The State advances in the preparation of budgets with a new macroeconomic framework

MadridThe Spanish government is making progress in preparing its General State Budget (PGE) for 2026—the state is currently operating on the 2023 budget—and is doing so with the approval of a new macroeconomic framework. Specifically, this Tuesday's Council of Ministers is expected to approve new projections for the Spanish economy, a fundamental step towards presenting a new State Budget, as announced by the Prime Minister, Pedro Sánchez, on Monday.

These projections will incorporate an upward revision to Spanish economic growth in 2025 (the current forecast is for a 2.6% GDP rebound). In addition to the current fiscal year, 2025, the new macroeconomic framework will also include forecasts for the next three fiscal years (2026, 2027, and 2028) and will also approve the report on the state of the Spanish economy, according to sources from the Ministry of Economy.

The Bank of Spain is also presenting new macroeconomic projections this Tuesday. The institution, headed by former Socialist minister José Luis Escrivá, currently forecasts that the Spanish economy will grow by 2.4% in 2025.

"The Spanish economy has led growth in Europe during 2023 and 2024, and will continue to do so in 2025," Sánchez stated this Monday during a speech in the Congress of Deputies. The latest macroeconomic figures, especially the second-quarter growth (0.7%), are giving the central government the impetus to improve its gross domestic product (GDP, the indicator that measures a region's economic activity) growth projection for 2025, which it now places at 2.6%. Regarding the public deficit and debt, in the latest projections, the Spanish government predicted a public deficit of 2.5% of GDP for 2025, and a debt of 101.7% of GDP.

Consumption, investment, and employment

As Sánchez explained, the various economic ministries have detected a positive trend in domestic consumption, employment, and foreign investment, which would justify the upward revision of Spanish economic growth in a turbulent international context. In addition to Donald Trump's new tariffs, the conflicts in Ukraine and Gaza are keeping geopolitical tensions sky-high.

In fact, in April, the Spanish government declined to change its economic growth forecast for 2025, even though no trade agreement had yet been reached between Brussels and the US to end the trade war. At that time, Economy Minister Carlos Cuerpo justified maintaining the GDP growth forecast at 2.6% because, although the foreign sector's contribution was reduced by the impact of tariffs, the drop was offset by private household consumption.

Regarding the labor market, the Spanish government continues to defend its dynamism. In the latest projections, it estimated the creation of an average of 480,000 jobs each year over the next four years, which would reduce the unemployment rate to below 10% in 2026 and below 9% in 2028.

Beyond the macroeconomic picture, these changes will be imminent. To begin with, the Ministry of Finance must approve a new spending ceiling, which it plans to do by the end of September or early October, according to Treasury sources, as well as new stability targets.

Two weeks ago, the Spanish government approved the ministerial order for the preparation of the 2026 General State Budget, which included defense spending and the impact of the tariff war among its priorities. However, the delay in the schedule makes it difficult to believe that new public accounts can be approved before the end of the year. The back-and-forth with the investiture partners doesn't help either.