Can the 2013 achieve the economic targets?

After more than four years fighting against the economic recession, it seems that 2013 can be the turning point for some countries. United Kingdom is expected to get out of the recession this new year, as forecast announces an economic growth of 1.2% of Gross Domestic Product (GDP). However, the hit European countries, in which Spain is part of, will continue into stagnation. Spanish prevision of growth in the next year is still downturn, with a minus 1.2% decrease of the GDP in 2013.

UK´s economic strategy “is focussed on reducing the deficit, restoring stability, rebalancing the economy and equipping the UK to compete in the global race”, as the Chancellor of the Exchequer, George Osborne, explained in the Autumn Statement to Parliament on 5 December 2012. On the other side, Spanish austerity measures have only contributed to increase unemployment (up to 25%) and to provoke more social unrest.

However, it it necessary to remark that neither UK nor Spain are likely to kept their forecasts of deficit reduction in the year that has just entered. The objective of Spanish deficit was 6.3% of GDP at the end of 2012, “but it could be (above that),” as the Bank of Spain governor, Luis Maria Linde, said last December 2012; although estimations yet predict Spanish deficit to drop to a 4.7% of GDP in 2013. On the other side, UK will also miss its deficit target from the 2013-2014 financial year, as the Autumn statement announced an escalation to 5.9pc of GDP, or £98bn, as Mr. Osborne indicated (hm treasury, Dec 5th, 2012). This data would indicate that the UK deficit next year could be higher than the Spanish's.

Therefore, new cutting measures will be necessary to reduce deficit and the extensive public debt. UK budget cuts are not significant, only 1.5% real cuts during 2012, if compared with Spanish ones where the most striking difference is that Spain does not include any measure to support growth as UK has setting up. For example, UK new policy includes increasing funding for UK Trade and Investments or helping smaller and medium-sized businesses access finance and support “from £25,000 to £250,000 for two years” as Mr. Osborne set out in the Annual Autumn Statement. This strategy can probably be the best solution to alleviate the financial situation; something that the European Union also instituted in its programme 2007-2013 “new funds, better rules”.