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Brussels removes Spain from the deficit blacklist

Mairenis Gomez

June 19, 2024 | 4:30 pm

Spain escapes the European Commission's excessive deficit procedure

The President of the Government, Pedro Sánchez, announced with great satisfaction that the European Commission has decided to withdraw Spain from the excessive deficit procedure. This announcement was made during the control session in the Congress of Deputies, underlining the economic success that has allowed the country to avoid sanctions.

The relief is due to optimistic forecasts for the coming years, which place the deficit below the threshold of 3% of GDP. This achievement is significant, especially considering that at the end of 2023 the deficit was 3,6%. The projected improvement for this year and next indicates promising financial stabilization.

Spain stands out in the post-pandemic economic recovery

Spain has demonstrated a remarkable capacity for recovery after the Covid-19 pandemic. The deficit has decreased by almost seven percentage points in three years, going from 10,1% in 2020 to 3,6% in 2023. This progress is not only indicative of effective fiscal management, but also of an economy that has been able to adapt and grow in difficult times.

The European context is also relevant here. While countries like France and Italy face higher deficits, Spain has managed to steadily improve its economic situation. This recovery has been possible thanks to well-directed economic policies and a joint effort to balance public accounts.

Public debt: a pending challenge

Although Spain has successfully overcome the deficit challenge, public debt remains a significant concern. During the pandemic, debt reached alarming levels, standing at 125,7% of GDP in the first quarter of 2021. However, there has been a substantial reduction of almost 20 points since then.

The challenge now is to continue this positive trend. The objective is to reduce debt to below 60% of GDP, in accordance with the requirements of the European Commission. This involves maintaining a disciplined approach to fiscal management and ensuring that investment and reform policies are implemented effectively.

Spain escapes the European Commission's excessive deficit procedure

An action plan for debt reduction

The Spanish Government must participate in a series of meetings with the European Executive to define a specific debt reduction plan. This plan includes a four-year time horizon, with the possibility of extension if certain investment and reform commitments are met. Collaboration with European institutions will be key to guarantee that Spain continues on the path of economic stability.

Spain's economic future, although promising, will require constant attention and proactive measures to ensure that the progress made so far is maintained and consolidated. The next meeting with the European authorities in September will be crucial to establish the foundations of this plan and to ensure that the country continue your path towards a stronger and more balanced economy.

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