The government’s euphoria in the face of short-term economic developments does not prevent Moncloa from showing much greater restraint in the projections transmitted to Brussels for the next seven years. In its budget plan sent this month to the EU, the Executive anticipates a cycle of slowing economic growth, which will freeze the GDP rate around 1% from 2027. It therefore envisages a clear loss of dynamism in the long term.
In its document, Moncloa forecasts robust growth until 2026 – with increases close to 2% – which will then begin to deflate. These worst-case expectations are based on projections made from the European Commission’s EUCAM model. A software which simulates an estimate taking as a reference – among other variables – the historical series and the calculation of the working age population prepared by Eurostat. “The V-shape of the trajectory of potential GDP responds to the coupling of different methodologies,” explain sources from the Ministry of the Economy, who recall that the hypotheses with which the macroeconomic scenario was constructed in the medium term “are very appreciated” . more precarious calculations which come from European statistics.
However, there are already short-term forecasts that warn of a loss of economic power. The International Monetary Fund (IMF) itself anticipates a loss of dynamism from next year. By 2024, Kristalina Gueorguieva confirmed last week that Spain will grow two points above the eurozone average, up to 2.9%, but she reduces this increase in GDP to 2.1 % in 2025, in accordance with the figures proposed by the tax plan.
Once the economic momentum brought by labor reform has been exhausted, the organization now indicates poor productivity performanceas the main challenge of the years to come. “In the future, what we need is growth driven by increased productivity,” said Gueorguieva, who calls for structural reforms.
In fact, the document sent by Carlos Corpo to Brussels counts on future growth, on the approval and execution of a battery of measures included in the Recovery Plan and other additions that Moncloa hopes to deploy during the next months. The plan recognizes up to 12 initiatives which, by 2031, will represent 3.3 points of GDP. Economics is based on the assumption that ongoing reforms, such as pension or labor reforms, will continue to add value to the economy in the medium term.
Expected economic impact
Indeed, the steps contained in the Transformation and Resilience Recovery Plan will have a positive impact of 1.6 points on the economy. Added to this are all the measures that Moncloa has undertaken to develop, in exchange for being able to develop its adjustment strategy over seven years instead of four.
This is where the immigration regulations that the Government wants to develop in 2025 are located. The initiative includes an improvement in the certification of titles, with the aim of making more flexible the requirements that immigrants face when the regularization of their situation, mainly in terms of residence permit and residence permit. issue work permits, improve pathways for entry and regular stay, in addition to simplifying administrative procedures. With this, Moncloa hopes to add three tenths to the potential GDP until 2031.
In the Government’s legislative calendar there are other additional measures, such as the promotion of affordable housing through Sareb, a new update of the ICO strategic plan, or the deployment of virtual autonomy with which the Economy Ministry wants to speed up bureaucratic procedures and standardize the requirements that businesses need to operate in diverse communities. This removal of obstacles could contribute a tenth to growth.
However, many of the reforms promised to the European Commission depend on a political agreement, at a particularly delicate moment between the executive, the opposition, parliamentary groups and the CCAA.
