The Spanish government will have free rein to present its budget this Thursday

Barring any surprises, this Thursday will see a contradiction unfold in Congress. On the one hand, the Spanish government will suffer a defeat –in what is the last plenary session of the year and the first with José Luís Ábalos suspended as a deputyEverything points to the lower house rejecting the deficit and debt targets, or stability path, for the second time. However, once this step is completed, and regardless of the outcome, the Ministry of Finance will be free to present the General State Budget (PGE) for 2026, as promised by Pedro Sánchez, despite the difficulty of passing it. taking into account the break with JuntsIn fact, the intention of the Minister of Finance, María Jesús Montero, is to present the General State Budget next February. By law, the Spanish government must approve this stability plan before presenting new public accounts and has up to two attempts to receive the green light from Congress. The first attempt was lost on November 27th, when Junts, PP, Vox, and UPN voted against it. The second attempt comes this Thursday, but given that the Spanish government is proposing the same deficit and debt targets, the result of the vote will be repeated. But once rejected, the Treasury simply has to refer to the deficit and debt targets in force—in this case, those of the last structural fiscal plan sent to Brussels—and can move forward with drafting the General State Budget. The key is that these targets no longer need to be voted on in Congress. What changes?

Beyond the rift between Junts and the PSOE—which Junts is demonstrating by blocking all legislation not negotiated with them—and although the Socialists have attempted to mend fences in recent days, the reason Carles Puigdemont's party rejects the stability plan is that they consider the proposed deficit target for 2026-2028 insufficient: a deficit of 0.1% of GDP. In fact, in 2024, Pedro Sánchez's last attempt to draft a budget—the 2023 budget remains in effect—was already rejected. The Popular Party uses the same argument. The Treasury estimates that the regional governments would be allowed to spend an average of €1.755 billion annually (€5.485 billion on average between 2026 and 2028). In the case of Catalonia, this amounts to €1 billion between 2026 and 2028. If the deficit target of the latest structural fiscal plan submitted to Brussels is assumed, the autonomous communities will have to close 2026 with a deficit of at least [amount missing], according to the Treasury's interpretation. The truth is that the plan only outlines a roadmap for all public administrations (State, autonomous communities, municipalities, and Social Security). Regarding the deficit, it sets it at 2.1% of GDP in 2026; 1.8% in 2027; and 1.6% of GDP in 2028. However, it is important to bear in mind that the new European fiscal rules are putting the spending rule under scrutiny.

The "Together Decree"

Finally, within the framework of this attempt by the Socialists to smooth over differences with the members of the regional assembly, especially at a time when the People's Party is flirting with the idea of a motion of no confidence, although it also has no intention of presenting one, and Pedro Sánchez is looking to catch his breath before finishing his term.Congress will have to decide whether or not to ratify the so-called "Junts decree." This decree incorporates several demands from Junts that were unblocked last week by the Spanish government. The extension of the implementation of Verifactu, the new invoicing system for SMEs and the self-employed, is being considered. which the Treasury has now postponed until January 1, 2027 instead of next yearas initially planned. This last-minute decision has caused a headache for businesses and the self-employed. While some have welcomed it—employers' associations have stated that not everyone had been able to adapt and were also calling for a postponement of its implementation—others have complained because they had already absorbed the cost of the new invoicing model by updating their software.

It also includes the authorization for municipalities, other local entities, and autonomous communities to spend the 2024 surplus on "financially sustainable investments" and, finally, the transfer to the Generalitat (Catalan government) of the management of public employment offers and the selection processes for local officials with national certification, such as secretaries, auditors, and treasurers.

Other votes

But the economic votes in Congress this Thursday don't end there. The Spanish lower house will also have to vote. the increase of public sector salaries by 11% during the period 2025-2028Following the agreement between the Spanish government and the main civil servants' unions, the increase will be distributed as follows: 2.5% this year (with retroactive effect); 1.5% in 2026, with an additional 0.5% linked to the Consumer Price Index (CPI); 4.5% in 2027; and 2% in 2028. The Spanish government should have no problem passing the measure, especially since the People's Party (PP) is expected to vote in favor. Furthermore, Congress will have to vote on the amendments to the Customer Service Law that the PP introduced in the Senate, where it holds an absolute majority. Once these amendments are approved or rejected, the legislation will be sent to Parliament. Official State Gazette to be published and come into force. Finally, the other litmus test for Pedro Sánchez will be the start of the legislative process for the reform of the Law on the Rights of Persons with Disabilities and the reform of the Dependency Law, regarding which Junts and the PNV have submitted amendments in their entirety. It will therefore depend on the PP whether the amendments succeed or fail and whether their processing is allowed.