However, in this respect I wish to refer to two aspects from a purely technical standpoint. The first is that, as I have mentioned, in a scenario of already low price dynamics, the risks to inflation forecasts in the short and medium-term are clearly on the downside. In recent months, the headline inflation rate in Spain has been broadly negative (-0.9% in October according to the leading indicator of the CPI published by the INE last week), while core inflation, which is less volatile, has also consistently surprised on the downside and remains at levels close to 0%. In this setting, as it has been the case in 2020 with pensions and public sector wages indexed at 0.9%, which will be above observed inflation (-0.3%, on Banco de España projections), the proposals to raise public sector wages and pensions envisaged in the Draft Budget could give rise to an increase in real terms in compensation for those groups, at the same time as the economy overall is witnessing large-scale destruction of employment and public finances a highly acute deterioration, unprecedented in recent times. That said, in my opinion, rather than adopting widespread wage increases for public sector workers, it would be more appropriate to assess the possibility of introducing more specific increases within that group, for example, for health sector workers, based on objective criteria.
In the case of 2021, the expansionary stance would be mainly due to the impact on growth of the NGEU programme.6 Therefore, should any of the risks mentioned in relation to the impact of this programme materialise, the expansionary stance of fiscal policy could ultimately be smaller in 2021. 2.4  Government debt in the Draft Budget  According to the Draft Budget, the general government debt-to-GDP ratio will reach a historic high of 118.8% of GDP in 2020 and will edge down to 117.4% in 2021. This fall would be exclusively a consequence of the strong nominal GDP growth forecast in 2021, since both the budget deficit and the stock-flow adjustments would exert upward pressure on the government debt ratio.7  Nonetheless, taking into account the risks I have already mentioned, to GDP growth (on the downside) and to the level of the budget deficit (on the upside) in 2021, the government debt ratio may behave less favourably than projected in the Draft Budget. 6  Although this programme will have a neutral effect on the general government balance, by partly closing the negative output gap forecast for that year, it will increase the cyclical component of the balance – calculated as the product of the output gap and its elasticity to the cycle (0.6, according to the OECD) – and the structural deficit.