The State will notify Brussels of compliance with the spending rule in 2025

MadridThe Spanish government will notify Brussels this Thursday that in the year 2025 it complied with fiscal rules and, specifically, with the European spending rule. Pedro Sánchez's executive will send the Annual Progress Report – this is the document that replaces the Structural Fiscal Plan since the new fiscal rules came into effect – to the EU executive. In it, it will detail that it complies with what has become the main reference variable for the European Commission: the spending rule, that is, the maximum growth of disbursements by all public administrations: State, autonomous communities, municipalities, and also Social Security, and European funds or extraordinary spending, for example, spending linked to the reconstruction of the DANA in the Valencian Country, are excluded. For 2025, the maximum growth of this net spending could not exceed 3.2%.

With the new fiscal rules, the European Commission focused on this spending rule and not so much on the deficit, with the aim of preventing the increase in disbursements from straining public debt. If European limits were not met, the European Commission could demand corrective measures either on the spending side; or on the revenue side.

Different economic scenarios

Who will provide details of all of this will be the First Vice President and Minister of Economy, Carlos Cuerpo, at a press conference this Tuesday, after the Council of Ministers. In addition to detailing compliance with fiscal rules, the presentation of the report will also serve Cuerpo to explain what the macroeconomic scenarios that the Spanish government contemplates are, especially taking into account the war in the Middle East. In fact, as a result of the conflict, the central executive rules out the imminent presentation of a macroeconomic framework that would serve as a basis for General State Budgets (PGE). The reason, as Cuerpo will explain, is the strong uncertainty derived from the war and the difficulty in drawing up solid forecasts.

This is why the Spanish government is not even working on a central scenario, but is considering different hypotheses depending on elements such as the duration of the conflict, the evolution of prices of raw materials such as oil, among others. However, two months after the outbreak of the war in the Middle East, the Ministry of Economy has not detected, for now, a strong impact on activity, so there will not even be major changes. What explains the current pulse of the Spanish economy continues to be, in the opinion of Cuerpo's team, the labor market. On the other hand, there is more concern regarding the escalation of prices. In this regard, the Spanish government believes that it has acted quickly with measures such as the reduction of VAT on fuel and that they have helped to "compensate" for the shock.

In addition to Cuerpo, this Tuesday, the brand new Minister of Finance, Arcadi España, is also scheduled to appear at a press conference to approve fiscal measures linked to the recovery of areas affected by the DANA. It will be España's debut since he took over the Finance portfolio replacing María Jesús Montero.