The President of the Independent Authority for Fiscal Responsibility (AIReF), Cristina Herrero, participated today in the commemorative event for the 40th anniversary of the Foundation for Applied Economics Studies (FEDEA), an event that brought together experts and institutional representatives to reflect on the great challenges of the Spanish and European economies.
In a conversation with the Professor of Applied Economics at Pablo Olavide University of Seville and FEDEA researcher, Diego Martínez López, the President provided an assessment of the first year and a half of application of the new economic governance framework of the European Union, established since April 2024. The reform, according to her words, places fiscal sustainability as a priority, introduces an approach of national ownership of commitments, and simplifies supervision through a single variable: net primary expenditure excluding revenue measures. Furthermore, it allows compatibility between sustainability and growth and reinforces the role of independent fiscal institutions like AIReF.
Cristina Herrero highlighted that, on paper, these new features represent an advance over the previous framework, but she also underlined the technical difficulties and the complex international and geopolitical context in which it has been launched, which has resulted in mixed outcomes.
In the case of Spain, the President considered that there is ample room for improvement to have a true medium-term strategy that anchors the national fiscal policy vis-à-vis the EU and serves as a guide and anchor for Public Administrations. Specifically, she pointed out that the Medium-Term Fiscal and Structural Plan (MTP) 2025-2028 suffers from a lack of ambition: it has not been subject to debate in Parliament or consultation with Autonomous Regions, it lacks a complete macroeconomic and fiscal scenario, it is not disaggregated by sub-sectors, nor does it offer information on concrete measures. Furthermore, its implementation is being carried out without the General State Budgets for 2025 or internal budgetary stability targets.
Regarding the commitments assumed, Cristina Herrero considered that their compliance would be feasible in the first years without adopting measures, thanks in part to the margin provided by the 2024 figures, but that it would be necessary to take measures in the years 2027 and 2028.
During the conversation, the need to advance in the reform and adaptation of the national fiscal framework to the new European governance was also addressed. According to Cristina Herrero, there are many elements that require an in-depth review of our framework, which is why AIReF will issue an Opinion in a few weeks with concrete proposals to reinforce the medium-term vision of the national framework, review the supervision and control mechanisms, improve information, and review the AIReF regulations.
Finally, beyond the national fiscal framework, she pointed out the need to face the challenge posed by decentralization and the corresponding coordination effort, as well as the challenge that population aging poses with an impact on various public expenditure items, such as pensions, healthcare, and long-term care. Added to this challenge are new demands associated with defence and climate change. In this regard, Cristina Herrero highlighted the need to boost productivity as an engine of economic growth in a context of long-term reduction of the labour factor and highlighted the value of the expenditure evaluations that AIReF is carrying out, the Spending Reviews, which allow for improving the efficiency of public spending in a context of resource scarcity.
