Calviño does not rule out extending aid to contain inflation and hopes to be able to approve new Budgets for 2024

The first vice president of the Government and Minister of Economic Affairs, Nadia Calviño, leaves the door open to extend some of the support measures for families and companies adopted in the last year to alleviate the effects of the war in Ukraine on the Spanish economy. Furthermore, he has shown his desire to present the General State Budget for 2024 in the event that the acting President of the Government, Pedro Sánchez, manages to be inaugurated if the attempt by the leader of the PP, Alberto Núñez Feijóo, fails this week.

Calviño spoke at the press conference after the Council of Ministers in which the vice president summarized the Government's vision of the state of the Spanish economy at times of uncertainty and slowdown in Europe.

Regarding a possible extension of the support measures, the vice president does not rule out the total or partial extension of the package also in 2024. “Between now and the end of the year, appropriate measures will be taken to continue on a path of containing inflation and supporting to those productive sectors and those families most affected,” said the vice president. Furthermore, he added that the Government will continue “in the same line” and will adopt “at all times appropriate measures trying to make efficient use of large public resources to respond to the impact of war.”

So far, the Executive has deployed measures for a total of 50,000 million euros of public money, distributed in six decrees. A response that Calviño has considered “very effective”. Among the aid that is still in force includes the tax reduction on the electricity and gas bill – which is almost at the legal minimum, the Iberian mechanism to lower the price of electricity, the reduction of VAT on certain foods basics or the reinforcement of the thermal and electrical social bonus.

However, the Government now faces pressure from European institutions, which are asking to withdraw generalized energy support and only retain measures focused on the most vulnerable.. The European Commission already recommended that Spain withdraw the measures last May and the European Central Bank (ECB) has urged eurozone governments on numerous occasions to withdraw energy support or, otherwise, expose themselves to greater risks. increases in interest rates.

However, withdrawing energy support measures would be an unpopular decision at a time when oil prices have begun a new climb that has led the Bank of Spain to revise upwards its inflation forecasts for 2023 and 2024.. In any case, the debate must be settled before October 15, the deadline for the Executive to present its Budget Plan to the European Commission, in which it must detail the main lines of income and expected expenses of public administrations for 2024.

The uncertainty about whether or not there will be General Budgets for next year adds more doubts to the process. In this sense, the first vice president has shown her desire to present a budget project for 2024, if the acting Executive manages to repeat in Moncloa. An approval that could be delayed until next year due to the tight deadlines. “We are a government in office, but a government that works. We have not stopped working. Hopefully we can present these General State Budgets,” said the vice president.

“Strength” in the midst of European slowdown

Regarding the evolution of the Spanish economy, Calviño has highlighted the country's situation in a context in which GDP growth in the eurozone is practically stagnant, if not negative in some countries. “We are in an international moment marked by uncertainty, with changes that are accelerating vertiginously. In this complex context, the Spanish economy is showing its strength,” said Calviño.

The vice president has highlighted that the Spanish economy is the one that grows the most among the large ones in Europe and registers the lowest inflation in the eurozone. Along the same lines, he highlighted that after the latest reviews by the INE, the Spanish GDP is now 2% above the pre-pandemic level.. However, it is important to remember that, although the INE review has reduced the gap that separated Spain from the rest of the countries, Spain continues to be the country furthest behind in the European recovery.