Brussels is finalizing all previous analyzes to return to fiscal containment in 2025, after years of difficulties due to the pandemic. The new economic governance framework required countries to present a four-year structural budget plan, extendable to seven years. In the case of Spain, this roadmap sets a deficit target of 0.8% in 2031. The figures presented by the government were approved this Tuesday of the European Commission, although it has not yet presented the budgets for 2025.
“For euro area Member States which have not submitted a draft budgetary plan for 2025 (Austria, Belgium, Spain), the Commission cannot assess at this stage whether the budgetary policies of these Member States in 2025 are in line with the recommendations“, indicated the European Commission in its autumn package, made public this Tuesday, in which it was to analyze the general state budgets for the next financial year.
The European Commission supports the budgetary trajectory traced by the executive of Pedro Sánchez and considers, at the same time, justified that the adjustment process is extended to seven years, instead of four, since considers “investment and reform commitments” which will contribute to sustainable growth and resilience.
The structural budget plan is a document that countries had to present to Brussels for the first time this year as a prelude to the new budgetary rules. The idea of this document is to give some control to countries to take responsibility for their accounts. Brussels has reiterated to Spain, in recent months, the need to present accounts for 2025, although this assertion was toned down after Dana. The obvious risk is that A financial plan, without budgets for next year to support it, runs the risk of becoming a dead letter. For practical reasons, the figures in the budget plan would have no basis for ensuring their compliance.
The Community Executive has given the green light to 21 structural tax plans of the Member States, including that of Spain. However, he has objections to the Netherlands. The European Commission’s economic vice-president, Valdis Dombrovskis, calls on the Dutch executive to chart a path forward “consistent” spending which takes into account the recommendations addressed to it by Brussels last June.
In its budgetary plan, Spain proposes a downward trajectory for the public deficit to 0.8% in 2031. Within this same horizon, it limits the increase in the public deficit. net primary expenditure on average 3%a figure which exceeds the limit of 2.8% set by Brussels. In addition, Spain has committed to reducing its debt level below 100%, to 98.4% precisely, from 2027.
The document bases these figures on the strength of potential GDP growth for the coming years – 1.9% through 2028 – to establish an ambitious spending rule. It will go from 3.7% next year to 3.5% thereafter, and 3.2% in 2027. Subsequently, it will fall to 3% in 2028 and 2029; to decrease again to 2.5% and 2.4% in 2030 and 2031. Furthermore, the Ministry of Economy stressed that the spending capacity could increase if tax increases are approved in the future.
The Minister of Economy, Carlos Body, indicated that “Spain will be the leader in growth among the major European economies, and in a balanced way, protecting the welfare state and the necessary future investments, a manner compatible with our commitment to financial responsibility“. A message that embraces the autumn forecasts of the Community Executive made public this month and which places Spain as the euro zone economy that will experience the strongest growth.
