This Thursday’s vote in the Congress of Deputies on the stability objectives of the General State Budgets (PGE) 2025 once again puts the fragility of the coalition government to the test. The Executive is taking the same deficit path in the Lower House that had already been rejected by a majority of deputies from Junts, the Popular Party (PP) and Vox in the last plenary session in July, before the summer holidays.
The Executive informs the Popular Party and the Catalan Party that the rejection of this new deficit path (the imbalance between the income and expenditure of the Administrations) represents a reduction of up to 12 billion euros in total for all regions and localities, which includes those governed by the PP or the Junts.
As approved by the Council of Ministers on September 10, the budgetary imbalance targets of the Central Administration are 2.5% in 2025 and 2.1% in 2026 (always in relation to GDP), compared to 3% in the one that the Government has committed to achieve. the European Commission in 2024. In the meantime, it requires a deficit of 0.1% from the Communities and local entities to maintain the balance between income and expenditure.
The approval of these limits or trajectories (in budgetary jargon) are necessary to begin the processing of the PGE. Although the First Vice President and Minister of Finance, María Jesús Montero, has repeatedly said that she will also present the budgets, “with the previous stability objectives”, if Junts once again breaks the majority of the last investiture of Pedro Sánchez. and unites PP and Vox to vote against.
The Government specifies that this position implies a budgetary adjustment of 3.332 million for the Communities in 2025 and an additional 3.482 million in 2026. In addition to a reduction of 1.666 million for the City Councils next year and an additional 3.482 million in 2026, as can be seen in the first graph of this information.
The key is that the previous stability targets are more rigid, with a trajectory that required local entities to spend 0.1% less of their available resources in 2025 and 0.2% the following year, and autonomous communities 0.1% in both years (again relative to GDP).
Montero’s argument underlines that the new stability objectives will allow the Communities not to have to make efforts to reduce the deficit in the coming years. On the other hand, with the correction of the national accounts of the INE last week, which increased the GDP of recent years, the cut that the right and the extreme right threaten has gone from around 11.5 billion to 12 billion in total in 2025 and 2026.
The PP considers that the Government’s objectives imply that the Communities must make a greater effort to balance the accounts than the central Executive. On the political level, the PP’s economic spokesman, Juan Bravo, recalled this weekend that “President Feijóo had already suggested (to Pedro Sánchez) that when his partners failed him, he should not come looking for the PP.”
The government’s efforts to demonstrate that the rejection of the PP and Junts is “a blow in the foot” are not bearing fruit. “If the same proposal that was voted against in July is presented, it will obviously be voted against. If it is modified, the modification will be analyzed and the vote will be decided,” Jordi Turull, secretary general of Junts, explained publicly this Monday.
His thesis is that if the budgets do not prosper, “the responsibility will not fall on the seven deputies of Junts, but on the PSOE for not reaching a consensus.” According to Turull himself, this is the message that the Catalan party transmitted during the meeting between its leader, Carles Puigdemont, and the number three of the socialists, Santos Cerdán, last week. In practice, Junts is asking for more money for Catalonia. Ultimately, the political strategy is to provoke parliamentary defeats in order to put pressure on other objectives.
“Voting against the deficit path is voting against Catalonia having an extra tenth of budgetary margin, that is, giving up 500 million euros,” commented Sumar’s spokesman and Minister of Culture, Ernest Urtasun, on Monday. “On Thursday, Junts will be able to correct the mistake it made by voting against the housing reform process last week,” he added.
In 2024, the 2023 PGEs had to be extended because the government did not have the guarantee of the votes of the ERC or the Junts in Congress, especially after the call for early elections in Catalonia. But the Ministry of Finance insists that it can carry out the 2025 budgets without Congress approving the stability objectives.
In fact, sources from the team of Vice President María Jesús Montero recently told elDiario.es that “this issue had already been discussed at the beginning of the year with the PGE 2024, and we have already said that the Attorney General’s Office has made it clear that it is returning” to the previous path.
In March, elDiario.es had access to a report from this institution that concluded that the government had to comply with two obligations: prepare budgets and comply with EU budgetary rules, which were reactivated precisely this year after being suspended during the pandemic. Thus, in the face of parliamentary rejection, the Public Ministry indicated that “in accordance with internal legislation, a path of convergence towards the equilibrium situation will be applicable, the one contained in the stability program”, which the European Commission valued positively.
In the coming weeks, the Executive must send Brussels a medium-term budget plan (the AIReF recommendations are analyzed here), which will be marked by the deficit trajectory and a horizon of GDP growth above 2% in the coming years and job creation, which allows to maintain spending and reduce the deficit. “We are interacting with the Commission to determine the final proposal on net primary spending, which is the most important variable of the new Community budgetary rules,” stressed the Minister of Finance.
That same Monday, the Minister of Economy, Carlos Body, confirmed in a television interview the update of the government’s projections with significant improvements. “Tomorrow I will present this update of the macroeconomic forecasts to the Council of Ministers, and I can anticipate that for 2024 we will raise our growth forecasts from 2.4% to 2.7%,” he said.
