The Foundation for Applied Economics Studies (Fedea) estimates that the aggregate deficit for 2023 of the autonomous communities (CCAA) will be 0.8% of GDP, a figure slightly higher than the forecasts made by the Government and AIReF. which place the regional deficit at 0.6% of GDP in both cases.
This is stated by Fedea in a new issue of its Fiscal and Financial Observatory of the Autonomous Communities, in which regional income and expenses are analyzed until July and an estimate of the regional budget balance at the end of the year is presented.
According to the data published by the General Intervention of the State Administration on September 29, the balance in National Accounting until July 2023 of the Autonomous Communities was -1,142 million euros (-0.1% GDP), which has This represents an improvement compared to the balance for the same period in 2022, which was -4,857 million euros (-0.4% GDP).
This improvement is due to an increase in resources subject to deliveries on account and settlement of the Autonomous Financing System (SFA).
In the projection exercise to estimate the end of the year 2023, Fedea starts from the July data (-0.1% GDP) and adds the balance in National Accounting for the months of August to December 2022 (-0.7% GDP), as well as the expected differential between income and expenses for the period August-December 2023 with respect to the same period in 2022.
Fedea considers as differential income effects the higher expected payments on account (5,033 million) and the drop in estimated collection in the Tax on Property Transfers and Documented Legal Acts (-599 million). Both effects represent an increase in resources of 4,434 million euros (0.3% GDP).
Regarding the differential effect of expenses, Fedea adds the impact that, if maintained, the increase in spending recorded as of July 2023 in each community will have in the items of personnel expenses, intermediate consumption, social transfers in kind and interest, which amounts to 5,725 million euros.
It also takes into account the differential impact of the October-December 2023 salary update on that produced in the same months of 2022, both with retroactive effects to January (-959 million). In sum, the total effect represents an increase in expenses of 4,766 million euros (0.3% GDP).
Consequently, explains Fedea, the differential effects of income and expenses are cancelled, giving rise to a predicted regional deficit, in National Accounting, of 0.8% of GDP, two tenths higher than estimated by AIReF and the Government. This deviation is explained by the higher expenditure planned by Fedea compared to that estimated by both institutions.
“This forecast is not good news for two reasons. The first, because the reduction of the deficit in the Autonomous Communities in 2023 would only be 0.3% of GDP, much lower than the forecast (0.8% of GDP) with the that the Budgets were prepared. And the second, because this deviation is produced by the strong growth in spending, particularly public consumption and, therefore, we think that there will be a structural deterioration,” warns Fedea.
In his opinion, if his deficit projection for the Autonomous Communities is confirmed, “the path of deficit reduction announced by the Government for 2023 would be put at risk, which in turn rested on the expected deficit reduction by the Autonomous Communities. “.
“With the more than probable return of European fiscal rules for the year 2024, we believe that the fiscal consolidation of all Public Administrations in Spain cannot be delayed any longer and should be one of the main tasks that the future Government of Spain must face. Spain,” concludes the report.
SEVEN COMMUNITIES BELOW THE TOTAL
When breaking down the data by Autonomous Community, the worst stop is the Valencian Community with -2.3% of GDP. Followed by Murcia, which is also left with a forecast that drops to -2.2%. Castilla-La Mancha and Catalonia are positioned with a projection of -1.2%, followed by Aragón and Extremadura with -0.9% and La Rioja with -0.8%, which is equal to the total -0.8% of the CCAA.
On the opposite side are the 10 remaining communities, with the Community of Madrid, Castilla y León and Andalusia, with the lowest projection, -0.6%. For their part, the Basque Country, Galicia, Cantabria and the Canary Islands are between -0.3% and -0.2% deficit.
The only three whose projection is positive are the Balearic Islands and Asturias, with 0.2% and finally Navarra with 1.2%.
