Spain | The return of tax rules and their enforcement

Spain must combine fiscal consolidation and budgetary stability with growth. It must increase the weight of productive public expenditure over total public spending and improve its efficiency, as a strategy for inclusive progress, in order to reduce inequality with the creation of quality jobs and greater productivity.

Key points

• Key points:
• After such a turbulent 2022, there are many doubts about 2023, but also some certainties. After three years of suspended fiscal rules in the EU, first because of the pandemic and then because of the war in Ukraine, everything points to their return, something that is essential for the future well-being of Spain and Europe.
• The ECB, which has played an essential role during these years with its pandemic bond-buying program, has allowed European countries to increase their public debt levels without straining their risk premiums.
• However, taming inflation in the eurozone now requires raising the ECB's official interest rates and initiating the reduction of its balance sheet (Quantitative Tightening). At its last meeting in 2022, the institution chaired by Christine Lagarde announced that this would take place in the spring of 2023.
• In parallel, the European Commission issued a statement last November indicating that a new fiscal governance framework is being put in place, whereby in 2023 a consensus must be reached on national stability and convergence programs for 2024 and the following years.
• The Commission's negotiations with each country must determine a plausible debt reduction path that is clearly sustainable. The decision and commitment as a country to comply with European fiscal rules in our own interest will allow us to count on the crucial support of its institutions, and on the confidence of the markets to meet the high financing needs of public debt over the next decade.

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