have already asked Spain not to renew the energy support measures.

However, all these challenges will have to be addressed by someone else if Calviño achieves his long-awaited position at the European Investment Bank (EIB).. The minister has fought on several occasions to achieve relevant positions in international institutions. He already tried it at the IMF when Christine Lagarde left for the European Central Bank in 2019 and was on the verge of taking over the presidency of the Eurogroup – the informal debate forum for the economy and finance ministers of the eurozone – in 2021, which was offered to her. narrowly escaped.

If she achieves the presidency of the EIB, the newly elected Minister of Economy will become the third Spaniard to occupy an important position in high European institutions, only behind Josep Borrell (head of European diplomacy) and Luis de Guindos (vice president of the ECB).

Starting in 2024, banks must report to the Bank of Spain on the salary differences of their workers between men and women. This is dictated by a circular from the supervisor published this week in the Official State Gazette (BOE), which demands information on the gender pay gap in what is the third sector in Spain with the largest pay differences between men and women.. Although banking is one of the areas in which it pays the best, the differences are also evident at the territorial level: the average salary in Madrid is 34% higher than the Spanish average.

According to the new instructions from the Bank of Spain, credit institutions must report every three years on the gender pay gap in their workforce, a requirement that aims to adapt Spanish regulations to a 2013 European directive and the guidelines of the European Banking Authority (EBA), reviewed in June 2022. Specifically, the bank will have to provide data on the proportion of men and women employed and their distribution according to salary levels, as well as on the gender pay gap itself.

The request for information affects all credit institutions – that is, both banks and savings banks, credit cooperatives and even the Official Credit Institute (ICO) – except those that either have less than 50 workers or are subsidiaries of entities located in another Member State of the European Union. Each organization must send its information to the Bank of Spain individually, whether or not it is integrated into a group, and will have the deadline for the first sending until June 15, 2024, the deadline to communicate the data on the wage gap at the close of 2023.

The financial sector is one of those that pays the highest salaries in Spain, although it is also among those with the greatest remuneration differences between men and women.. According to the latest data from the General Treasury of Social Security, the average contribution base was 3,434 euros gross per month among workers in financial and insurance activities in June of this year, 6.5% more than in mid-2019. 2022. For both men and women, it is the second sector with the highest salaries, only behind activities related to the supply of electricity and gas, where the average contribution base reaches 3,313 euros.. Both amounts far exceed the average for all sectors (2,093 euros).

Specifically, the average gross salary among male bank employees amounts to 3,705 euros, while in the case of women it is 3,211 euros per month, according to June data. In this way, the difference between both genders is 494 euros, which represents the third largest sectoral gap, after those existing in the field of domestic activities – domestic workers, gardeners, doormen, janitors, etc. – and scientific activities. and technical, where the pay difference is around 800 and 500 euros respectively.

The distance between the average salary of men and women has grown by 8.8% in the last year in the financial and insurance sector, compared to June 2022, and exceeds the average gap of 323 euros per month that exists as a whole. of sectors. According to the latest Social Security affiliation data, there are nearly 320,000 people in Spain who work in finance, of which 175,700 are women and 143,900 are men.. Employees dedicated to banking and insurance barely represent 2% of a total of almost 16.4 million employed workers.

Millionaire salaries

The report on the wage gap requested by the Bank of Spain in the new circular adds to other information that credit institutions already had to report annually to the supervisor, relating to the general remuneration of all staff and salaries equal to or greater than one million. euros per year, for example. The institution headed by Pablo Hernández de Cos emphasizes in the circular published this Tuesday that all the information requested is aligned with the guidelines of the European Banking Authority (EBA), which, among other tasks, examines the remuneration practices of financial entities, especially to members with higher income levels.

According to data collected by the EBA, in 2021 there were 221 bankers in Spain with salaries of at least one million euros – compared to 128 in 2020 – who shared 478 million. The average millionaire salary among this wealthy minority was 2.16 million euros. In the year after the pandemic, the Iberian country was the fourth State in the European Union with the most million-dollar salaries in the financial sector, behind Germany (589), France (371) and Italy (351).. In fact, the highest paid banker in the entire eurozone in 2021 was Spanish and earned 14.67 million euros. In total, in the EU as a whole there were 1,957 bankers with millionaire salaries in 2021, with an average remuneration of 1.8 million euros.

Territorial gap

Leaving astronomical salaries aside, gender is not the only salary gap present in the financial sector. There is also a strong territorial bias. According to statistics on the labor market and pensions in tax sources released this week by the Tax Agency, the average salary of banking employees in Madrid rose to 60,800 euros per year in 2022, 34% above the 45,430 euros in the previous years. which is the Spanish average.

The remuneration of the financial sector in the rest of the communities is far from the amount recorded in the capital. Even in Catalonia, which is the second region where the most banking employees are concentrated after Madrid, the average salary is 44,723 euros, slightly below the national average.. At the opposite extreme to the autonomy chaired by Isabel Díaz Ayuso is Extremadura, where the average remuneration in the banking sector is 31,642 euros per year per person, almost half that of Madrid.