The Congress will hold an extraordinary Plenary this Thursday to submit to a second vote the deficit path and the budget stability objectives linked to the General State Budgets (PGE) of 2027, with the expectation that they will be rejected again, just as happened last week.
On July 14, the absolute majority formed by PP, Vox, Junts, and UPN rejected for the first time the deficit objectives, in a session where Podemos and the deputy from Compromís integrated into the Mixed Group, Águeda Mico, abstained.
After that parliamentary setback, the Government decided this Tuesday to approve again in the Council of Ministers the same stability path and send it back to Congress to attempt its validation. If it falls again, the Executive will proceed with the processing of the 2027 accounts with a stricter fiscal framework for the autonomous communities, although adjusted to the fiscal discipline requirements of the European Union.
The intention of the Executive is to open conversations with the parliamentary groups about the 2027 Budgets once the internal agreement is closed, with the aim of registering the project upon returning from summer.
Stability path 2027-2029
The proposal of the Executive places the deficit of the set of Public Administrations at 1.8% of GDP for 2027, 1.6% in 2028, and 1.5% in 2029. Within this distribution, the Central Administration will concentrate the largest part of the gap, with rates of 1.5%, 1.4%, and 1.3% in the period 2027-2029.
In the Council of Fiscal and Financial Policy, it was approved, despite the opposing vote of the PP counselors, that the autonomous communities have a deficit target of 0.1% in each of the three years, which translates into a fiscal margin of 5.849 million.
Although that 0.1% of GDP has been set for the set of autonomous communities, the Treasury has shown willingness to discuss an asymmetric distribution of the deficit based on the fiscal situation of each territory.
Regarding the subsector of local entities, the Ministry of Finance has established that municipalities must achieve budgetary balance during the three years. For its part, Social Security will have a deficit target of 0.2% of GDP in 2027 and 0.1% both in 2028 and in 2029.
Descending path of debt and spending rule
In terms of public debt, the Government foresees a downward trajectory for the next three fiscal years, from 97.6% of GDP in 2027 to 96.4% in 2028 and to 95.3% in 2029.
The Central Administration and Social Security must jointly reduce their debt to 77.6% of GDP in 2027. In 2028, the ratio must be set at 77%, while in 2029 the target is lowered to 76.6%.
For the autonomous communities, the target is set at 18.9% in 2027, in line with the 19.7% marked for 2026. In 2028, the autonomous debt must decrease to 18.3% and, in 2029, to 17.7%. In the case of local entities, the debt target will be 1.1% in 2027 and 2028, and 1% in 2029.
Additionally, the Treasury has communicated that the expenditure rule is set at 4% for 2027, at 3.8% for 2028, and at 3.6% for 2029.
Record Spending Cap
Alongside the stability objectives, although without being put to a vote, is the limit on non-financial spending, the so-called 'spending cap', which for 2027 is set at the record figure of 226.032 billion euros, representing an increase of 6.6% compared to 2026.
The 'national' spending cap will grow by 14.006 billion compared to that of 2026, while, when compared to the non-financial spending limit that included European funds, the increase will be 9.855 billion (+4.6%). It is worth remembering that the end of the application of the Recovery, Transformation and Resilience Plan (PRTR) on the next August 31 implies that resources from the MRR cannot be used beyond that date.