More than 4 billion euros for Catalonia and commuter rail: the ERC agreements that must be finalized in January

Barcelona"Things will happen in January," said Salvador Illa last week in his 2025 review. The words of the President of the Generalitat were not, in reality, new; rather, they aligned with the prediction already made by the First Vice President and Minister of Finance, María Jesús Montero, at the last Fiscal and Financial Policy Council (CPFF) meeting regarding a new financing model for all the autonomous communities. However, Montero's announcement should be preceded by an agreement with Esquerra Republicana (ERC), which is almost finalized. January is the month in which the major issues between the Republicans and the PSOE must be resolved: not only financing, but also further progress should be made in the transfer of the commuter rail network. At the beginning of the year, the Generalitat and Moncloa should formalize the creation of the new joint venture, key to giving the Catalan government a say in its management.

In recent weeks, talks between the Ministry of Finance, the Spanish Government, and Esquerra Republicana (ERC) have accelerated, and both sides are finalizing the last details. According to sources familiar with the matter, the amount the State would contribute to Catalonia with this new funding would exceed 4 billion euros. There are still some variables at play to determine the final figure. What is guaranteed at this point is the principle of ordinality, meaning that Catalonia will not fall in the rankings in terms of the resources it receives compared to those it contributes. This was confirmed by the spokesperson for the Catalan Government, Silvia Paneque, this past weekend. "Catalonia cannot be left behind in terms of revenue relative to what it receives. I don't want to get into a debate about semantics, but the proposal must comply with this criterion," she stated in an interview with ACN. However, it remains to be seen what formula the three parties have found to ensure this principle is met.

Montero is expected to present this new model at the Fiscal and Financial Policy Council (CPFF), which she plans to convene in January. There, we will have to see the position adopted by the regions governed by the People's Party (PP), which will most likely translate into outright opposition. However, the key position for the new model to be approved is the one adopted by Junts. Carles Puigdemont's party has openly expressed its reservations, considering the agreement reached between the Republican Left of Catalonia (ERC) and the Socialists insufficiently ambitious. Thus, if the negotiators' expectation was that the new financing proposal would be approved in Congress before Easter, the decision ultimately made by Junts could render that plan meaningless.

If the Treasury finally seals the agreement with ERC on the model, the investiture agreement will not yet have been fully implemented. One of the core issues will remain: that the Catalan government (Generalitat) will take over the collection of all taxes, starting with personal income tax (IRPF). This issue had been shelved due to the reluctance of the Ministry of Finance. In fact, Esquerra Republicana (ERC) has not brought its proposed law, which it introduced independently to empower the Catalan Tax Agency to collect personal income tax (IRPF), to a debate in the plenary session of Congress, pending an agreement with the Socialist Party (PSOE). However, ERC leader Oriol Junqueras asserted last week that this issue is "essential" for negotiating the Catalan and national budgets. The budgets of Health Minister Salvador Illa depend precisely on the agreement that the three parties can present. If Esquerra finalizes the pact on the financing model and there is a timetable for making progress on the remaining aspects of this issue, the party is willing to open talks to negotiate the Catalan government's budget for next year. Thus, if the agreement is signed in January, the budget negotiations would begin immediately afterward; that is, the Republicans would not wait for Junts' position, which is key to determining whether the agreement will be approved by Congress.

The new commuter rail operator

Alongside the new funding, this January must also see the unblocking of the new mixed-ownership company for the commuter rail service, which is to manage the service from now on. The agreement between the Spanish government, the Catalan government (Generalitat), and Esquerra Republicana (ERC) stipulated that this operator should be operational by January 1st. This deadline will not be met, but it is expected that the company will be established in the first weeks of 2026 and the names of the five people who will form part of its board of directors, agreed upon by all three parties, will be made public. One of these appointments was proposed by ERC.

The transfer of the commuter rail service is another issue that the Republicans have been negotiating with the Socialists for months to finalize the agreement they reached to invest Pedro Sánchez as Prime Minister in 2023. Before the summer, the government, the Ministry of Transport, and ERC agreed that the new operator would control the new public-private partnership. The Republicans had requested a two-year limit on the maximum period during which Renfe would remain the majority shareholder, but ultimately agreed not to a limit – although the investiture agreement stipulated that the company would be "separated from Renfe". In any case, January will be key for both the financing agreement and the commuter rail agreement to move forward. And they will do so in the same month that Spanish President Pedro Sánchez and the leader of ERC, Oriol Junqueras, are scheduled to meet following the Republican leader's request in light of the alleged corruption cases that have emerged in recent days surrounding Sánchez's inner circle. It will be the first time they have met in public since Sánchez became president and Junqueras was released from prison – they only greeted each other briefly in May 2019 in Congress, when Junqueras attended to take his seat while still incarcerated. The meeting has not yet been scheduled, but Junqueras assured in an interview with the EFE news agency last week that he would go to demand that Sánchez "comply" with the signed agreements.