The Government’s Fiscal and Structural Plan ignores the most restrictive limit on the growth of public spending in the guidelines of the European Commission, according to “the previous guide” published this Wednesday by the Community Executive, a day after receiving the document from Spain.
The recommendations from Brussels for the Fiscal and Structural Plan of our country lower the limit of the annual increase in “net primary expenditure” to 2.8% on average from 2025 to 2031, against the 3% proposed by the Government, as explained in this information. . In other words, they demand a greater adjustment of the public accounts than what the Executive intends to face in order to reduce the deficit (the imbalance between public revenues and spending) and the debt, which are measured in relation to GDP.
The European Commission must now decide whether or not to accept Spain’s targets, and it will do so “at the end of November”, as Economy Ministry sources confirmed on Tuesday. The “adjustment” proposed by Spain is 0.4 points of GDP each year, or a tenth less (nearly 1.5 billion) than the 0.5 point reduction recommended by the community executive.
As permitted by the EU’s renewed fiscal rules, the government has extended the “adjustment period” to seven years. This new “corset” focuses on limits on public spending as a means of reducing budgetary imbalances (deficit and public debt) and recovering “fiscal space” in case it is necessary to respond to another crisis or another shock, as was the case. occurred after the pandemic and the inflation crisis.
The spending rule presented this Tuesday by the Government in Brussels provides for a ceiling on its increase of 3% on average from 2025 to 2031. In the short term, in 2025, this limit on public spending remains at 3.7%. In 2026, at 3.5%. And in 2027, at 3.2%. The European Commission’s recommendations remained at 2.8% on average over the seven-year period. In 2025, 3.2%. In 2026, 2.8%. And in 2027, 2.7%.
This Fiscal and Structural Plan is “a framework”, like a spending ceiling, for the preparation of annual Budgets by the Government. The concrete measures that will be deployed to respect this “umbrella” in the medium term – a concept influenced by the Ministry of Economy – will be developed in each year’s budget plans, which must also be approved by the European Parliament. Commission. .
Among these measures, the Government is integrating a “complementary” tax reform. In the same spirit, this document includes the objective of “promoting the convergence” of our country’s tax collection towards the EU average.
The final horizon proposed by Spain involves an increase in nominal GDP to 2,000 billion euros in 2031, with a deficit which will have been reduced to 0.8% of GDP – against 3% in 2024 – and a public debt which will have fallen to 90.6% of GDP. – against 105% currently – thanks to the control of the growth of public spending, various measures and reforms (most of them already implemented and linked to the recovery plan) and, above all, economic growth and the creation of jobs.
These objectives must be pursued each year, according to the new budgetary rules, reactivated after being suspended in 2020 due to the pandemic. But the European Commission preferred a greater “effort”.
Currently, the government is negotiating the general state budgets (PGE) of 2025. For now, the government has not been able to approve even the deficit trajectory of the PGE of 2025, after Junts broke the blocking of investiture in the Lower House in July. A parliamentary setback which did not prevent the preparation of the Budgetary and Structural Plan sent to the European Commission, but which endangers the budgets, after those for 2023 have already been extended this year.
