Catalonia not to be blamed for Spanish deficit

Catalan President, Artur Mas, has travelled to Brussels this week to explain the state of the finances of the Generalitat to the president of the European Council, Hernan Van Rompuy. Mas has explained that Catalonia’s deficit will be 2.66%, above the 1.3% threshold set by Spain but that Catalonia has reduced its budget 10% and reducing it further would affect the Catalan’s people welfare since the Generalitat manages healthcare, education and culture, amongst other services. Mas also pointed out that the Generalitat’s deficit would meet with the Spanish target if Spain paid the 1.4 billion euros it owes Catalonia.

Later on, the spokesperson for the European Commission for Economic and Monetary affairs has explained that with these “budget cuts of unprecedented proportions” Catalonia has done its homework and has clarified that the other Spanish Autonomous Communities are the ones which need to follow Catalonia’s example and deal with their deficit.

Just after the elections last May the 22nd, the hidden deficit in many Spanish Autonomous Communities has surfaced and the international press (here and here), had pointed at the Autonomous Communities, and amongst them, Catalonia, as the main responsible for Spain’s deficit. However, as I explained here, Catalonia is only responsible for a very small portion of it..

The Spanish Government and media have an ongoing campaign to accuse Catalonia, and the international media has until now played along, as the culprit for the Spanish deficit and has threatened to intervene the Generalitat if it doesn’t meet the deficit target. This obbeys a carefully planned strategy to present Catalonia and the Catalan devolution process as a danger to Spain’s stability in order to reverse it and recentralise the Spanish State. A grotesque situation, threatening to intervene the Generalitat if it doesn’t meet the deficit target and at the same time provoking the overspending by not paying what it had committed to. It’ll be interesting to see how the Spanish justify a much higher deficit by some of the Spanish Autonomous Communities now that Catalonia has dealt with it and Europe is aware of the actual situation.

As a result of Mas’ meeting, rating agency Fitch has contradicted Moody’s and has admitted that the Catalan deficit is not endangering the Spanish solvency. This is a good start that may calm down the rating companies and make it easier for the Generalitat to find international investors for its financing needs this year.

But this is not enough, we need Mas to explain in Europe that Catalonia suffers an unparalleled fiscal plundering of 10% of its GDP by Spain every year, an unsustainable situation that makes Catalonia the highest taxed country in Europe and is a burden for its economic growth and welfare. Especially considering Spain’s frivolous spending habits. It is not acceptable denying Catalonia the 1.4 billion euros forcing Catalonia’s deficit above the target while at the same time not hesitating to approve 3.85 billion euros to finance the high speed train from Madrid to Extremadura, a region with 1 million inhabitants.

picture by tiseb

11 thoughts to “Catalonia not to be blamed for Spanish deficit”

  1. A bit like Scotland paying more into the Westminster exchequer than we receive from them,Scotland pays her way but were accused of being subsidy junkies.

  2. thanks nconway, do you know where can the fiscal redistribution information within the UK be found? I’d be curious to check it out

  3. The GERS report, which is a UK Gov statistical report produced annually.

    GERS means Government Expenditure and Revenue Scotland which details just that. They have been analysed by forensic accountants in Scotland and found to be very fictitious, at least ones of some years ago were. It seems that some figures were just conjured up and others were disingenuously constructed against Scotland’s interests.

    Initially I believe, the who expenditure on the Royal Navy’s Nuclear submarines and missiles was attributed as a Scottish expenditure by the UK Gov. All companies with UK Head Quarters in London were judged to be English incomes including all VAT monies and Excise taxes from Scotch Whisky. Oil revenues from oil extracted from Scottish waters are judged to be “UK” revenues and not Scottish.

    Over the years these “leger de main” errors have been corrected and even the UK Gov accepts that Scotland could be economically viable.

    There are analyses which indicate that the geographical area which receives most subsidies (hidden ones) was London, with all the Civil Service structures, Railway and Underground subsidies, Olympic Games, World Cup (Failed Bid) etc etc .

    Scotland produces more electricity than it consumes and these exports South pay a high charge to access the National Electrical Grid which has a charge model based, basically, on distance from the SE England. So Scotland, a country with 8.9% of the UK population produces, I think, about 11% of electrical supply and is charged nearly 40% of the National Grid’s connection charges. Electricity in Scotland, where it is produced, is actually dearer in than London. To put this in human terms a widowed pensioner in Scotland put on a 1 Killowatt electrical fire to stay warm in Winter, much colder in Scotland than London, is actually subsidising the millionaires in Mayfair and the jewellers’ shops in Bond Street. Power stations nearer London receive a subsidy per KW hour generated! This another devious hidden subsidy to London.

    It used to be the same with long distance telephone calls but that has changed with internet telephony.

    I will send you a link to the GERS report but better I will send a link to the Scottish forensic analyses of the GERS reports which details the tricks and lies used by the UK Administration.


    The above is the first analysis carried out on the 2005 report by Niall Aslen

    This is the latest version for 2008/9 published in June 2010.

    There should be a new version for 2009/10 due this month

    Scotland actually produces a surplus whereas the UK, as a whole, is in an enormous negative black hole. Yes Scotland, unlike any other European nation does not have a budgetary deficit!

  5. Thanks James, I’m sure Scotland would be viable as an independent state. There’s more than 200 states in the world right now and most of them are viable in one way or another and most of those are surely in a worse financial situation than Scotland. I’ll have a look at those reports.

  6. Albert, I forgot to add in my earlier posts that there is another outrage with respect to London centred tax advantage against the interest of Scotland.

    Traditonally the control of the foreshore, beaches and some distance out to sea, not territorial waters, was placed within a department administration fro this Estate. This was for the protection of the inshore fishing rights and other local issues. This was transferred sometime in the late 19th Century to a London based administration and “merged” with the same English dept in what was called the Crown Estate. This was entirely illegal but in those days no one paid any attention to this.

    The development of fish farming in Scotland in the late 60’s onwards was “sanctioned” by the Crown Estate who charged a tax on this. Offshore wind farms, electricity from waves and sea currents now are taxed by the same “unknown” obscure Civil Service Dept.

    It has now emerged that these taxes do not go to the Crown but to the Treasury and thus the London coffers. This is completely illegal, unanswered and ignored by the UK Gov although a Committee at Westminster, made up of unionist MPs said it was theft, illegal and should be transferred to Scotland’s control.

    It has not happened and until the SNP took control at Holyrood has not been pursued. It is now and will bear a longterm revenue source for the Scottish people if we can get the National Grid charges made equitable and the proposed hidden subsidies on English based nuclear power stations, including a new generation, built by the French Nationalised company EDF, none of which will be permitted to be built in Scotland. Our Green renewable electricity is subsidising EDF building, for profit, new nuclear power stations in England.

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