The President of the Independent Authority for Fiscal Responsibility (AIReF), Cristina Herrero, took part today in the second edition of the PwC Legal Forum, where she stressed the importance of transparency when making forecasts in an increasingly more ambiguous and volatile world dominated by uncertainty. In her opinion, it is increasingly more complicated to make forecasts, and hence there must be the utmost transparency in order to explain the changes in figures and to be consistent and thorough.
During her speech, she stressed the importance of economic forecasts that serve as an anchor for economic activity and decision-making, in spite of the uncertainty. She also explained that in the case of AIReF, it is under a legal obligation to state its opinion on the macroeconomic scenarios of the Government. In fact, currently, the institution is working on the endorsement of the scenario underpinning the Budgetary Plan that the Government must submit to Brussels.
This AIReF report, which will be published in the coming weeks, will point to the period of slowdown the economy finds itself in, despite the strong resistance being shown by Spain compared with other European countries. Cristina Herrero highlighted some elements that will be key for growth in 2024, such as the impact of financing conditions and the weakness of its main trading partners. At a domestic level, she referred to the evolution of the labour market and the uncertainty regarding the implementation of European funds. The high degree of institutional uncertainty, marked by the negotiations to form a new government in Spain and the uncertainty regarding the new framework of fiscal rules to be approved in Europe further exacerbate this situation. AIReF, as is habitual, will explain the causes of any revision in its figures and will explicitly state its assumptions, base estimations and risks.
As regards the new EU fiscal framework under negotiation, the President expressed her conviction that the focus will be placed on the sustainability of the public accounts at a European level, and particularly at a national level, passing on the initiative and responsibility to the Member States. This will translate in individual countries needing to present economic and fiscal strategies with at least a four-year horizon and from an integral perspective that not only includes the fiscal dimension, but also the economic dimension.
The proposal, as acknowledged by Cristina Herrero, may seem a little ambitious for Spain, which has no experience in plans that involve all the General Government sub-sectors and which will also be debated in Parliament, seeking the broadest possible consensus. However, although it is not straightforward, a national strategy would be advisable given the public debt challenge Spain faces. In the short term, the President once again called for responsibility from the Central Government to mitigate uncertainty, given that budgetary stability requires a clear game plan despite the political impasse.
