The State has reduced its deficit by 70 billion euros since the pandemic.

MADRIDWhen Spain closed the year of the pandemic with one of the highest public deficits (the difference between revenue and expenditure) in the European Union, doubts about how it would address the situation outweighed certainties. Five years later, it can be said that these doubts have begun to fade. Between 2020 and 2024, in absolute terms, the State has offset the negative fiscal balance of all administrations by almost €70 billion. Thus, from a deficit of 9.9% of GDP recorded in 2020, it has fallen to a deficit of 2.8% of GDP in 2024. "This demonstrates the effectiveness of the Spanish government's economic action and fiscal policy," argued the First Vice President and Minister of Finance.

Likewise, with the closing figure for 2024, Spain is adhering to the fiscal rules—in force since last year—at least with regard to the public deficit. In fact, Montero emphasized that this is a lower deficit compared to the commitment the Spanish government had made to Brussels: it planned to close 2024 with a public deficit of 3% of GDP. In absolute terms, between 2023 and 2024, the deficit has been reduced by 8.072 billion euros.

Margin for defense

This deficit improvement of two-tenths of a percentage point compared to the commitment established with the European Commission represents a margin in terms of spending for 2025 of around €3.2 billion (it must be taken into account that one-tenth of GDP is around €1.59 billion). In the midst of the discussion on the increase in public spending on defense and a day after the president of the Spanish government, Pedro Sánchez, announced a investment plan in this area, Montero acknowledged that this is money that could be allocated to this, although she clarified that it will have to be considered "item by item." In any case, the Treasury Minister reiterated that the Spanish government is waiting to see how the debate in Europe is resolved and, above all, whether the safeguard clause and, therefore, the fiscal rules are ultimately relaxed.

Once again, Montero took advantage of the presentation this Thursday of the budget execution of all public administrations. to once again boast about the management of Pedro Sánchez's government in economic matters and contrast it with the management of the Popular Party governments. Thus, he emphasized that this scenario has been reached without implementing cuts and by strengthening the welfare state. "In recent years, we were clear that the more citizens reintegrated into the recovery of economic activity, the less intense the crises would be," Montero said.

The last five years have been marked by the COVID-19 pandemic, the energy and price crises, and natural disasters such as the volcanic eruption in La Palma or the DANA (National Flood Risk Reduction) in the Valencian Community, situations that have impacted the Spanish economy. In fact, Montero recalled that Brussels has given permission for public spending to address the DANA (National Flood Risk Reduction) to be excluded from the 2024 fiscal deficit. Had this not been the case, the public deficit would have soared to 3.52% of GDP (€5.524 billion more). On the contrary, part of the deficit is explained by the negative impact of court rulings on some fiscal changes made by the Popular Party governments. "They represent a cost of more than 11 billion euros for the public coffers," Montero said.

Catalonia: deficit of 0.41% of GDP

By subsector, the central government closed 2024 with a deficit of 2.58% of GDP, thus assuming the bulk of the deficit for all governments. In the case of the autonomous communities, the deficit decreased to 0.10% of GDP, meeting their target, while local governments closed 2024 with a surplus of 0.42% of GDP, and Social Security with a deficit of 0.53% of GDP.

Catalonia closed 2024 with a public deficit of 0.41% of GDP (€1.227 billion), a considerable improvement compared to 2023, when the deficit stood at 1.37% of GDP. However, it is one of the four autonomous communities that closed the year in the red, which puts it at risk of non-compliance with fiscal rules, and specifically with the spending rule. In fact, the Minister of Economy, Alicia Rosemary, will provide details this Friday. In any case, Minister Montero has acknowledged that in this case, the need to implement a rebalancing plan, as dictated by Brussels, will be studied.

Tax revenue

Behind this deficit reduction is a new boom in tax collection, which Montero has linked primarily to the good performance of the economy and, in particular, the labor market, while continuing to mitigate the potential impact of inflation. Last year, tax revenue climbed to a record €294.734 billion, an 8.4% increase compared to 2023, when a historic figure (€271.935 billion) was already recorded.

Particularly noteworthy was personal income tax revenue, which amounted to €129.406 billion, 7.8% more than in 2023. Also increasing were corporate income tax revenues (€39.096 billion in 2024) and VAT (€92.54.21). Montero stressed that this has been possible in parallel with the application of certain tax breaks, such as aid to public transport, the reduction of VAT on some foods for part of the year or the reduction of taxes such as personal income tax for the lowest incomes.