Publications

Debt sustainability metrics remain strong across sectors. However, signs of stress are gradually emerging through rising retail NPLs and an overall weakening net FX position.

This study analyses the evolution of revenues, expenditures, budget balance, and debt of Spain’s autonomous communities from 2003 to 2025. It adjusts for the impact of atypical factors such as the pandemic in order to show the underlying deficit and the true financial situation.

The Historical Balance of Public Sector Borrowing Requirements (HBPSBR) was 52.7% of GDP at the end of 2025 vs. 50.4% in March 2026. We expect the HBPSBR to be around 53.7% by year-end.

Public deficit fell to 2.4% of GDP in 2025, in line with expectations, supported by strong revenue growth and temporary factors. Under a no-policy-change scenario, the deficit is expected to decline to 2.3% of GDP in 2026 and stand at 2.4% by the end of 2027.

Europe is seeking to strengthen the international role of the euro in the face of the U.S. dollar’s dominance in order to achieve greater geopolitical autonomy. The success of this challenge requires economic weight, institutional strength, and technological and financial innovation.

Spain is reducing its deficit and risk premium thanks to economic growth, even in the absence of an approved budget. However, net primary spending is rising above what was committed, and if the cycle cools, confidence could deteriorate.

BRSA and CBRT have tightened macro-prudential measures further. The increasing pace of retail & SME NPL inflows will decelerate again with the additional BRSA restructuring decision and potential CGF packages in 1Q26.