14 November 2012

Statement by VP Rehn on Spain's compliance with the Council EDP Recommendation

The Commission has just adopted a Communication setting out its assessment of Spain's compliance with the Council Recommendation of 10 July for the correction of its Excessive Deficit related to its public finances.

"We know that Spain is undergoing a very difficult re-balancing of its economy after many years of unsustainable policies. The government and the Spanish people are making significant efforts to ensure the sustainability of public finances. This involves hard choices, and sacrifices for many parts of the population. Progress is being made, even if the situation faced by many Spaniards remains very difficult.

Spain has adopted sizeable measures of fiscal consolidation to restore confidence to its public finances and these measures amount to around 5¼ per cent of GDP in 2012 and to 2¼ per cent of GDP in 2013. The estimated annual improvement in the structural balance this year and next year is in line with the effort required in the Council recommendation.

Yet, there are risks to achieving the nominal targets for next year 2013. They stem partly from an optimistic macro-economic scenario underlying the 2013 budget and partly from the optimistic projections for social security. There are also risks of more budgetary slippages in the Autonomous Communities, which is why it is vital to implement effectively the provisions of the Budget Stability Law.

I would also like to stress the importance of proceeding with the establishment of the Fiscal Council as planned, and ensuring its full institutional and financial independence.

On the basis of this assessment, our conclusion is that Spain has taken effective action for 2012 and 2013. Thus, I have proposed yesterday to the College, and the College has adopted today a Communication concluding that effective action has been taken for these two years, 2012 and 2013, in restoring the sustainability of public finances. We send this Communication now to the Council for its deliberations and for its decisions.

The Commission's view is that no further steps in the excessive deficit procedure of Spain are needed at present. However, the measures announced so far for 2014 fall short of what is required by the revised Council recommendation. Therefore, we will of course closely monitor budgetary developments and I look forward to seeing the concrete details of the fiscal measures for 2014 shortly."

Press release

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