Crisis and recentralisation

Marta Espasa
3 min

As a consequence of the crisis –or with the excuse of the crisis–, an important recentralisation process is being carried out in Spain. This is done via two procedures that feed off each other.

First we have the wide-ranging new legislation that Madrid has passed. Its objective is to considerably reduce the decision-making power of the regions in regard to devolved matters. A clear example of this regulatory invasion is the new education law.

The other procedure is the quantitative one: the importance of sub-central governments is reduced because most of the fiscal adjustments and consolidation fall on them. For example, in 2008 –just before the recession– the distribution of non-financial public spending allocated to the different levels of government in Spain was as follows: the central government managed 50% of total spending, the regional governments 36% and local governments 14%. In fact, 2008 was the year when the level of decentralization was highest, if we measure it in terms of public spending. Well, in 2013 the share of public spending was as follows: the central government managed 58%, the regional governments 31% and local councils 11%. So, as we can see, the crisis in Spain has generated a noticeable recentralisation process in that it has forced sub-central governments to adjust their budget more –basically through cutting back on their spending– to be able to meet deficit objectives that are much more restrictive than those that the central administration has assigned itself.

The tendency to adjust the budget more on sub-central governments has also been observed on an international scale. Some say that in federal countries this tendency could be interpreted as the price to be paid by sub-central governments to be more independent from the central government. However, in Spain's case this independence is very slight, both in revenues –sub-central governments have very little autonomy for self-financing– and in spending –as I mentioned before–. Therefore, the reasons behind this recentralizing behaviour range from political opportunism to the use of fiscal policy as a way of stabilising the situation.

It's obvious that in times of crisis, fall in revenue of sub-central governments –especially regional governments– caused by the decline in own taxation, transfers and the value of their assets means that these governments are less capable of providing the level of public services that are assigned to them. We must keep in mind that the main spending areas that are assigned to regional governments are health, education and social services, all of which are highly sensitive to public opinion. So, a decrease in the quantity and quality of services that are provided on an regional level can damage the public's confidence in these governments and can cause central governments to use this fact to justify the recentralisation of these services.

Well, if the issue is citizens' opinion, let's see what they say. According to various opinion polls, such as "Public opinion and fiscal policy" by the CIS, or the survey "Fiscal opinions and attitudes in Spain" by Spain's Institute of Fiscal Studies, up until 2008 people said they wanted the central government to lose importance and to increase the power of regions and local governments. However, after the start of the recession in 2008, there has been a change in the tendency and the number of people who would welcome a recentralisation has grown. This opinion is shared in all of the regions except Catalonia, where –starting in 2008– people long for a greater devolution of powers. What makes the Catalan case different isn't just that with the crisis in Catalonia citizens want greater self-rule –despite the Catalan government's budget cutbacks–. Rather, what makes it different is that Catalonia is the region in which citizens believe that their government should carry more weight than the central one. Specifically, in 2010 Catalans said they wished that the power of the Catalan government were of 52% and that the state's dropped to 21%, that 9% corresponded to the local councils and that the remaining 18% corresponded to shared matters. In all the other regions, citizens believe that the central government must prevail.

In conclusion, both the CIS and the Institute of Fiscal Studies, two organizations that depend on the central government, have empirical evidence of the Catalans' wish for greater self-rule. It seems, though, that the central government isn't getting the message.

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