The war in Iran and its extension to much of the Middle East. And this scenario opens another one not contemplated until now: a growing tax pressure on public funds.
As with international analysts, governments in much of the world are already facing what they call a ‘complex dilemma’. EITHER spend more to cushion rising living costs of citizens (transport, electricity, food) at the cost of facing the “wrath” of debt investors or choosing fiscal discipline and’put the scissors into certain social items.
The first option is especially worrying to those governments with a high level of debt, which face restless international creditors. They are, continue The New York Timesdue to public finances reduced by military spending, essential public services, the aging of the population and investments in infrastructure. Factors to which is added the still latent energy crisis derived from the Russian invasion of Ukraine.
The election is mandatory, the article continues, for all countries, but there are especially affected areas where it will be felt more strongly. These are the countries of Europe and Asiafor its greatest dependence on imported oil and gasin the face of which inflation can hit hard.
“The fiscal space is important, but the political pressure is a much more determining factor“says Angel Talavera, chief European economist at Oxford Economics, a research group.
He admits that “the threshold for action is much lower because the prices have become a highly controversial issue for voters“, mainly due to the inflationary crisis of recent years. Since the initial movement of the US and Israel against Iran, this price crisis has returned to the foreground, among other effects.
Some countries have already moved quickly to alleviate the blow to households. For example, Portugalwhich has already lowered diesel taxeso Greecewhich has limited profit margin of fuel companies and certain food products.
Waiting for the Spanish government present its plan this FridayOutside Europe there are also movements. In South Korea, for example, the government is considering expanding a household energy voucher program.
