PSOE and United We Can reach an 'in extremis' agreement to take the PGE to the Council of Ministers today

The two government formations --PSOE and United We Can-- have reached an 'in extremis' agreement on the draft law of the General State Budgets (PGE) for next year, which will be approved at the meeting of today's Council of Ministers.

As reported by the Secretary of State for Communication, the agreement will be formalized this Tuesday at a meeting between the President of the Government, Pedro Sánchez, and the Second Vice President and Minister of Labour, Yolanda Díaz, and will subsequently be submitted to the Council of Ministers. for your approval.

This pact comes after last-minute negotiations between the two government partners, after Yolanda Díaz warned on Monday night that there were still deep differences within the coalition to close the agreement, especially on housing issues. .

In any case, while waiting to know the specific details of the agreement between PSOE and United We Can, both have been able to resolve the "fringes" that separated them from what may be the last accounts of the coalition.

One of the great pacts between the two parties was the fiscal one, which made it possible to unblock the agreements to close the accounts for next year, which aim to consolidate economic growth and job creation, but taking into account the current complex economic panorama, marked by because of the war in Ukraine and the escalation of prices.

After its approval in the Council of Ministers, it is foreseeable that the Minister of Finance and Public Function, María Jesús Montero, will take them next week before the Congress of Deputies, with the purpose that before December 31 the Budget Law is approved and, therefore, on January 1 enters into force.

The main warnings launched by United We Can had to do with the fact that they considered that the increase in the public budget "cannot be" directed at defense spending, but rather "must be used for social investment and reducing inequalities."

Likewise, the 'purple' formation insisted that the Government must comply with two commitments that it has maintained with citizens "for a long time", which are the repeal of the 'gag law' and the approval of the housing law, in process parliamentarian for months.

The family law and its main measures were another aspect pending sealing, given that United We Can demand budget support for two specific points, such as extending maternity and paternity leave to six months, as well as a universal child-rearing income of 100 euros.

SALARY INCREASE OF OFFICIALS

In the public accounts, the Executive must also include the rise in the salaries of civil servants. The Treasury has offered the unions an improvement of 9.5% between 2022 and 2024, which finally ended with an agreement.

Officials have already received a 2% salary increase in 2022, to which the retroactive 1.5% proposed by the Treasury will be added, which adds up to 3.5% for this year.

For 2023, the Executive sets an increase of 2.5%, to which two variables of 0.5% are added. The salaries of public employees would rise an additional 0.5% if the accumulated CPI for 2022 and 2023 exceeds 6%, and another 0.5% would be added if the GDP for 2023 exceeds 5.9%.

The offer is completed with a 2% increase in 2024, again with a clause to increase the salary by 0.5% in the event that the accumulated CPI for 2022, 2023 and 2024 exceeds 8%.

Next year's accounts will also have to deal with updating pensions according to the interannual CPI for the month of November, which could be between 7% and 8%, according to experts, which will mean a very important.

PACKAGE OF FISCAL MEASURES LINKED TO BUDGETS

Last July, the Council of Ministers approved the non-financial spending limit for 2023, known as the 'spending ceiling', which amounts to 198,221 million euros, a new record, 1.1% higher than that of 2022 , including 25,156 million European funds and a transfer to Social Security of 19,888 million, 8.1% more than last year.

The public deficit would be reduced to 3.9% of GDP, according to the latest Government forecasts, although the Treasury has recently presented a new fiscal package to deal with the current situation, with which it intends to raise an additional 3,144 million euros.

Among the most relevant fiscal measures that will accompany the Budgets, the reduction of the Personal Income Tax (IRPF) for work income below 21,000 euros stands out. The taxation of capital income in personal income tax of more than 200,000 euros will also be raised one point, up to 27%, and for capital gains of more than 300,000 euros, it will be raised to 28%, two more points.

Likewise, income from work from 15,000 euros (1,000 euros more than now) will be exempt from paying personal income tax, while in VAT, the rate will be lowered from 10% to 4% for feminine hygiene products, of which condoms and non-medicinal contraceptives.

Also in this tax, the net yield of modules for the self-employed will rise by 5% and the reduction for deductible expenses that are difficult to justify in taxation under the simplified direct estimation regime will be increased from 5% to 7%.

The fiscal package also includes changes in the Corporation Tax. Specifically, the nominal rate is lowered from 25% to 23% for small companies with a turnover of less than 1 million euros.

Likewise, in this tax, the possibility of compensating the losses of the subsidiaries in the consolidated groups will be limited to 50%, which will affect 3,609 large companies and will be temporary.

SUSPENSION OF FISCAL RULES

All this taking into account that, as in 2020, 2021 and 2022, the European Commission has proposed that the rules that limit the public deficit and debt of the Member States continue to be suspended in 2023. The suspension of the fiscal rules, which it has to be approved by the Government with the approval of the European Commission, it is protected by articles 135.4 of the Constitution and 11.3 of the Budgetary Stability Law.

As has happened in previous years, the Congress of Deputies certified that it appreciates the existence of an exceptional situation that justifies the need to suspend these deficit and debt rules and thus legitimizes the Government's decision, as required by the Constitution and the Budget Stability Law.