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Javier Díaz-Giménez, Professor of Economics , IESE, University of Navarra

Relative surprise

Tue, 28 Feb 2012 12:35:08 +0000 Published in

The Government's 8.5% deficit advertisement is a relative surprise. The Executive had previously announced a deficit of approximately 8.2%, so the problem is that in the end, the figure has been higher than expected, which is not good news. It is not good to have reduced only 8 tenths in a year, which has also been lost in fiscal consolidation.

In my opinion, it would be necessary to make very strong cuts in the General Budgets, and even to consider the entire Welfare State. We must rethink many aspects and reduce spending as much as possible. First, start with unnecessary items, avoid duplication and waste, reduce the Administration's staff or freeze hiring, among other things. And finally, written request, to reach the main items of the Welfare State, such as Health and Education. I also believe that the possibility of co-payment, done in a reasonable way, would be a positive thing. It should not be forgotten that the State functions as a business. However, despite the cuts that can be made, it is practically impossible to reach the 4.4% required by Brussels, especially with the current status and if the forecasts that the Spanish Economics will decrease by 1% or 1.5% this year are fulfilled. In the end, Brussels will have to change the deficit figures so that the reduction is more gradual and not so abrupt. For example, to demand 5.5% for this year and the 3% already announced for 2013.