The Treasury has called a meeting of the Fiscal Policy Council on Monday without a financing model.

Madrid / BarcelonaA date has been set. The Spanish government has called a meeting of the Fiscal and Financial Policy Council (CPFF) for next Monday with all the autonomous communities under the common regime, although without a regional financing model on the table. The PSOE and Esquerra parties have agreed to allow more time to finalize the new system. Sources at the Ministry of Finance confirmed to ARA that it will be one of the agenda items, but that it will be presented in a general way, they explained. In fact, the agenda for the meeting with the autonomous communities simply states that they will address "the current status of the reform of the regional financing system." "A closed and complete model will not be presented," sources at the Ministry of Finance indicated. The meeting will also serve to specify deficit and debt targets for the autonomous communities for 2026, a key element for the preparation of the regional budgets. The Ministry headed by María Jesús Montero (PSOE) has summoned regional governments to a meeting next Monday at noon to discuss their spending limits for the coming year, as well as the resources they will have at their disposal.

What will Junts do this time?

The last proposal put forward by the Ministry of Finance dates back to 2024 and set a deficit target for the autonomous communities of 0.1% of GDP. However, that proposal ultimately failed because Junts voted against it in Congress. Carles Puigdemont's party demanded greater spending leeway for the communities—in other words, a more flexible deficit target—and less leeway for the central government. The Ministry of Finance will face the vote again, but in a more complicated context, marked by the split between Junts and the PSOE. Sources within the Ministry anticipate that if the proposal is rejected again, they will try again, and if it fails a second time, they will reconsider the current targets. Setting these targets also means that the Spanish government has already established a path to stability—deficit, debt, and spending rule targets for all public administrations—and a spending ceiling for 2026. Approving both is an essential step for drafting and presenting a new general budget, as Pedro Sánchez has pledged. However, government sources do not believe that even if the procedures are successful, they will be able to present it before the Christmas holidays. It is worth remembering that the Spanish government is still operating with the 2023 public accounts extended and has not presented any draft budget since then. Nevertheless, the stability path and deficit targets would be approved at the Council of Ministers meeting next Tuesday, the day after the Fiscal and Financial Policy Council (CPFF). Talks on financing continue.

Regarding the financing model, Esquerra and the PSOE are giving themselves more time. The truth is that the Republicans had asked the Minister of Finance not to address the system yet in this forum, as they didn't see it as possible to reach an agreement before it was held. Furthermore, Oriol Junqueras's party was worried that the PP-governed autonomous communities would demand that Montero explain her plans in detail.

Where do the talks stand? As explained by ARA, the negotiators are now focused on agreeing on the common financing system and have postponed tax collection in Catalonia, since the PSOE is resisting ceding this power. To avoid stalling the talks, Esquerra decided this week to postpone until January the debate in Congress on the proposed law to transfer personal income tax collection to the Catalan Tax Agency.

Sources consulted by ARA explain that progress is being made on the numbers. While this newspaper reported a few weeks ago that the problem was the lack of respect for ordinality and the calculation of the adjusted population, the same sources assure that positions have been brought closer. Different models are being worked on, but above all, efforts are being made to reconcile the interests of the PSOE (Spanish Socialist Workers' Party) as well as those of Esquerra Republicana (ERC) and the PSC (Socialists' Party of Catalonia), which are currently aligned. The Catalan socialists are gambling with the future of the Catalan budget for 2026 in these negotiations. If the funding doesn't arrive until the end of the year or January – "there are still weeks to go," say knowledgeable sources – it means that at least the Catalan budget will be approved in the spring.

"Everyone wants a budget. Since we all want one, I'm sure the PSC will put pressure on the PSOE," stressed ERC's general secretary, Elisenda Alamany, this Wednesday. Alamany has argued that it is essential for Catalonia to have more resources to guarantee the welfare state and, in particular, to be able to dedicate resources to child welfare policies to reduce child poverty in Catalonia. She said this at a conference at the Pere Tarrés Foundation, where she cautioned, however, that the responsibility for approving a new budget that allocates more resources lies with the PSC government. The ERC general secretary did not comment on the convening of the Fiscal and Financial Policy Council, but party sources indicate that they are still "negotiating" to achieve "fair funding" with more resources. According to the Treasury's calculations, with the new model, Catalonia would gain between 4.5 and 5 billion euros more, although ordinality would not be guaranteed. Andalusia would also be one of the regions that would benefit the most, while the Community of Madrid would gain less than the average. One of the negotiators' objectives, in fact, is to take into account the fiscal responsibility of the autonomous communities when distributing resources, and to ensure that, for example, lowering taxes, as Isabel Díaz Ayuso does in Madrid, is detrimental. This is further compounded by the fact that the region benefits from being the capital city.

The elections in Extremadura

Another factor that has disrupted the planned schedule is the calling of elections in Extremadura on December 21st. This means Montero has to consider how this region fares under the new funding model to avoid harming the Socialist candidate, Miguel Ángel Gallardo. Will the agreement between the PSOE and the Left, then, come before or after these elections? One source ironically suggests it will depend on the final allocation of funds to each region. ERC continues to insist that one of the main stumbling blocks in the negotiations is Montero's candidacy in the Andalusian elections, as they believe she will not do anything that could jeopardize her electoral prospects. In this context, the Republicans consider it crucial when she is willing to pressure Salvador Illa and the Spanish government to defend Catalonia's interests.