The economic growth, which last year was five times higher than the average for the Eurozone, and the improvement in employment with record enrolment figures, make it possible to improve the deficit forecasts without applying cuts and strengthening the Welfare State.

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The Treasury informs Eurostat that Spain met the stability target

Firstly the financial year 2023 finally closed with a deficit of 3.64% of the GDP with financial aid. This is slightly lower than the provisional 3.66% advanced last week and has changed minimally after receiving the final national accounts data. Excluding financial assistance, the deficit stood at 3.65%. The Ministry of Finance has sent Eurostat the official closing figure, which is in line with and even better than the 3.9 % forecast committed to with the European Commission. This is the fourth consecutive year that Spain has met its commitments to Brussels.

A reduction in the deficit that has been based on economic growth, bearing in mind that Spain grew by 2.5% in 2023, five times more than the average for the euro area. Also in the dynamism of employment, with a record number of Social Security affiliates reaching 21 million employed, according to data from the Labour Force Survey for the fourth quarter of 2023.

Therefore, Spain has demonstrated once again this year that it is compatible to reduce the public deficit and strengthen the Welfare State by deploying a social shield to combat the effects of the war in Ukraine and protect the country’s social majority. Indeed, since the outbreak of the pandemic in 2020, Spain has reduced its deficit by more than 60 billion euros while expanding public services.

A path towards a balanced budget that continues in 2024. The Ministry of Finance has also published the State deficit data for February this year, which stands at 0.61% of GDP, compared to 0.64% in the same period in 2023. This brings the deficit up to the second month of the year to 9,466 million euros.

Likewise, the consolidated deficit data of the Central Administration, Autonomous Communities and Social Security for January in national accounting terms have also been released today, falling to 0.36 % of GDP, compared with 0.41 % a year ago.

Government deficit (February)
Up to the second month of 2024, the State has registered a deficit equivalent to 0.61% of GDP, which is a decrease from the 0.64% of the same period last year. This brings the deficit to 9.466 billion euros.

This evolution is due to an increase in revenue of 3 % to 30,546 million euros, while expenditure rose by 2.5 % to 40,012 million euros.

Non-financial resources of the State

Non-financial resources stand at 30,546 million, which is 3% more than in the same period of 2023. Taxes amounted to 25,572 million, 84% of total resources, and grew by 7.5% compared to February 2023.

Taxes on production and imports increase by 3.3%, of which VAT revenues amount to 12,999 million, 3.4% higher than in 2023. The increase in VAT is due to various reasons, including the temporary rate reductions that were implemented as a result of price tensions in different essential goods in production and consumption, which from January 2024 begin to increase gradually. On the other hand, the tax on non-reusable plastic packaging amounts to 81 million, while in 2023, the year in which it came into force, the collection was 39 million.

Current taxes on income and wealth amounted to 7,414 million, 19.7% higher than in the first two months of 2023. Of this amount, 843 million corresponds to the Temporary Tax on Credit Institutions and Financial Credit Establishments. In turn, personal income tax reached 5,336 million and revenue from non-resident income tax (791 million) rose by 19.1%.

In addition, taxes on capital amounted to 25 million euros and revenues from social security contributions reached 972 million euros.

Property income amounted to 1,033 million, of which 992 million was from interest, up 55% on the previous year, and 41 million from dividends and other income.

Income from the sale of goods and services totalled 339 million euros. Finally, the remaining resources amounted to 512 million, including current investment aid and international cooperation, among others.