A public deficit of 2.5% is proposed in 2025, 2.1% in 2026 and 1.8% in 2027
Jul 21. () –
The Plenary Session of Congress will debate and vote on Tuesday on the objectives of budgetary stability and public debt for all administrations, an essential step for the processing of the General State Budget (PGE) for 2025 that the Government wants to have ready in time and form by the end of the year.
After the ministerial departments have submitted their respective budgets to the Treasury and the Fiscal and Financial Policy Council, which includes the Government and the autonomous communities of the common regime, has met, these objectives are established, which are the starting signal for the processing of public accounts and the basis on which the State, the communities and local entities set their debt and deficit ceilings.
This will be the third time this year that the Lower House has examined budget stability objectives. The Government had submitted the 2024 budget objectives on two occasions, although these accounts were ultimately not processed due to the early elections in Catalonia, and the 2023 budget objectives, which were automatically extended on 1 January, remain in force.
On this occasion, the Executive has included better macroeconomic growth forecasts, with a GDP increase of 2.4% for this year and 2.2% in 2025, and has therefore proposed a fiscal path that will leave the public deficit at 2.5% in 2025, 2.1% in 2026 and 1.8% in 2027, as well as reducing public debt at the end of the period to below 100%.
The central government will assume the majority of the responsibility for meeting the new fiscal targets, as it will have to set its deficit at 2.2% in 2025, 1.8% in 2026 and 1.5% in 2027. The deficit target for the autonomous communities in 2025, 2026 and 2027 will be 0.1%, while local councils and corporations will have a balanced budget (0%) in 2025 and 2026.
THE GOVERNMENT IS CONFIDENT THAT THEY WILL BE APPROVED WITHOUT PROBLEMS
The Executive trusts that the stability objectives will be supported in Congress without any problems, as happened with the 2024 Budget, when PSOE, Sumar, ERC, Junts, PNV, Bildu, Podemos, BNG and Coalición Canaria voted yes, compared to PP, Vox and UPN, who rejected the Executive’s proposal.
What happens in the Senate will be another matter, where the PP will probably defeat them with its absolute majority. But this would no longer be a major problem for the processing of the public accounts, because although until now the Upper House had the power to completely defeat these objectives, the Government took advantage of the Parity Law, which will come into force next week, to eliminate this irrevocable veto power through an amendment.
In this way, if the PP rejects the stability objectives in the Senate, it will be enough for them to return to Congress and be approved with a simple majority.
SPENDING CEILING OF ALMOST 200 BILLION
The budgetary objectives are accompanied by a report on the non-financial spending limit or ‘spending ceiling’, which is not put to a vote. This sets a ceiling of 199.171 billion euros, including funds from the European Union.
The spending ceiling also includes a transfer from the State to Social Security for an amount of 22,881 million euros, 7% more than in the 2023 Budget. Social Security will be able to have a deficit of 0.2% in the next three years.
In addition to this spending limit, it is also established that the public debt of all administrations will be reduced to 103.6% of GDP in 2025, a percentage that should be almost two points lower in 2026, when it reaches 101.8%. Finally, in 2027 it will be below 100%, standing at 99.7%.
Continuing with public debt, the target set for the autonomous communities is 20.8% of GDP in 2025, 20% for the following year and 19.4% in 2027. For its part, the debt of the local councils will continue to decline in the coming years, going from 1.3% in 2025 and 2026 to 1.2% in 2027.
Finally, the State’s revenue projection is that it will grow by 5.4% in 2025 and 6.5% in 2026. As for the spending rule, it has been set at 3.2% in 2025, 3.3% in 2026 and 3.4% in 2027.
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