Spain | Fiscal Watch. June 2026

Summary

Discretionary measures linked to geopolitical tensions and severe storms raise the deficit to 2.8% of GDP in 2026. Their withdrawal should reduce it to 2.5% in 2027, but structural expenditure pressures will continue to constrain long-term fiscal consolidation.

Key points

• Key points:
• The current buoyancy of public revenues will be insufficient to offset the structural increase in public expenditure.
• The baseline scenario envisages net primary expenditure growth above the level committed to the European Commission. Compliance with the new EU fiscal rules will require rebuilding fiscal space through tighter expenditure control.
• The decline in the public debt-to-GDP ratio currently depends more on nominal economic growth than on a sustained improvement in the public finances.
• Parliamentary fragmentation and regional fiscal imbalances complicate the adoption of key decisions needed to ensure long-term fiscal sustainability.

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