a Deviation in the level of cumulative GDP in 5 years, the time considered necessary to reach the new "long term". The two simulations assume a "no-deal" that includes a long-term scenario under WTO rules. FORECASTS FOR THE SPANISH ECONOMY: MAIN RISKS. SURPRISES ON THE DOWNSIDE FOR INFLATION OIL PRICES  OVERALL INFLATION  3  CHART 6  %  Projections  70  Dollars/barrel  Projections  65 2  60 55  1  50 0  45 40  -1  35 -2 2013  2014  2015  2016  LATEST PUBLISHED PROJECTIONS  2017  2018  PROVISIONAL UPDATE  2019  30 2016  2017  2018  2019  ASSUMPTIONS USED IN LATEST PUBLISHED PROJECTIONS UPDATED PROJECTIONS  SOURCES: ECB, INE, Reuters and Banco de España. which Spanish general government has been immersed since 2009, as part of the “corrective arm” of the EU’s Stability and Growth Pact. Specifically, the budget deficit is expected to be below 3% of GDP both in 2018 and 2019. 1.3  Main risks and elements of vulnerability  The macroeconomic and financial scenario I have just sketched, which prolongs the expansionary phase of the Spanish economy, is, however, subject to certain downside risks. It should also be added that these risks have tended to increase recently and are being reflected in sharper downward revisions of analysts’ opinions on the outlook for the global economy in 2019 (see left-hand panel of Chart 5).
These adverse effects arise because public debt absorbs funds that could be put to more productive use and alters the overall financing conditions of the economy, distorting private investment decisions. Moreover, in adverse situations, high indebtedness detracts from the stabilising capacity of fiscal policy. In addition, sustaining high public debt requires maintaining primary surpluses over a prolonged period, which may call for higher levels of taxation or lower levels of productive expenditure. Lastly, one of the key possible adverse effects of high debt is the greater vulnerability of public finances to changes in investor or market sentiment. According to simulations performed in studies published by the Banco de España, under credible assumptions, the process of reduction of Spanish government debt will be very gradual; indeed, several decades may elapse before the debt-to-GDP ratio reaches 60%, which is the benchmark set in the current European fiscal rules framework. In consequence, it is crucial that advantage be taken of the current favourable economic setting to complete the fiscal consolidation process and create budgetary headroom in order to be in a position to address future downturns. The work remaining should take the form of a medium-term programme setting out the measures required to meet the budgetary objectives, together with prudent macroeconomic and public revenue forecasts. Reducing the vulnerability of Spanish public finances is even more important considering the medium and long-term challenge posed by population ageing (see Chart 13).