Fedea warns that the general forgiveness of debt to the CCAA will aggravate their problems of "fiscal indiscipline"

Warns that investiture pacts pose "risks" for public accounts and for economic and employment growth.

Fedea warns that the general forgiveness of debt to the CCAA will aggravate their problems of "fiscal indiscipline"

Warns that investiture pacts pose "risks" for public accounts and for economic and employment growth


The Foundation for Applied Economics Studies (Fedea) warns in an article in which it analyzes the different agreements reached by the PSOE to invest Pedro Sánchez as president that the general and unconditional forgiveness of a part of the debt of the autonomous communities common regime "will contribute to aggravating" their problems of "fiscal indiscipline".

In the article, prepared by its executive director, Ángel de la Fuente, Fedea emphasizes that the investiture pacts pose "at least two risks and one certainty." These risks, he specifies, have to do with economic growth, employment and the sustainability of public accounts, on the one hand, and with social and territorial cohesion on the other.

The "certainty", according to Fedea, is precisely that the forgiveness of regional debt will not help, but quite the opposite, to ensure that regional entities are disciplined in fiscal matters.

Fedea warns that the investiture agreement between PSOE and Sumar "lists" the program of the nine Government "clearly to the left", pointing to a "significant" increase in public spending and fiscal pressure.

"In addition to the strong upward pressure on spending that the recent pension reform will generate in the coming years, there are now plans to improve numerous social benefits and increase public spending on health, education, housing and other areas," he argues. From the source.

In his opinion, some of the announced measures, both in terms of income and expenses, "raise serious doubts" and could lead to new tax increases "for all" citizens and not only for those with higher incomes.

"It seems unlikely that everything proposed can be done without further unbalancing public accounts, contrary to what the European Union will demand after the reactivation of fiscal rules, or without strong tax increases for everyone and not just the rich," Fedea alert.

"The new Government and its allies seem to forget that such increases also have a cost in terms of lower disposable income and well-being for large segments of the population and could have adverse effects for everyone through their impact on economic growth and employment" , complaint.

For Fedea, some aspects of the pacts between the PSOE and the nationalist parties can be "very problematic", such as Junts' demand that 100% of the state taxes collected in its territory be transferred to Catalonia.

"Contrary to what was announced in some media, there is no agreement on such a transfer, which for the moment would only be a demand from Junts. However, it is not at all reassuring that the PSOE has agreed to start a negotiation process on the financing of Catalonia that will be developed in a bilateral framework and based on a surprising common diagnosis that involves accepting, to a large extent, the nationalist theses about the alleged deficiencies and abuses of the current system," says Fedea.

De la Fuente does not see it likely that this negotiation process will culminate in the current legislature with an agreement on the maximum demands of the nationalists, but he does not rule out "significant concessions that could pass for a special status for Catalonia both in the negotiations on the financing reform as well as its position in the new model".

These concessions, he specifies, would translate into a lower contribution from Catalonia to the common treasury and, therefore, "in privileged financing to some extent."

"There is also a risk that such concessions mark the beginning of a confederal drift that would gradually reduce the margins for interterritorial leveling and, with it, for personal redistribution beyond the internal scope of each community. This process would entail a gradual weakening of the State, which could be deprived of the resources and tools necessary to carry out its basic functions," he adds.

For Fedea, the investiture pacts leave open many "important" issues, sometimes limiting themselves to opening a negotiation process to whose progress the continuity of the legislature by the nationalist parties is subject.

"The uncertainty is, therefore, very great and we will have to see how the negotiations evolve and what they take shape in order to be able to make a more informed assessment of their implications," the entity emphasizes.

Other aspects of the coalition agreement between PSOE and Sumar that Fedea considers "very debatable" are the reduction by law of the working day without proportionally adjusting salaries, the increase in the minimum interprofessional salary (SMI) to 60% of the average salary and the tightening of the conditions for dismissal and dismissal.

These actions, warns De la Fuente, "tend to increase the unit costs of companies and reduce their internal flexibility, thus breaking an important aspect of the agreement reached at the time regarding the recent labor reform."

"All of this, in turn, can compromise the competitiveness of companies and their ability to adapt to adverse shocks, with negative effects on employment," he concludes.