This is the first time that the EU’s new budgetary discipline rules, which came into force on April 30, have been applied. And the Commission of Ursula von der Leyen opted for a lenient approach when evaluating the multi-year adjustment plans which have been transmitted to you by the Member States and which constitute the cornerstone of this reform of the Stability Pact.
The result is a kind of “overall success” from which 20 Member States have benefited, including Spain. Italy and France too, whose budgetary situation is even worse. Only the Netherlands are suspended, whose plan does not guarantee that the deficit remains sustainably below the 3% limit. The community executive also postponed its opinion on the Hungarian project. Germany, Belgium, Bulgaria, Austria and Lithuania missed the deadlines and have not yet sent their programs to Brussels.
As for Spain, the Commission gives the green light to the seven-year adjustment plan sent to it by the government of Pedro Sanchez last October 15. A plan which provides for a reduction in the public deficit from 3.5% in 2023 to 3% this year, 2.5% in 2025, 2.1% in 2026, 1.8% in 2027, 1.6% in 2028, 1.5% in 2029, 1.2% in 2030 and 0.8% in 2031. This amounts to limiting the increase in net spending – the new benchmark indicator – to 3% on average, even if the largest adjustment is postponed until the end of the period.
The Community Executive has decided to accept the request of the Minister of the Economy, Carlos’ bodyto extend the duration of the adjustment plan from four to seven years, which implies less annual effort. In exchange, the Spanish government committed to a series of reforms and additional investments to those of the Next Generation recovery plan, since they last until 2031. The other member states to which Brussels has granted an extension are France, Italy, Finland and Romania.
“Five member states – Finland, France, Italy, Spain and Romania – facing relatively high budgetary challenges decided to opt for a seven-year adjustment period. This significantly reduced their effort annual budget, on average around half a percentage point of GDP”, explains the Commissioner for Economic Affairs, Paolo Gentiloni.
“The Commission has once again placed Spain in the group of good studentsthat is to say Member States which respect the new European budgetary rules, thus supporting the investment and reform roadmap which underpins our balanced, sustainable and equitable growth model”, welcomed the Minister Corps.
The Commission chose to approve Spain’s adjustment plan, even though it itself had suggested to the Sánchez government a more demanding adjustment path. Specifically, Brussels advised Spain last June to annual effort equivalent to 0.5% of GDP (7.5 billion euros per year) as a necessary remedy to put their accounts in order and reduce their large bill.
But the Minister Corps ignored this recommendation and opted for a less ambitious budgetary effort of 0.4% of GDP per year (6 billion per year). It nevertheless benefited from the “general approval” of the community executive.
In its opinion, the Commission considers that the Spanish plan (like the rest of those approved) would ensure that public debt remains on a downward trajectory for up to 10 years after the adjustment period. Furthermore, the net spending trajectory keeps the deficit below 3% of GDP in the medium term and respects all required safeguards.
The adjustment path approved by Brussels does not take into account the impact of Valencia DANA. But the European Commission has already made clear that reconstruction costs would be considered an “extraordinary” expense, which would not be taken into account when deciding whether the EU should open an excessive deficit sanction procedure against the ‘Spain.
The Community Executive also published its assessment of the 2025 budgetary plans of Eurozone countries. In the case of Spain, there is no opinion because the Sánchez government has not yet sent its budgets to Brussels, although the legal deadline to do so expired in 2025. The Commission still hopes to receive the Spanish budget plan “in the coming days”. not very future. “distant”.
