Forecasts not credible and not able to build confidence UNREALISTIC PERCEPTION OF LATENT RISKS IN A CONTEXT OF HIGH NATIONAL AND INTERNATIONAL UNCERTAINTY Spain will not regain pre-pandemic GDP level until Q1 2024 Structural deficit consolidation FINANCING OF NEW STRUCTURAL EXPENDITURE WITH THE CYCLICAL INCREASE IN REVENUE RESULTING FROM THE IMPACT OF INFLATION ON THE NOMINAL TAX BASES OF THE MAIN TAXES The structural deficit will increase by 8 tenths of a percentage point to -4.3% in 2023 compared to 2022 The high level of public debt limits the room for fiscal policy margin The estimate of government revenue in 2023 is based on an underestimated collection in 2022 Concerns about the upward dynamic of public spending Only 11.8% of consolidated expenditure is allocated to economic actions in 2023 Assessment by the Círculo de Empresarios Fiscal policy → prudent and rigorous, without short-termism and discretionality for electioneering motives Exceptional measures → selective, temporary and targeted at vulnerable groups Effective and efficient fiscal policy → public expenditure assessment Credible path of government deficit and debt ▼ in the medium term Transparency and legal certainty, especially for businesses Certainty in the implementation of Next Generation EU funds Improving the efficiency of the tax system + ▲ tax bases

1. Personal Income Tax Corporate Tax VAT
Settlement advance 22/
Collection 21
11.1 -0.5 12.2
Collection Jan.-Aug.22/
Jan.-Aug.21
16.7 52.7 20.1
-4.3 -3.8 -3.5 -4.3
-10.1
-6.9
-5
-3.9
2020 2021 2022* 2023*
Structural deficit Deficit AMECO** Deficit GSB 23
General State Budget (GSB) 2023: on the wrong track
ECONOMY
In data
Forecasts not credible and not able to build confidence
UNREALISTIC PERCEPTION OF LATENT RISKS IN A CONTEXT OF HIGH NATIONAL AND INTERNATIONAL UNCERTAINTY
Source: Círculo de Empresarios based on M. of Finance
and Public Adm., AIReF and Bank of Spain, 2022
198,221
NON-FINANCIAL EXPENDITURE CEILING
STATE 2023
million €, +1.1% y-o-y
TAX REVENUE
2023*
+7.7%
Regarding tax settlement
advance 2022
Structural deficit consolidation
FINANCING OF NEW STRUCTURAL EXPENDITURE WITH THE CYCLICAL INCREASE IN REVENUE RESULTING FROM THE IMPACT OF INFLATION
ON THE NOMINAL TAX BASES OF THE MAIN TAXES
The estimate of government revenue in 2023 is based
on an underestimated collection in 2022
% change
STRUCTURAL DEFICIT
2023*
-4.3%
GDP from -3.5% in 2022*
Government forecast of nominal GDP growth in line with the
Bank of Spain and AIReF, but with a different composition
% y-o-y change
Concerns about the upward dynamic of public spending
State non-financial expenditure ceiling; million €
Spain will not regain pre-pandemic GDP level until
Q1 2024
Index 2015 = 100
The structural deficit will increase by 8 tenths of a
percentage point to -4.3% in 2023 compared to 2022
% PIB
The high level of public debt limits the room for fiscal
policy margin
% GDP
2.1
1.5 1.4
6.0 5.9 5.9
Government AIReF Bank of Spain
Real GDP Nominal GDP Government
Lower price increase forecast 2023
86
90
94
98
102
106
110
Q4
2019
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
Q3
2023
Q4
2023
Q1
2024
120.4
118.3
115.2
112.4
2020 2021 2022* 2023*
Debt AMECO
Debt GSB 23
* Forecasts
* Forecasts
Assessment by the Círculo de Empresarios
IT IS URGENT …
Million € and % change
81,312
86,093
VAT
105,040
113,123
Personal
Income Tax
Settlement 22 GSB 23
26,483
28,519
Corporate
Tax
+5.9
136,345
152,075
Social
contributions
GSB 22 GSB 23
+7.7 +7.7 +11.5
152,560
182,439
118,565
133,259
118,337
151,495
198,221
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Adjustment of European funds and Social Security and EETT transfers
Comparable homogeneous non-financial expenditure ceiling
Only 11.8% of consolidated expenditure is allocated to
economic actions in 2023
Consolidated expenditure = €485,985 M (€30,008 M are European funds)
% of total and million €
+Impact of government revenue measures 2023 = €3,231M (AIReF)
Social
€274,445M
56.5%
70%
Pensions
€190,687M
General
actions
€126,389M
26%
Public
Debt
€31,275M
Economic
actions
€57,399M
11.8%
R&D&i+Digit.
€16,328M
Basic
utilities
€27,753M
5.7%
Defense
€12,317M
FORECAST REAL GDP GROWTH
GOVERNMENT 2023*
y-o-y
0.7 pp higher than that of
the Bank of Spain
+2.1%
** AMECO: European Commission database
Fiscal policy → prudent and rigorous, without short-termism
and discretionality for electioneering motives
Exceptional measures → selective, temporary and targeted
at vulnerable groups
Effective and efficient fiscal policy → public expenditure
assessment
Credible path of government deficit and debt ▼ in the
medium term
Transparency and legal certainty, especially for
businesses
Certainty in the implementationof Next Generation EU funds
Improving the efficiency of the tax system + ▲ tax bases