Brussels questions that defense spending justifies Spain's fiscal deviation

BrusselsBrussels is once again rapping Spain's knuckles over fiscal matters. The European Fiscal Board, the body that oversees the sustainability of public finances, reproaches the Spanish executive for requesting to activate the exemption clause from fiscal rules to spend more on defense, while this item only increased by 0.1% of the gross domestic product (GDP, the indicator that measures the size of an economy). Instead, Spain deviated by 0.4% of GDP from the recommended net expenditure trajectory.

Thus, the report, published this Monday, questions whether the increase in spending justifies this deviation of 0.3 percentage points, since only a "minimal" part can actually be attributed to military spending. It maintains that the activation of this clause by Spain avoided a potential excessive deficit procedure, a European Union control mechanism that is triggered when a member state exceeds deficit limits or fails to comply with certain fiscal rules.

The document explains how the Spanish government requested the European Commission and the Council of the EU (the legislative body that represents the member states) to activate the national safeguard clause on April 13, when the debt ratio was "considerably" above the reference value of 60% of GDP. A fact that, it maintains, "calls for attention." This mechanism, which allowed it to continue borrowing, is an extraordinary system designed so that states can rearm more easily in the face of the Russian threat, and allows the part of additional spending allocated to the defense item not to count in this calculation.

But what the European body reproaches Spain for is that it used this exception without (fully) putting it into practice. Thus, it only spent 0.1% of GDP of the excess on defense, while the rest – that is, 0.3% of GDP – was spent "mostly" on other items that should not be covered by this exception. Furthermore, the entity highlights that the "vast majority" of EU member states had already requested the mechanism almost a year earlier, shortly after the community executive opened the door to it in March 2025.

Too much spending

The European Fiscal Board makes another criticism of the Spanish executive. Spain is the only large member state of the eurozone where nominal GDP growth higher than expected, instead of prompting it to reduce the deficit, has been accompanied by net expenditure growth also higher than recommended, both in 2025 and 2026. The body describes this pattern as "pro-cyclical fiscal policy," and asserts that it is contrary to the objective of the multi-annual plans.