LATE on Tuesday October 20, the Spanish parliament approved the 2016 budget without implementing calls from the European Commission to revise the plan to meet deficit targets.
Officials in the EU indicated that Prime Minister Rajoy’s fiscal policy wasn’t realistic with regard to the growth forecasts and the country’s feasibility to reach its deficit targets.
Europe said the budget shortfall would be at 3.5 per cent of gross domestic product in 2016 which would miss the 2.8 per cent target. The Commission also said that this year’s target of 4.2 per cent would be missed by 0.3 per cent percentage points.
The conservative government however has dismissed the EU concerns, and with the absolute majority enjoyed by Prime Minister Rajoy’s party, the budget has been passed.
The new Spanish government that is appointed in the December 20 general election will be able to make changes to the budget, but the spending plan which has just been approved is being described by Rajoy as a reward after five years of belt tightening.
The budget allows increases of 9.3 per cent for education, 3.6 per cent for health, and 7.6 per cent for culture. State pensions see a 0.25 per cent rise and civil servants will receive a one per cent pay rise and will get bonuses for the first time in six years.
The opposition has accused the government of electioneering with this budget as the PP continues to defend their plan.
Economy Minister Luis de Guindos and Budget Minister Cristobal Montoro both said that the plan would lead to faster job creation and rising tax revenue.
The leader of the PP party in parliament Rafael Hernando was among those calling into question the political affiliations of the European Economic Affairs Commissioner Pierre Moscovici. Moscovici was finance minister in France under the Socialist Francois Hollande and denied any political motivations.