226,032 million euros: the Spanish government presents the "biggest spending ceiling in history"

MadridAfter announcing the deficit targets for the autonomous communities to the Council of Fiscal and Financial Policy, this Tuesday the Council of Ministers ratified them and also approved the spending ceiling for all public administrations. The Minister of Finance, Arcadi España, announced that it will be the "largest in history": up to 226,032 million, 6.6% more than the previous spending ceiling, which was 212,026 million euros.

"It has no precedent," he said, and remarked that this will allow for the development of expansionary budgets in terms of the welfare state. Accounts that the Spanish government plans to approve in a cabinet meeting in the autumn and take to Congress even though it does not have guaranteed support.

What does the spending ceiling imply? It is a budgetary management mechanism through which the State, once it knows the estimated revenues, sets the maximum possible expenditure to comply with the stability objective set by the European Union. A figure that is set at a maximum deficit of 1.8% for 2027. There are several factors that explain this increase: among other things, inflation, which has increased the State's collection, especially in terms of VAT, as well as the progressive increase in wages, which (without tax deflation) has also increased the general administration's income in terms of personal income tax.

In any case, it is when distributing the deficit margin of the budgetary stability objectives among the administrations that there is political battle, since the spending ceiling is a budgetary management tool of the Spanish government but is not voted on in Congress. On the contrary, the stability path is.

Minister Arcadi España has explained, as he already did yesterday in the meeting of the Council of Fiscal and Financial Policy, that the 1.8% deficit will be distributed as follows: 1.5 points for the general administration of the State, 0.2 points for Social Security, 0.1 points for the autonomous communities, and 0 points for the town councils. España has said that it is the general administration of the State that makes "more effort" despite having the highest margin, as it must reduce three tenths compared to the deficit target for 2026 (2.1%). And, he has emphasized, 0.1% is maintained for the autonomies, as last year.

This is an interpretation that most of the autonomous communities, governed by the PP, do not share, nor does Junts, which requests the possibility that the Generalitat can have a larger deficit margin than the State and has already announced that it would vote no to the stability path in the Congress of Deputies. In fact, the Junts deputies already overturned the budgetary stability objectives last year because the deficit that the autonomous communities had to meet was also 0.1%, compared to that of the State administration, which stood at 1.8%. Other regional sources also point out that in practice it is not true that the communities do not have to make adjustments, because they do not start from a deficit of 0.1%. It is disparate between regions: for example, Asturias has a surplus of +0.51%; while the Valencian Country and Murcia are the ones with the largest deficit, with -1.54% and -1.56%, respectively. Catalonia closed 2025 with a public deficit of -0.54%, so it will also have to make adjustments to comply with the stability objective.

To get out of the deadlock, Minister Spain has once again put on the table the possibility of setting an asymmetric deficit for the autonomous communities, so that they can lend each other the possibility of spending more on each other depending on the situation they start from. The most interested parties, the minister said, are the Valencian Country and Murcia, precisely governed by the PP.

Failure in Congress: without support

With the stability objectives approved by the Council of Ministers, they must now be taken to the Congress of Deputies. Given Junts' refusal, Minister Arcadi España has chosen to focus on the PP. "The reasons for the no have to do with partisanship, which is a disease that affects right-wing parties," said España, who chided the popular party for a change in position: last year, in the Council of Fiscal and Financial Policy, the PP's regions abstained. Furthermore, he also lamented the criticism from the president of the Community of Madrid, Isabel Díaz Ayuso, who this Tuesday insisted that the budgets are merely a "purchase of votes from the independence movement." "I find it hard to understand the PP's obsession with Catalonia," the minister replied.

However, criticism also came from the left: “We are talking about the same proposal that was made a year ago. Whoever repeats the same actions can expect the same results,” warned the Secretary General of Podemos, Ione Belarra, who also lamented that they have not yet had "any contact" with the ministry.

In summary, the Spanish government assumes it will fail to advance the stability objectives – considered the first step in drafting the State budgets – but this will not alter its plans. A first vote is expected in the Spanish chamber on July 14, and if it fails, it will be repeated on July 23. With two failed votes on stability objectives, and in accordance with the interpretation made at the time by the State Attorney General's Office, the deficit and debt objectives included in the last stability program submitted to the European Union will be automatically applied. These are figures that are usually more restrictive, as autonomous communities were obliged to maintain a 0 deficit. This is why the ministry warns that if the objectives are rejected, the autonomous communities will have to make an "adjustment of 5,849 million euros" from the outset, plus all that they have already overspent in 2025.