The Fitch rating agency warns of the “degree of uncertainty” that the double electoral year can generate in Spanish public finances in a context of high inflation (the annual CPI rate rose to 4.1% in April) and a tightening of financial conditions due to the rise in rates from the European Central Bank. The US firm considers that the municipal and regional elections on Sunday and the general ones scheduled, in principle, for the end of the year carry a certain “risk of fiscal relaxation”, given the possibility that additional discretionary measures are approved. The rating agency published its review of Spain’s rating on Friday night, which it has decided to maintain at ‘A-‘ with a stable outlook.
In its report, the New York-based firm recalls that the result of the May 28 elections will be an “important indicator” for the general elections that, at most, will have to be held on December 10. It will do so in a context in which, in his opinion, the impact of the tightening of financial conditions and high subjacent inflation “will weigh on the economic outlook.” However, the agency trusts that the purchasing power of households will be maintained thanks to the increase in wages. Looking ahead to next year, they expect GDP to grow at 1.6%.
