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Council of Ministers

Government raises ceiling on spending for 2019 by 4.4% to 125.06 billion euros

Moncloa Palace, Madrid, Tuesday 24 July 2018

​The government has approved the budget stability and public debt targets for the next three years, as well as the limit on non-financial State spending for 2019. It also presented a report on the situation of the Spanish economy, which includes the macro-economic scenario for the period 2018-2021.

The Minister for the Treasury, María Jesús Montero, explained that the government's roadmap seeks to recover citizen confidence in institutions to resolve their problems and help economic recovery filter down to families.

With this goal in mind, the Council of Ministers approved the extension of the deficit target for the coming years. "We are talking about A further 6 billion euros for the well-being of our citizens, particularly the middle classes and workers", said María Jesús Montero.

The State deficit will be set at 1.8% for 2019, 1.1% for 2020 and 0.4% for 2021 and the public debt parameters are set for the public authorities as a whole at 96.1% of GDP in 2019, 94.1% in 2020 and 91.5% in 2021.

María Jesús Montero stressed that, with these figures, "we will continue down the path of reducing our debt levels". She also pointed out that the public authorities to benefit the most will be the regional governments and social security system. In this regard, she argued that the government wants public policies on healthcare, education, long-term care and a focus on the unemployed to reach our citizens "regardless of the type of public authority that benefits from these improvements".

The autonomous regions, she specified, "will have an additional 2.5 billion euros to prepare their budgets in 2019, which will revitalise the Welfare State".

The minister also pointed out that the rate of change of the rule on spending that affects all the public authorities will be set at 2.7 for the year 2019, 2.9 for 2020 and 3.1 for 2021.

Limit on non-financial spending

The Minister for the Treasury specified that the limit on non-financial spending for 2019 will be set at 125.06 billion euros. "This means that we will raise the ceiling on spending for 2019 by 4.4% with the aim of making an expansive Budget possible that guarantees fair economic recovery. This will be the benchmark figure for the new Budget".

This adjustment, she said, is a result of "a macro-economic scenario where the foundations for growth continue to be stable with fiscal margins that will principally ensure regional governments benefit therefrom". María Jesús Montero also remarked that tax revenue "is performing positively", and hence the measure will not result in "a greater fiscal effort from the middle classes and workers, or indeed for SMEs and the self-employed".

Macro-economic chart

The Minister for the Economy and Business, Nadia Calviño, claimed that the forecasts made in the government's macro-economic chart "are based on prudent assumptions regarding the development of the global economy".

Nadia Calviño pointed out that a gradual increase in interest rates is expected in both the short and long term, a slight appreciation in the Euro this year, the stabilisation of the exchange rate in the coming years, sound global growth and that Spanish exports will continue to rise steadily.

The minister also highlighted that the growth forecast for GDP in 2018 is maintained at 2.7% and 2.4% for 2019.

Nadia Calviño maintained that these forecasts are in line with the structural efforts towards reducing the deficit by 0.4% of GDP, as notified to the European Commission. It will also allow us to maintain a growth rate of 2.4%. "Our policy is geared towards fiscal consolidation that is not in conflict with maintaining and sustaining economic growth and job creation over the coming years", she underlined.

She also considered that these forecasts are in line with the government's social agenda and with its aim of recovering investment in the Welfare State. She also stressed that the Ministries of the Treasury and of the Economy have undertaken to maintain budget stability as a key goal in reducing the weight of public debt in Spain and to commit to sustainable growth in the medium and long term.

More jobs

The Minister for the Economy and Business reported that the government forecasts that between the fourth quarter of 2018 and the fourth quarter of 2021, around 1.2 million jobs will be created, in other words, an average of 400,000 per annum. Its goal is to have 20 million people in work by 2020, the same number as prior to the crisis.

The government also expects the unemployment rate to continue falling at a rate of close to between one and two percentage points a year to stand below 11% by the end of the year 2021.

Improved widowhood pensions

The Council of Ministers also approved a Royal Decree that contains a rise in the regulatory base of widowhood pensions for those aged 65 or over. In 2018, this increase will stand at four points - from 52% to 56% - and as from 1 January 2019, it will rise to 60%.
The aim of this measure is to improve pensions for the elderly with limited resources. According to social security calculations, some 400,000 people would benefit from this rise this year and close on 500,000 people next year, "mostly women and widows", clarified the Minister for Education and Vocational Training, and Government Spokesperson, Isabel Celaá.

The measure, which will be reflected in August payslips, will amount to an increase in social security spending of 301.31 million euros in 2018 and 1.38 billion euros in 2019.

The Royal Decree approved on Friday by the government complies with an additional provision of Law 27/2011, of 1 August (Law on updating, aligning and modernising the social security system), which had not been implemented until now, in which a gradual increase in the regulatory base of widowhood pensions was provided for a period of eight years to reach 60% by 1 January 2019.

Lifting of veto in the Lower House

The Minister for Education and Vocational Training reported on the decision approved by the Council of Minister to lift the veto on the passage through the Lower House of 44 draft bills  passed by the previous government.

Isabel Celaá explained that some of these 44 draft bills are of "tremendous social interest", since they affect such key issues as equal treatment and opportunities for women and men at work, the universal right to public healthcare, the elimination of court fees, updated pensions and the financial balance of the social security system.

Isabel Celaá argued that "by lifting this veto, the government will ensure that Parliament once again plays the leading role that it is supposed to in an advanced democratic society". Let's not forget that the Council of Ministers held on 12 June adopted a similar decision on another 18 draft bills.

Other agreements

The Government Spokesperson also reported on the decision taken by the Council of Ministers to nominate the journalist Rosa María Mateo as the sole provisional director of the RTVE Corporation, a mandate that will extend until such time as the parliamentary groups agree on the renewal of "the management bodies of the Corporation pursuant to Law 21/2017".

The government nominated the poet from Granada, Luis García Montero, as Director of the Cervantes Institute, who "will henceforth by in charge of working to ensure that our common language continues to be a tier 1 cultural vehicle".

On the international stage, Minister Celaá, after condemning "the serious violent incidents that recently occurred in Nicaragua" on behalf of the government, announced that the President of the Government will appear before the plenary session of the European Parliament in December 2018 "to explain his vision on the future of Europe".

The Council of Ministers also approved an amendment to the Law on Trademarks, which is "of great interest to Spanish companies". Trademarks, explained Isabel Celaá, have a significant macro-economic dimension: they provide 41% of all jobs, 45% of exports, 40% of GDP and 55% of investment in R&D+i. This new law, she added, "is important in the fight against piracy".

The government also approved the resumption of the works on the University Hospital in Melilla, with an investment of more than 88 million euros.

Non official translation