Airef: The Fiscal Authority worsens its public deficit forecast for 2022 to 4.5% of GDP | Economy

Despite the fact that the outlook continues to be in turmoil, the Spanish economy has turned around, moving away from the worst forecasts. In 2022 the GDP has not stepped on negative ground, as many analysts feared; inflation has moderated —at least, the general index—; employment has held up and tax revenues are growing at the fastest rate in history. So much so that the Fiscal Authority (Airef) has improved its growth forecast for the year that has just ended to 5.3%, compared to the 4.4% projected by the Executive. In 2023, the economy would grow by 1.6%, slightly more than the 1.5% that the Government draws. The organism’s deficit forecast also improves the official one by half a point – it places it at 4.5% of GDP in its latest update, published this Monday -, although the previous forecast worsens by two tenths. At the same time, the institution modifies its table on inflation: it lowers it to 8.4% for 2022, but raises it to 4.2% for this year.

In fact, the institution in charge of overseeing public accounts calculated that the deficit of the Administrations would stand at 4.3% of GDP in 2022 thanks to the increase in the specific weight of tax revenue, which is on its way to setting a record. Absolutely due to the rise in prices —higher than 8% on average last year—, the rise in public wages and the stamina of employment. However, the new fiscal measures approved to mitigate the impact of inflation, and greater spending, especially by communities, have led Airef to adjust the shot. The body has increased its deficit forecast for the central Administration by one tenth, up to 3.1% of GDP —even so, the figure is four tenths better than that forecast by the Executive—, and increases the deficit by the same amount. hole in the regional accounts (1.1%).

What does not change is the forecast for local corporations: Airef estimates a surplus of around 0.2% of GDP, compared to 0.1% for the Government, due to a more intense increase in income compared to expenses . The provision for Social Security Funds is also maintained. The agency estimates that its Red numbers close 2022 at 0.5% of GDP, in line with what is established in the Budgetary Plan. The Ministry of Finance will disseminate the final information in March.

tax revenue

Although at an insufficient level to offset the increase in spending, Airef improves its tax revenue forecast in terms of national accounting. Pending the data for the year as a whole, it estimates a 13% advance in 2022 compared to the previous year, one tenth more than in the previous projection and despite the numerous tax cuts implemented to mitigate the blow of inflation, which until November accumulated more than 7,000 million. In terms of cash, it estimates a jump of 14.8%. All figures would contribute to growth.

The agency calculates that personal income tax will end up providing the Treasury with 16% more in 2022 compared to the previous year, corporate tax will contribute 22.4% more and VAT 14.4%, despite the decrease caused by the reductions. tax on energy taxes. Special taxes will advance less vigorously, at 2.3%, mainly due to the impact of the reduction in the rate of the special tax on electricity. The increase in the contribution of social contributions will be 4.6%.

These data reflect the latest statistics from the Tax Agency. Tax revenue had already exceeded in November – the latest data available – everything collected in 2021, reaching a historical record of 239,789 million. This figure is only about 4,000 million from the objective set in the Budgets for the whole year, and contributes to the fact that the deficit until October, the latest data available, was reduced by 70% compared to the previous year.