Brussels urges Spain to increase housing supply: "There's a shortage of 600,000 apartments."

Brussels"The Spanish economy, in general, is doing well," summarizes a source from the European Commission. Spain continues to grow above the European average and has inflation under control. And, despite exceeding the 3% deficit limit for 2024 by two-tenths, setting it at 3.2%, Brussels has not opened disciplinary proceedings, considering it a temporary deviation due to the unforeseen investments it has had to undertake due to the DANA (National Development Plan). However, there is one aspect that particularly concerns the EU executive: the housing access crisis, which is particularly affecting Barcelona, ​​​​and Catalonia in general.

On this point, Brussels is clear. "The Spanish economy faces a housing deficit of approximately 600,000 units," says the report of economic policy recommendations published this Wednesday by the EU executive. Specifically, it highlights the lack of social housing and criticizes the fact that it only represents 1.5% of the total in the State, a percentage that is "well below" the average recorded in the European Union.

With the goal of building more housing, Brussels also recommends that Spain "free up public land" and "increase funding for affordable and social housing," which it believes would "boost housing availability." In this regard, the EU executive is pressuring Spain to approve the pending land reform, considering that it would "provide regulatory stability and eliminate administrative bottlenecks." "It is essential to reverse these factors," the European Commission insists.

Brussels turns a blind eye.

The maximum deficit allowed by the EU is 3% of gross domestic product (GDP), and Spain finally exceeded it by two-tenths of a percentage point in 2024. However, Brussels turned a blind eye and, as expected, did not open disciplinary proceedings. Therefore, it considers the deviation justified by unexpected expenses related to the DANA (National Anti-Dumping Act) and the state's rearmament plan, since otherwise it would have been 2.8% and would have complied with EU fiscal rules.

In this way, Brussels assures that the State, "in general," is complying with the fiscal path agreed upon for seven years and that, for example, this year's increase in public spending will be offset by last year's. Specifically, in 2025, the EU executive estimates that net public spending will grow by 4.2%, five-tenths of a percentage point more than the maximum agreed upon, but last year it stated that it was well below the agreed 5.3%.

Furthermore, the European Commission's economic forecasts estimate that Spain's public deficit will fall by four-tenths of a percentage point this year, to 2.8%, and in 2026 it expects it to remain at 2.5%. That is, half a percentage point below the maximum allowed by EU fiscal rules.

On the other hand, Brussels urges Spain to reduce the tax burden on labor and increase the tax burden on consumption or real estate. Along the same lines, it proposes increasing taxes on pollution and asserts that increasing rates in this regard is the path the State should follow to "boost economic growth, job creation, cohesion, and the green and digital transition."

The delay with the recovery fund

The European Commission has also urged Spain to accelerate the state plan for COVID recovery funds, as there is just over a year left until the deadline to receive them. "Time is running out, and that's why we're calling for efforts to implement the plans. There's no time to waste," said Economy Commissioner Valdis Dombrovskis at a press conference.

Currently, Spain has received €48 billion of the total €80 billion in available funds in the form of subsidies to which it is entitled. Although two disbursements are planned each year, the last payment to the State was in July 2024. Since then, Spain has not benefited from the funds. Furthermore, to receive the fifth refund, which it requested in December and amounts to €8 billion in subsidies, it must approve the diesel tax, which the Spanish government has been unable to pass in Congress.