Confemetal warns that the PGE are based on forecasts "overly optimistic" that will not be fulfilled

He considers that the fiscal philosophy of the 2023 accounts “seems designed to penalize productive investment”

November 13 () –

Confemetal warns in its latest bulletin on the economic and labor situation that the General State Budget (PGE) for 2023, which is based on a forecast of economic growth of 2.1%, “deceives itself from the first paragraph of its articles”, having been prepared “with excessively optimistic projections of the main macroeconomic variables”.

The employers of the metal point out that these forecasts are not only confirmed, but that, in light of the latest evolution of the Spanish economy, “it will be impossible for them to materialize.”

“No national or international institution, not even the Government itself, has been able to prevent its growth forecasts from sliding steadily downward to be far from what could be forecast just before the summer. The OECD forecasts a 1.5% advance of our GDP in 2023, the IMF places it at 1.2%, and the Government builds its accounts on a forecast of 2.1%.This optimistic figure is maintained in an international scenario marked by the high inflation and the tightening of monetary policy,” he stresses.

Thus, for Confemetal, the 2023 Budget Law begins to be violated from the macroeconomic framework that accompanies it, as well as from a tax philosophy “that seems designed to penalize productive investment, so that, before being approved, it already betrays its premises and objectives.

“The big problem with these Budgets is that they contain the same lack that made other precedents fail, which is none other than the lack of prioritization of the economy’s competitiveness, the real underlying problem in Spain,” Confemetal emphasizes.

To improve competitiveness, the business organization calls for “real and profound” reforms that make markets for goods, services and factors more flexible and that allow new companies to grow and consolidate existing ones.

“Without solid and competitive companies, the risk of stagnation in our economy will be a devastating reality for our levels of well-being and those of future generations,” he warns.

In his opinion, the Budgets should respond to an economic cycle characterized by uncertainty and slowdown, since the Spanish economy is “vulnerable” to geopolitical tensions and their consequences on energy markets and supply chains, as well as deterioration of the European economies.

“With costs and prices of goods on the rise and poor forecasts for the evolution of labor costs, inflation, far from slowing down, could still worsen, deteriorating the purchasing power and private investment and the general confidence of the economy,” it warns.

CRITICISM FOR THE GREATER TAX PRESSURE FOR COMPANIES

At the same time, Confemetal warns that the “serious problem” of public debt makes the Spanish economy “extremely vulnerable” when monetary policy tightens its financing conditions, as is currently happening.

In this context, the metal employers believe that the main challenge for the Spanish economy should be the reduction of the public deficit to guarantee access to financing for both public administrations and the private sector.

“To achieve this reduction, the possible path is austerity and the rationalization of public spending, a clear commitment to fiscal consolidation that is far from illuminating these Budgets in which spending once again beats its own records,” he denounces.

This increase in spending, he criticizes, is supported by an “exceptional” growth in income derived from the effect of inflation and the increase in tax pressure on companies and individuals.

“This growth in public spending is going to fuel inflationary dynamics, since items such as pensions and civil servant salaries are indexed to the evolution of the CPI for the previous period, conditioning future fiscal measures, fueling inflation through the effects of second round and reducing the effectiveness of the price containment measures,” he warns.

To maintain this spending structure, tax revenues amounting to 262,781 million euros are budgeted, a new record that, according to Confemetal, will raise the tax burden in 2023 to 42.3%.

Overall, the metallurgical employers calculate that the business tax burden (Corporate Tax plus contributions) has gone from 10.3% in 2019 to 10.7 in 2022 and will exceed 11% in 2023, “far from the Union average European Union which is below 10%”.

“In a context of economic slowdown and rising costs of raw materials, energy and labor, adding the increase in fiscal costs will only serve to hinder investment and the generation of wealth and employment,” laments the business organization.