The Ministry of Finance reopens the dispute over the deficit of the communities
The Spanish government will transfer to the territories the deficit and debt targets for 2027 and the resources
MadridA procedure that normally had been overcome without much difficulty in Congress has been a headache for the Spanish government for some time. It is the approval of the stability path, the prior step to draw up general state budgets, and which includes the deficit and debt targets, as well as the spending rule for all public administrations. Specifically, what is causing Pedro Sánchez's government a headache is the deficit target set for the autonomous communities, which in the last votes in the Spanish lower house has not prospered because the stability path – which includes the targets for all administrations – has not had enough support: the PP has voted against it, but also Junts.
This Monday, the Ministry of Finance will reopen this dispute and will propose the deficit and debt targets for 2027 for the autonomous communities in a new Council of Fiscal and Financial Policy (CPFF). Also the resources that the territories will have next year.
In 2024, Junts, as part of the investiture bloc, voted against the deficit and debt targets for the first time. Carles Puigdemont's party considered that the spending margin granted to the autonomous communities was "insufficient" and constituted a comparative grievance with respect to the central administration. At that time, the Ministry of Finance was proposing a deficit target for the communities of 0.1% of GDP for 2025. The same happened last year.
The Spanish government has always regretted that decision. La Moncloa argued that it was a sufficient margin – recalling the return of fiscal rules and indicating that a large part of the spending is already assumed by the State, which at the same time transfers resources to them–. Also, voting against it ultimately means accepting a more detrimental deficit target – the target in force must be adopted and since the General State Budgets have been extended since 2023, Pedro Sánchez's government has to cling to the last plan approved by Brussels, which foresees budgetary balance (a deficit of 0% of GDP for the communities).
In addition to the deficit and debt targets, this Monday the Spanish government will transfer to the autonomous communities the resources they would have next year. In November 2025, when the Ministry of Finance tried to get the State budgets for 2026 on track, it informed the autonomous governments that they would have a record of financing system resources of up to 157,731 million euros (7% more than in 2025) as advances or down payments. Of this money, Catalonia would receive a record of 30,207 million, 6.9% more than in 2025. To the advances or down payments for 2027, the positive settlement of 2025 will have to be added.
The PP wants to talk about financing
The PP communities will take advantage of the conclave with the Ministry of Finance to put the reform of the regional financing model on the table. The Spanish government intends to address this issue in another CPFF before the summer holidays and after having met bilaterally with some territories (it has only achieved this with Catalonia and with the PSOE regional governments, while most PP governments have not agreed to it). A priori, the intention is to approve the reform upon returning from the summer holidays so that it can then make the leap to Congress.
La Moncloa clings to the economic agenda
All of this –via of stability and spending cap– will be approved in this Tuesday's council of ministers. This is the first step in drafting new General State Budgets for 2027, which Pedro Sánchez has committed to presenting – he also did so in 2026, but did not achieve it – despite the low hours the legislature is going through: the judicial cases put the Spanish government and the PSOE on the ropes, but also the fragile and weakened relationship with the investiture bloc. In any case, Pedro Sánchez has not hesitated to focus on the economic sphere, in which for days he has been seeking the necessary boost to exhaust what remains of his term, or at least what remains until he calls elections in the State. Thus, the economic proposals he is making are also becoming a cover letter for 2027.