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European Commission’s “in-depth reviews” for Spain 2014

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29 Apr. 2014

In accordance with the Regulations on the prevention and correction of macroeconomic imbalances, the General Directorate for Economic and Financial Affairs presented their report last March 5.

Amongst all the observations and remarks raised, we point out the following:

  • The banking sector has bolstered by the recapitalization of weaker banks and the transfer of problematic assets to Sareb (the asset management company).
  • The adjustment in the construction and housing market sector appears to be approaching stabilization.
  • The forthcoming reform of the tax system could contribute to make said tax system more growth-friendly and tax revenues less volatile.
  • Reducing non-wage costs for companies, shifting the tax from labour to consumption could contribute to employment growth and cost competitiveness.
  • Generalized tax cuts tend to have a limited impact on employment so tax should shift increasing the consumption tax and equally reducing the tax rate on labour. Low-skilled workers require a much smaller tax shift.

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