First challenge to Rajoy: negotiate a sharp adjustment in public spending – The Reporter

Mariano Rajoy must deal with a parliament hostile

The new Spanish legislature is imbued with so-called “dialogue”, to the ongoing conversation. The president of the Government did not offer it in their interventions, and their partners and parliamentarians, as Citizens, do not cease to demand as a hinge is required for this mandate does not end in a jiffy. There are large fields where you will need a long negotiation, but others are more urgent and can not delay in parliamentary committees. Among these are the Budget in 2017, which has already late, according to the calendar established with Brussels.

despite the promised economic boom, the improvement in cyclical revenue will not be enough to appease the institutions. This emerges from a letter of the European Commission submitted a few days ago that the Government of Rajoy where he indicates that, after having a look at your budget plan for the coming year, it was found that lack by developing a set of 5,500 million euros for Spain to meet the objective of fiscal consolidation, 3.1% of GDP in 2017.

The Executive estimates that this year the public deficit will close around 4.5% of GDP, and that, without doing anything -in extension budget – in 2017 will reach 3.6%. That is to say, that the improvement of the collection and the inertia of the measures already taken will reduce the deficit by around 10,000 million. But still five tenths to avoid that Brussels, if not before, imposes a severe penalty to Spain and apply for a retention of the structural funds.

The Government has no intention of holding back on this debate and go into the next exercise in the extension budget. The previous documents are already done in the Ministry of Finance. The vice-president of the Government on functions, Soraya Sáenz de Santamaría, warned last Friday that it will approve in the next few days the roof of non-financial expenditure of the State, which opens the melon of the parliamentary proceedings, and that it should be already validated by the Courts. It is the previous step to submit the Draft Law of General Budgets of 2017. By now, the PP has achieved an approved in these negotiations, managed to agree with C’s and PSOE corrections to the Law of Stability and shared information already on the spending ceiling.

But now the questions are two: how you can cut 5,500 million? Who is willing to agree to this adjustment? As no one bet too that this legislature will be long, it is difficult that neither the PSOE nor Citizens are willing to stamp your signature on a few new accounts from budget cuts. On the expenditure side the most exposed in these cases is that of public investment, but after years of scissors is already under minimum. Everything seems to indicate that the adjustment should be carried out through a tax increase. The spokesman of the PSOE, Antonio Hernando, has already warned in the session of investiture of any contest by the socialists in the Budgets will raise the taxation of those who more you earn.

At least one of the two -C’s or the PSOE – are required to agree the accounts, but Rajoy may be forced to negotiate with the PNV and some other force lower, which would undoubtedly concessions are asymmetrical to those that might oppose Citizens. The accounts will be a good test for the “new policy”.