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Published on Thursday, February 27, 2020

Fiscal Consolidation: A Demanding Challenge

Predictably, Spain closed 2019 with a public deficit that was closer to 2.5% of GDP than to 2%, meaning little change in comparison with 2018. This almost complete lack of improvement means that fiscal consolidation efforts will be carried over to this year.

Key points

  • Key points:
  • In accordance with the stability goals approved in 2017, the Spanish public administrations must correct the deficit by almost two percentage points, up to 0.5% of GDP in 2020.
  • However, achieving this goal would require the implementation of a contractionary fiscal policy, which could be detrimental to the recovery of activity.
  • This is because the slowdown in the Spanish economy will mean that the improvement in public accounts that is brought on by the cycle will gradually taper off.

Associated documents for downloading

  • Report (PDF) Miguel_Cardoso_Virginia_Pou_La_consolidacion_fiscal_un_reto_exigente_Expansion_WB.pdf Spanish February 27, 2020

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