![]() In contrast, pension expenditure, which is linked to inflation by law, is expected to grow faster than nominal GDP in 2023 and at a similar rate to GDP in 2024-2026.Īs for interest charges – a key variable for debt sustainability – the Stability Programme projects that it will increase moderately, bringing it to 2.9% of GDP in 2026 (2.4% in 2022), since nominal GDP growth and the long average maturity of Spanish debt will limit the increase. Of particular note is the reduction (as a percentage of GDP) of wage earners’ remuneration, which would fall from 11.6% in 2022 to 11.2% in 2026, as well as that of subsidies, from 2.0% in 2022 (very high due to the 20-cent-per-litre fuel discount, now withdrawn in 2023) to 1.4% in 2026. excluding interest payments) would go from 45.4% of GDP in 2022 to 43.4% in 2026. Public expenditure would gradually decline as a percentage of GDP due to the large increase in nominal GDP and a certain containment of non-pension and interest expenditure. ![]() Thus, fiscal pressure is expected to increase in the coming years, despite the fact that the Programme does not contemplate any rise in tax rates. ![]() As for social security contributions, the forecasts capture the buoyancy of the labour market and the increase in contributions under the pension reform. In the case of direct taxes, this reflects the buoyancy of collections due to the anticipated strength of the labour market as well as the assumption that there will be a consolidation of post-pandemic structural factors, such as the materialisation of the submerged economy following the labour reform, a reduced level of tax fraud and the rise in e-commerce. Thus, revenues as a percentage of GDP are expected to increase to 43.4% of GDP in 2023 (43.0% in 2022) and this will continue to increase over the coming years, driven by growth in direct taxes and social security contributions above nominal GDP. If we analyse the expected evolution of the public accounts in some detail, on the revenues side the Programme takes into account the measures approved in the 2023 budget (the increase in the income tax rate for capital incomes, the tax on banks and the energy sector, the solidarity tax on large fortunes in 2023-2024, etc.), as well as the increase in social security contributions foreseen in the pension reform.
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