Spain | Uncertainty around fiscal policy in the 2019-20 period

Summary

Budget implementation in April 2019 slightly worsens the dynamics of 2018. During the 2019-2020 period, and in no policy change scenario, the pace of adjustment of the public deficit would be moderating compared to that observed in previous years

Key points

• Key points:
• The deficit amounts to 0.6% of GDP in April 2019, worsening by a tenth of that observed in the same period last year
• Public revenues continued to moderate their dynamism in the first four months, but somewhat less than expected at the beginning of the year, while public expenditures maintained the slightly expansive dynamics as expected
• In a no policy change scenario, the deficit would be reduced to 2.2% of GDP in 2019 and to 1.9% in 2020, supported by cyclical recovery
• Public debt will be reduced by more than one percentage point on average per year. Accelerating this rate of decline will require additional adjustment measures or reforms that increase growth capacity

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