The Congress will hold an extraordinary Plenary this Thursday to submit again to a vote the deficit path and the budget stability objectives that will serve as the basis for the General State Budgets (PGE) of 2027. The forecasts indicate that the plan will be rejected again, just as it 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, opted for abstention.
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 the Lower House to try to push it through in a second round. If the result is negative again, the Executive will proceed with the preparation of the 2027 accounts applying a stricter fiscal planning for the autonomous communities, although adjusted to the limits set by the European Union.
The Government's intention is to start conversations with the parliamentary groups about the 2027 Budgets once it closes the project within the Executive itself, aiming to register the new public accounts after the summer break.
Stability Path 2027-2029
The Executive's proposal places the deficit of the entire Public Administrations at 1.8% of GDP in 2027, 1.6% in 2028, and 1.5% in 2029. Within this distribution, the Central Administration will concentrate the largest part of the imbalance, with rates of 1.5%, 1.4%, and 1.3% for the period 2027-2029.
In the Council of Fiscal and Financial Policy, approval was given, despite the rejection of the PP counselors, for the autonomous communities to have a deficit target of 0.1% in each of the three years, which will grant them a fiscal margin of 5.849 billion euros.
Although a deficit of 0.1% of GDP has been established for all autonomous communities, the Treasury has left the door open to negotiate an asymmetric distribution depending on the budgetary situation of each territory.
Regarding local entities, the Ministry of Finance has established that municipalities must maintain budgetary balance during the three contemplated years. For its part, Social Security will have a deficit target of 0.2% of GDP in 2027 and 0.1% in both 2028 and 2029.
Downward path of debt and spending rule
In terms of public debt, the Government estimates that it will follow a downward trajectory in the next three years, going 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 reduce their indebtedness to 77.6% in 2027. By 2028, the debt level will have to be at 77% of GDP and, in 2029, the goal will be to lower it to 76.6%.
In the case of the autonomous communities, the goal is to reach a ratio of 18.9% in 2027, in line with the 19.7% set for 2026. In 2028, the autonomous debt must decrease to 18.3% and, in 2029, to 17.7%. As for local entities, the debt target will be 1.1% in 2027 and 2028, and 1% in 2029.
Additionally, the Treasury has communicated that the spending rule is set at 4% for 2027, 3.8% for 2028, and 3.6% for 2029.
Record spending cap
Alongside the stability objectives is the limit of non-financial spending, known as 'spending cap', which is not subject to parliamentary voting. For 2027, this threshold is set at 226.032 billion euros, the highest figure to date, 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, in comparison with the non-financial spending limit that included European funds, the increase will be 9.855 billion, 4.6% more. It is worth remembering that the end of the application of the Recovery, Transformation and Resilience Plan (PRTR) on the next August 31 means that MRR resources cannot be used beyond that date.