The announcement of the call for elections in Andalusia by president Juan Manuel Moreno Bonilla, this week, has caused a real earthquake on the political board, catching many formations off guard and precipitating a long-announced change that had not yet materialized. The departure of María Jesús Montero from the Ministry of Finance has resulted in a mini-government crisis that has culminated in the appointment of Carlos Cuerpo as economic vice-president and of Arcadi España as the new Minister of Finance, definitively clearing all speculation about who would take over the economic portfolio.
Arcadi España: technical experience facing complicated legacy
Arcadi España arrives at the Ministry of Finance with a solid background in economics and a proven track record in fiscal planning and budgetary management, a preparation that his predecessor, a graduate in Medicine, did not possess. His experience includes the responsibility as Minister of Finance of the Generalitat Valenciana, which will allow him to resume contacts with regional ministers and participate with full knowledge of the facts in bilateral commissions, a field that Montero did not traverse. España receives, at its headquarters on Alcalá street and Paseo de la Castellana, a cursed inheritance: pending economic issues that Montero has not managed to unblock with just over a year left until the end of the legislature.
General Budgets: an absence that conditions everything
The first of the challenges is the lack of approved General Budgets. The lack of parliamentary support has halted any possibility of moving forward with a public accounts renewal project. Since 2023, Spain has been operating with extended budgets, to which the Executive has introduced specific modifications, the most recent through the Royal Decree-Law on anti-crisis measures, expanding credits for expenses such as those of Social Security. The situation is aggravated in a context of geopolitical uncertainty, due to the war in Ukraine and the new conflict in the Middle East, which blocks the trade of energy and raw materials for industry and agriculture. The absence of solid budgets limits the Government's fiscal room for maneuver.
Warnings from the European Union and international organizations
The criticisms do not come only from the opposition. The European Commission has warned that Spain runs the risk of non-compliance with spending rules in 2026, as net spending growth could exceed the agreed limit, placing the country in a situation of “risk of non-compliance” even if there is no formal infringement yet. The AIReF and the OECD point out that the Spanish fiscal framework is outdated and lacks internal coordination, with multiple rules on spending, deficit, and debt that are not coordinated and reduce the country's credibility before Brussels. Furthermore, Spain is practically the only EU country that has not submitted the required budgetary plans for 2025 and 2026, which complicates the evaluation of its fiscal situation compared to other member states.
Autonomous financing: the singular financing and the pending debt
Another complex challenge is regional financing. The reform remains anchored since 2009, accumulating almost two decades of delay due to the lack of agreement among the autonomous communities. Regions such as Murcia, Valencian Community, Andalusia, and Castilla-La Mancha remain underfunded, while the Government negotiates with Catalonia greater regulatory and tax control for the Generalitat, including personal income tax (IRPF) and other possible taxes. This model, politically known as singular financing, has no formal legal basis nor is it defined in the LOFCA, the Statute of Catalonia, or state regulations, but it is demanded by ERC and is reflected in the agreements with the Government.
The concept of singular financing was incorporated as part of the agreement between the PSC and ERC to facilitate the investiture of Salvador Illa as president of the Generalitat after the 2024 elections, including commitments on financing for Catalonia with the idea of moving towards a more autonomous model in tax collection and management. For Arcadi España, this will be a central issue in the upcoming fiscal and financial policy conferences, as well as in the bilateral commissions with autonomous communities, where his previous experience in the Generalitat of Valencia will give him an advantage in negotiating.
The European fiscal challenge: discipline and coordination
The new Minister of Finance, Arcadi España, faces another of Montero's "cursed legacies": a growing fiscal challenge in Spain as the European Union's spending rules are reactivated after their suspension due to the pandemic. The European Commission has warned that net expenditure growth could exceed the limits foreseen for 2026, while the lack of approved General Budgets complicates the evaluation of Spanish fiscal policy and its alignment with European objectives.
Experts like the AIReF and international organizations like the OCDE emphasize that Spain needs a comprehensive reform of the fiscal framework: correctly coordinate spending, deficit, and debt, and improve internal supervision. The multiplicity of rules, coupled with the decentralization of spending among autonomous communities, makes it difficult to uniformly apply the rules and diminishes the country's credibility before Brussels.
Addressing these challenges will be one of the priority issues for Arcadi España, who must guarantee spending discipline, present complete budgets and fiscal plans for 2026 and strengthen coordination with the autonomous communities. Only then will Spain be able to align its fiscal framework with European rules, avoid risks of non-compliance and regain the trust of international supervisory bodies, also consolidating its technical leadership compared to Montero's management.
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