The target set in the draft State Budget for 2008 for the general government surplus is 1.15%, in a macroeconomic scenario characterised by a mild slowdown in GDP. The projected decrease in the surplus is based essentially on tax cuts mainly affecting personal and corporate income tax, whereas on the spending side the draft Budget sets a growth rate for the State in line with expected nominal GDP growth. This entails strict compliance with the ceiling established in the Budget Stability Law in June. In any event, it should be kept in mind that the Budget is based on a projection for end-2007 that is very prudent on the revenue side. The strong buoyancy of receipts in the year to date, particularly in direct taxes, might enable the latest official projection of the surplus for 2007 to be exceeded. Should this occur, under a macroeconomic scenario similar to that assumed in the Budget, this improved result in 2007 should be carried over to the budget for 2008 and thus enable another surplus in excess of projections. What is most important is that, as in previous years, the additional revenue that may arise should not lead to increased spending, but rather to a higher surplus. Regarding the size of the budget surplus, I wish to underline that the current situation of public finances is, in part, temporary.
Miguel Fernández Ordóñez: Recent developments in the Spanish economy Testimony of Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, to the Parliamentary Budget Committee, Madrid, 9 October 2007. *  *  *  Ladies and gentlemen, My appearance before this Committee as part of the Parliamentary discussion of the State budget for 2008 comes at a time when shocks are still reverberating through some of the major international financial markets, and the attendant uncertainty inevitably bears on the analysis of the economic situation. In my appearance before the Parliamentary Committee on Financial Affairs on 17 September, I examined in detail the origin and the main implications for ECB monetary policy and for the Spanish economy of these shocks, which emerged last summer against a background of marked momentum of the economy and of world trade. A significant part of this dynamism – reflected in growth rates above 5% for world output and above 6% for trade – derives from the sound performance of the emerging economies in recent years; indeed, they seem to have been less affected by the shocks than the more developed Western economies. This is, in fact, a significant feature of the present bout of turbulence which, if I may briefly recall, originated in a financial market of a developed country (the US sub-prime mortgage market).