Finance Minister Cristóbal Montoro

Finance Minister Cristóbal Montoro has presented the 2014 budget today, insisting that there will be no new tax increases next year, in the run up to the next elections, because the economic recovery will bring job creation and therefore additional contributors.

As for Governmental departments, the budget for Industry, Energy and Tourism will see a 31.6% increase, largely due to increased financing costs of the electricity system. Economy and Competitiveness will gain an additional 19.5% and Employment and Social Security will see their purse grow by 11.5%. Even Education and culture sees an increase, albeit by just 6.6% for scholarship endowments, but where there are winners, there has to be losers, with Health seeing the biggest budget hatchet with a 35.6% decrease and Foreign Affairs dropping by 8.8%.

As for basic public services, the budget has been reduced in all sectors, with a reduction of 2.7% in Justice, Public safety and prisons see a 0.3% cut and 6.7% less in Foreign Policy affairs. Even defence has been cut, albeit by just 2.3%.

When we look at investment activities, spending on infrastructure will be cut by 8.6%, but investment in transport subsidies will increase by 36.8%. Agriculture, fisheries and food will also have a 0.8% increase, nowhere near the boot to Industry and Energy, seeing a 26.4% increase on 2013. The Royal Family will also see a cut of 1.89%,

The minister said that this budget will have a “strong social” element and see the continued “recovery of the Spanish economy”, that will help spain overcome the crisis.

Local authorities will still see cuts to their budgets, forcing them to continue to tighten their belts, although by just 0.1%. Meanwhile, the state’s investments in the regions will be cut by 7.1%, with Asturias, Catalonia, Castilla-La Mancha and Madrid seeing the biggest cuts, with an increase in investment for regions such as La Rioja, Navarra and Cantabria.

The consolidated budget expenditures will increase by 3.7% in 2014, but staff costs will fall by 0.5%. Always a vote winner, contributory pensions will rise by at least 0.25% in 2014, the minimum under the new reform government. With this appreciation, and taking into account the forecast increase in the number of pensioners and the variation of the average pension, the Government envisages an increase of 5.4%.

Finally, as the election season approaches, with the first vote being in the European Parliament, there will be a 27% increase in election based activities.

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