Feijóo will lower social contributions if the audit of the accounts allows it

The People’s Party prepares a pension reform if it finally reaches Moncloa. One of the star measures goes in the opposite direction to what was agreed by Minister Escrivá in Brussels. The leader of the PPP, Núñez Feijóo, prepares an audit of public accounts and once the available fiscal margin has been analyzed, they will decide whether to lower social contributions. From Genoa they transport that the will of the PP is to lower social contributions and taxes on work as long as the economic situation allows it. In addition, they shield their support for the revaluation of benefits with the CPI.

The first thesis of the PP to seek the sustainability of pensions – which faces an obvious demographic imbalance due to the retirement of the baby boom starting imminently– revolves, essentially, on training, the birth rate and productivity, and not on cutting spending, to improve income from contributions without raising them, a kind of counter-reform.

Spain has the problems we already know: 2.7 million unemployed, mismatch due to vacancies and 190,000 fewer births than in 2008. In contrast to the increase in the contribution rate through the Intergenerational Equity Mechanism (MEI), they will bet on bringing the labor market towards full employment and improve productivity with a “fundamental” role of training.

The battery of measures that the popular ones are preparing is despite the changes already imposed by the coalition government during this legislature. From the PP they glimpse new changes based on the consensus of the Pact of Toledo, with concrete measures that they would put on the table in the case of reaching the presidency.

Consequently, with the audit of the accounts that they raise if they reach La Moncloa, the popular ones consider it crucial to reduce superfluous spending. From think tank as the Institute of Economic Studies (IEE) estimate in 60,000 million excess spending due to lack of efficiency in the use of public money. The PP also has the intention of promoting the birth rate, without specifying more concreteness to date.

Within the economic roadmap of popular education, therefore, there is not touching the generosity of the benefits. From Genoa they affirm that support for the revaluation of public pensions with the average annual inflation rate is guaranteed.

The challenge in Europe

The hypothetical drop in social contributions would therefore be framed under an economic assumption that allows it. However, the plan that José Luis Escrivá, the head of Social Security, has agreed with the European Commission, sets a precedent that any other government must comply with.

Brussels forced to include a closing clause in the Equity Mechanism that reviews this measure every three years, in such a way that if the expected spending exceeds 15% of GDP, additional measures would be applied. Ultimately, a rise in the contribution rate for common contingencies. Thus, it turns the MEI into an automatic adjustment tool (as was, for example, the Sustainability Factor), which was the will of the European Commission from the outset.

In this way, the next Government has the challenge of the first review of the MEI, an appointment in 2025 for which the Bank of Spain and the Independent Authority for Fiscal Responsibility (AIReF) They already provide for additional measures on spending or income.

While waiting to know the specific plan for the PP with pensions, what Brussels will continue to monitor are the numbers that cause the changes: at all times, a reform must pursue the objective of sustainability, according to the thesis promoted by Brussels.