An assessment of the main revenue and expenditure figures in the 2023 general state budget

An assessment of the main revenue and expenditure figures in the 2023 general state budget

Fecha: noviembre 2022

Desiderio Romero-Jordán

Budgetary breakdown

SEFO, Spanish and International Economic & Financial Outlook, V. 11 N.º 6 (November 2022)

The 2023 general state budget (2023 Budget) is underpinned by an optimistic GDP growth forecast (2.1%). It assumes a revenue-GDP elasticity of 1.1 and an expenditure-GDP elasticity of just over 0.6, which would unlock a reduction in the deficit from 5.0% in 2022 to 3.9% in 2023. On the revenue side, the forecast growth of 7.6% (at all levels of government) is shaped by the sharp growth in inflation (71.4% according to AIReF). Other contributing factors to the favourable revenue outlook include the measures set to take effect in 2023, with a net positive contribution to the state’s coffers of 2.71 billion euros. The new sources of tax revenue stem mainly from essentially temporary measures (92.9% and 92.6% of tax revenue gains in 2023 and 2024, respectively) rather than genuine tax reform, as promised to Brussels for the first quarter of 2023 and upon which the release of 7 billion euros in European funds is conditional. On the expenditure side, the estimated figures are sensitive to the pending decision as to the rollover to 2023 of the household and business aid put in place in 2022, whose overall cost, if not adjusted, would be around 18 billion euros.

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