Spain's Congress rejects deficit path for sixth time in two years, but government will forge ahead with 2027 budget

What happened in Congress

The lower house of Spain's parliament rejected the government's deficit and debt objectives for public administrations on Thursday, 23 July 2026, with 178 votes against and 167 in favour. The vote against came from PP, Vox, Junts and a single UPN deputy. The governing PSOE, Sumar, ERC, EH Bildu, PNV, BNG and Coalición Canaria voted in favour, while Podemos abstained. It was the second defeat for the same stability path in ten days: the identical proposal had already been voted down on Tuesday 21 July, and it marks the sixth time Congress has vetoed fiscal targets in the last two years.

Government reaction: budget will go ahead without approved path

Treasury minister Arcadi España arrived at the extraordinary plenary session, which closed the political calendar before the summer break, saying he was confident PP deputies had reconsidered. He challenged the opposition to choose between defeating the government and giving regions an extra 5,849 million euros of fiscal room over the next three years. After the vote, the government signalled it would move directly to drafting the 2027 State Budget, setting its deficit targets according to commitments already made to Brussels: 1.8% of GDP in 2027, 1.6% in 2028 and 1.5% in 2029. The Treasury considers the vote a procedural step and relies on a State Attorney's report from the tenure of former minister María Jesús Montero to justify proceeding without parliamentary approval of the stability path.

Espero que hayan reflexionado sobre lo que es perder dinero para sus comunidades autónomas, 5.800 millones de euros.

Regional fiscal impact

The rejected 0.1% deficit allowance would have given the 15 autonomous communities under the common regime room to run a small deficit instead of balancing their budgets. Without it, they face a more restrictive path: the state absorbs 1.5% of the 1.8% total, with the remainder divided between Social Security (0.2%) and the regions (0.1%). Municipalities must reach budget equilibrium. Opposition regions led by the PP, which govern most autonomous communities, argued the 0.1% figure is insufficient given their spending responsibilities. The lost fiscal margin over three years amounts to 5,849 million euros, according to the Treasury.

Debt forgiveness bill advances

In a separate vote the same day, Congress gave initial approval to the government's bill on exceptional financial sustainability measures for autonomous communities, despite PP and Vox tabling full amendments. The text allows the central state to assume 83,254 million euros of regional debt, primarily originating from the Autonomous Liquidity Fund (FLA). Arcadi España called the initiative one of solidarity and responsibility, noting that seven out of every ten euros would go to regions governed by the main opposition party.

7 de cada 10 euros serán para autonomías gobernadas por el principal partido de la oposición.

Political reactions

PP deputy José Vicente Marí Bosó accused the government of trying to appear busy and failing to comply with the law, calling on the executive to present a new fiscal proposal. Junts spokesperson Miriam Nogueras had warned before the debate that her party would vote the same way again, and deputy Josep María Cruset repeated his criticism that the deal was a scam for Catalonia. PNV deputy Idoia Sagastizabal described the debate as a déjà vu. The Treasury minister, who had urged the opposition not to opt for blockage, received the same answer twice in four days.