The Independent Authority for Fiscal Responsibility (AIReF) criticizes the lack of state budgets: "It makes debate and oversight impossible."

MadridThe Independent Authority for Fiscal Responsibility (AIReF) has once again criticized the Spanish government for still not having presented a draft national budget for 2026. "Not presenting a budget prevents debate, and the lack of debate means that oversight [of the Spanish government] is impossible," criticized AIReF President Herrero, a close associate of Herrero. Herrero said that it is "crucial" to be able to carry out this oversight exercise to see if the executive's actions align with its promises, especially in fiscal terms. Despite the difficulties in approving new public accounts (the 2023 budget remains extended), especially after the fragile relationship with JuntsPedro Sánchez is determined to present a budget proposal. Before that, however, the government must establish a spending ceiling and a stability path with new deficit and debt targets. This step is expected to be taken in the coming days. All of this will also have to be presented to the autonomous communities at a Fiscal and Financial Policy Council (CPFF). In this regard, the Independent Authority for Fiscal Responsibility (AIReF) has once again raised the issue of applying different deficit targets depending on the region.

Why? Because within the framework of the new European fiscal rules, which prioritize the spending rule, the agency believes that "it doesn't make sense to be talking about a [deficit] target for all regions equally because they are not all in the same situation." This is because some regions could comply with the spending rule and even have a surplus (end the fiscal year without a deficit), while other autonomous communities, despite complying with the spending rule, would still register a deficit, which forces them to further contain spending. Catalonia, for example, plans not to comply with the spending rule of the Spanish Stability Law and has announced a reduction in public spending, but it will also have to make efforts to end the year in balance.

What's happening across the country as a whole?

In the case of the public administrations as a whole, that is, the State, the scenario changes somewhat. It is true that, according to AIReF, the Spanish government would also not comply with the spending rule of Spanish law by 2025. but it does comply with the European rule because it includes deviations. This safety net, however, only applies to the State as a whole (all public administrations) because the European Commission does not establish a specific rule for the autonomous communities, which must comply with Spanish law. In fact, the Independent Authority for Fiscal Responsibility (AIReF) has estimated that if Spain complies with the spending rule of Spanish regulations, which would entail applying an adjustment of around €12 billion in 2025, it would "more than adequately comply" with the European rule. However, looking ahead to 2026 and 2027, AIReF warns that the State would not comply with the European spending rule. Although in 2026 Spain would be within the permitted deviation in cumulative terms (not in annual terms), in the case of 2027 the agency believes that the deviation will be exceeded, which would lead to the opening of an investigation and, therefore, a sanction. Airef estimates that to avoid exceeding the limit, an average annual adjustment of two-tenths of a percent of GDP (around €3 billion) would have to be applied from now on.

More growth

Nevertheless, the agency headed by Cristina Herrero has raised its GDP growth forecast for 2025 by seven-tenths of a percentage point to 3%, exceeding the Spanish government's projection. It has also improved its economic growth forecast for 2026 to 2.1%. However, the Independent Authority for Fiscal Responsibility (AIReF) warns of a medium-term slowdown. Regarding the public deficit and debt, it projects the former at 2.2% of GDP in 2025 and anticipates it will fall to 2% in 2026. Debt is also expected to decrease, reaching approximately 95.2% of GDP by 2030.