The Government of Spain approves the spending cap of an expansionary and responsible General Budget

Moncloa Palace, Madrid

Minister Carlos Cuerpo, Ministers María Jesús Montero, Pilar Alegría and Minister Ángel Víctor Torres, during the press conference after the Council of Ministers (Pool Moncloa/José Manuel Álvarez)

The Council of Ministers has approved the non-financial spending limit of the General State Budget for 2026, as well as the budget stability and public debt targets for all public administrations in the period 2026-2028.

The First Vice-President of the Government of Spain and Minister for Finance, María Jesús Montero, stressed that the government is thus fulfilling the "first fundamental milestone" of the draft budget which, "as we have said repeatedly, we will be presenting because it will be good for citizens as a whole".

This budget, she added, will be "expansionary and responsible": it will continue to strengthen the welfare state and public services to address problems such as access to housing, while also complying with fiscal rules to continue reducing public debt and the deficit. The Vice-president assured that this is the same "roadmap" as the previous public accounts, which have made Spain the driving force of the European economy, have enabled measures such as the revaluation of pensions, the increase of the minimum wage and the deployment of a "social shield" against the impact of the pandemic and the war in Ukraine and have been based on a "progressive and redistributive" fiscal policy.

The non-financial spending limit increases by 8.5%

The national spending cap, that is, without European funds, is set at €212.026 billion, 8.5% higher than in 2025. "This is a significant increase, but also a prudent one, in line with compliance with fiscal rules and the deficit reduction committed to," the Minister for Finance stated. Including European funds, the non-financial spending limit stands at €216.177 billion, also an 8.5% increase.

The First Vice-President of the Government of Spain and Minister for Finance, María Jesús Montero, during the press conference after the Council of Ministers | Pool Moncloa/José Manuel Álvarez

María Jesús Montero emphasised that 2026 will be the last year in which the budget incorporates resources from the Recovery and Resilience Mechanism, "a fundamental tool for transforming our production model". In total, Spain has already received 5 disbursements from these funds, which amounts to more than 55 billion euros in transfers. This amount represents approximately 70% of the total expected and places Spain as the leading EU country in terms of the volume of non-repayable funds received.

The Vice-president also noted that the spending limit includes a transfer of €22.881 billion to Social Security to comply with the maximum recommendations of the Toledo Pact. "This is a further demonstration of the government's commitment to the sustainability of our pension system," she said.

Less public deficit and more spending power for autonomous communities

The deficit target for all public administrations for next year is set at 2.1% of Gross Domestic Product (GDP), 0.4 percentage points less than the deficit forecast for 2025. For the following two years, the target is set at 1.8% and 1.6%. Montero emphasised that, since the peak of the deficit during the pandemic, the government has reduced it by 70%. "At the moment we have a lower deficit than countries like France or Italy," she said. And according to the latest forecasts from the European Commission, Spain will end this year with a lower deficit than Germany, something that hasn't happened in 20 years.

The Vice-president explained that the burden of reducing the deficit falls primarily on the central government. In fact, the majority of that deficit corresponds to transfers to Social Security and the distribution of bank tax revenue to the autonomous communities.

The autonomous communities, for their part, maintain the same deficit target for the entire 2026-2028 period: 0.1% of GDP. "Given that they will receive the highest revenues in their history from the financing system, they will effectively have more spending capacity and greater fiscal leeway," she argued. Local authorities will maintain a balanced budget throughout the period, and in 2026 they will receive the largest advance payments in history. Finally, the Social Security deficit target will be 0.2 percent in 2026 and 2027 and 0.1 percent in 2028.

The First Vice-president reminded everyone that, if the Lower House of Parliament rejects this path to stability, the regional governments will lose 5.485 billion euros over the next 3 years.

With regard to the public debt target for all levels of government, it will be set at 100.9% of GDP in 2026, 100% in 2027, and 99.1% in 2028. Montero stressed that public debt has decreased by 22 percentage points since the first quarter of 2021, exceeding forecasts, a fact reflected in the rating agencies' assessments.

Economic growth forecast revised upwards

The Minister for Economy, Trade and Business, Carlos Cuerpo, during the press conference after the Council of Ministers | Pool Moncloa/José Manuel Álvarez

The Minister for Economy, Trade and Business, Carlos Cuerpo, presented to the Council of Ministers the updated macroeconomic forecast, which raises the growth forecasts for this year to 2.9%, maintains the 2026 forecast at 2.2% and the 2027 and 2028 forecasts at 2.1%.

The minister argued that "despite the uncertain international context and the slowdown in the main European partners, Spain maintains dynamic and resilient growth thanks to a balanced and responsible model", and recalled that the European Commission, the International Monetary Fund and other entities such as the Independent Authority for Fiscal Responsibility have also updated their forecasts upwards and maintain them above 2% in the medium term.

Carlos Cuerpo pointed out that Spain is in a leading position among the major European and global economies, will continue to lead growth this year, and is projected to double the eurozone's growth rate by 2026.

During his speech, the minister highlighted the importance of private consumption and investment as key drivers of growth forecasts. With regard to private consumption, he highlighted its strength, which rests on a robust labour market, not only in terms of increased employment but also the gradual recovery of workers' purchasing power. He also stressed the role of productive investment in innovation and construction, the latter being key "to rebuilding the public housing supply under affordable conditions."

Carlos Cuerpo also indicated that the increase in employment has been accompanied by improved productivity: "In the period 2019-2024, hourly productivity grew 40% more than in the period 2013-2018".

The minister also referred to the dynamism of the labour market and the government's projections of creating an average of 450,000 jobs per year, which will translate into a reduction of the unemployment rate to 9% by 2028. According to Cuerpo, increased productivity and job growth will lead to a decrease in inequality. Furthermore, he indicated that, with a youth unemployment rate similar to that of 2002, the school dropout rate has fallen to 12.6%.

Poverty and inequality indicators

The main new feature of the macroeconomic framework, which is now called the economic framework, is that it incorporates, for the first time, projections for reducing inequality and poverty, Cuerpo highlighted: "Thanks to this balanced growth, we are moving from macro to micro, while remaining aware that there is still a long way to go".

Specifically, these projections allow us to understand how GDP growth, productivity, and reduced unemployment affect income distribution and citizens' well-being.

The benchmark indicators are the Gini index, an aggregate measure of income inequality; the 80/20 inequality indicator, which represents the income gap between the richest 20% and poorest 20% of the population; and the at-risk-of-poverty rate, which is the number of people living below 60% of the median income.

Carlos Cuerpo reported that Spain reduced its at-risk-of-poverty rate by 1.8 percentage points between 2018 and 2024, making it the country with the third largest reduction in the Eurozone. Forecasts up to 2028 indicate that the gap will continue to narrow, reaching half of what it was in 2018. He also highlighted that both the intensity and severity of poverty have decreased.

Similarly, Spain has seen the greatest reduction in inequality among eurozone countries between 2018 and 2024, as measured by the 80/20 indicator. The gap with the eurozone average has narrowed by 40%, and, according to the minister, the government anticipates a further reduction of 40 percentage points.

Removal of elements contrary to democratic memory

The Minister for Territorial Policy and Democratic Memory, Ángel Víctor Torres, during the press conference after the Council of Ministers | Pool Moncloa/José Manuel Álvarez

The Council of Ministers has approved the procedure for compiling the catalogue of symbols and elements contrary to democratic memory, which are those that glorify the military uprising and the Francoist dictatorship.

The Minister for Territorial Policy and Democratic Memory, Ángel Víctor Torres, stressed that the Executive is thus implementing the Democratic Memory Law and that the text incorporates the contributions of the autonomous communities and the Spanish Federation of Municipalities and Provinces (FEMP), as well as the opinion of the Council of State. The law also establishes a 15-member technical commission comprised of experts and representatives from the autonomous communities and the Spanish Federation of Municipalities and Provinces (FEMP).

Public administrations, private individuals, and memorial associations or other groups may request the removal of these symbols and elements, following a regulated administrative procedure. The text also outlines the mechanisms applicable to vestiges with architectural value or those designated Assets of Cultural Interest. Ángel Víctor Torres stressed that any elements that have to be removed may not be exhibited under any circumstances. "And there is room for re-signification of those vestiges that have a specific value, so that it is known that they glorified a war, a subsequent dictatorship, and the absence of freedoms," he explained.

Once the commission has been established, the catalogue will be updated every 15 days. The minister estimated that there are approximately 4,000 remaining vestiges of the Franco regime throughout the country, present in social housing, religious buildings, and town names, among other areas.

Recovery and recognition of the victims of war and dictatorship

The Minister for Territorial Policy and Democratic Memory also presented an assessment of the three years since the implementation of the Democratic Memory Law. Torres underlined that, thanks to this law, initiatives seeking to repeal the regional laws implementing the national law have been halted. The minister recalled that the United Nations rapporteurs clearly stated that the so-called "laws of concord" violated human rights and international law.

The Law's implementation includes the development of two four-year exhumation plans. A 2019 study estimated that some 20,000 people were in mass graves, ditches, and wells where the remains could be recovered, and nearly half of them-some 9,000 bodies-have been exhumed during these years. Specifically in the Valley of Cuelgamuros, 36 boxes containing 458 sets of remains belonging to different individuals have been located, and 31 victims have been identified.

The law has also resulted in the presentation of an interactive map of mass graves, numerous acts of reparation, and the fact that 1,614 families have received declarations of recognition and annulment of the legal proceedings that affected victims of repression and totalitarianism.

The minister also highlighted the granting of citizenship to 54 children and 117 grandchildren of International Brigades members who defended the Republic. Furthermore, the Democratic Memory Law offers the possibility of obtaining citizenship to the descendants of Spanish exiles for political, social, economic, and other reasons. 237,000 people are already registered as Spanish citizens and half a million have this right recognised.

The government has also carried out educational activities and commemorative events and has made progress in the audit of assets seized during the war from political parties and individuals, as well as in the designation of "sites of memory"-those places where there was repression or where democracy and lost rights were defended.

Finally, Ángel Víctor Torres emphasised the re-signification of the Valley of Cuelgamuros, "which was a mausoleum during the dictatorship and a centre of forced labour and death". The architectural proposal chosen by an international jury aims to begin construction during the current legislative term.

International Children's Rights Day

The Minister for Education, Vocational Training and Sports and Government Spokesperson, Pilar Alegría, during her speech at the press conference after the Council of Ministers | Pool Moncloa/José Manuel Álvarez

The Minister for Education, Vocational Training and Sports and Government Spokesperson, Pilar Alegría, reported on the approval by the Council of Ministers of a declaration on the occasion of International Children's Rights Day, which is commemorated on 20 November each year.

In this declaration, the Government reaffirms its commitment to the rights of Spanish children, highlighting the measures implemented by the Executive to protect their well-being and guarantee them "a life free from violence, discrimination, and inequality". This commitment, Alegría affirmed, "is not only a constitutional obligation, but also a national project for all."

Current affairs: visit of the President of Ukraine

The government spokesperson began her speech by referring to the visit to Spain this week by the President of Ukraine, Volodymyr Zelensky. According to Pilar Alegría, the Ukrainian leader's third visit reflects, once again, the "strong commitment that Spain has had and continues to have to the Ukrainian people", a long-term commitment "to the sovereignty, territorial integrity, and defence of the people and government of Ukraine for as long as Russian aggression persists".

Pilar Alegría, who noted that Presidents Sánchez and Zelensky will discuss issues of common interest at the Moncloa Palace, reiterated that the war against Ukraine "threatens European security and values" and stressed that, therefore, Spain's position is to stand with Ukraine "for as long as necessary."

Non official translation