AIReF raises 2026 Spanish deficit forecast to 2.8% and sees EU spending rule breach

A deficit forecast revised upward

Spain's Independent Authority of Fiscal Responsibility (AIReF) now expects the public deficit to reach 2.8% of GDP in 2026, two tenths of a point above its July estimate. The figure was presented on Wednesday, 4 November 2026, in its report on the main lines of the 2027 public administration budgets, which the authority produced even though no state budget bill has been submitted for another year. The forecast rests on net primary spending growth of 7.3% in 2026, more than double the 3.5% committed in the structural fiscal plan and well above the 4.7% in the spring progress report. In July the authority had estimated 6.4%, and since then it has counted further extraordinary outlays, including an extension of energy tax cuts, aid for the Ceuta crisis and measures for natural disasters. Inés Olóndriz, the authority's president, summed up the stance in one line.

“Fiscal policy has been expansionary and procyclical.”

She added that the policy runs against what European authorities recommend, and she attributed the 2026 increase partly to temporary measures and partly to structural spending.

Committed in structural plan3.5%

Spring progress report4.7%

July forecast6.4%

November forecast7.3%

Committed in structural plan

3.5 %

Spring progress report

4.7 %

July forecast

6.4 %

November forecast

7.3 %

Data from the article text

The EU spending rule breached from 2026

AIReF says the government will break the EU expenditure rule already in 2026, even with the maximum flexibility allowed for defence spending and certain energy security measures. That flexibility is estimated at three tenths of GDP a year and six cumulatively, and the authority still expects the 2026 overshoot to exceed the maximum permitted deviation. The authority could not calculate the size of the breach, because it does not know whether the government will request the energy escape clause or whether the next government will present a new medium-term fiscal plan. The overshoot continues in the following years, with spending growth of 5.1% forecast for 2027 and 4.6% for 2028, against annual targets of 3.2% and 3%. The deficit is expected to reach 2.6% of GDP in 2027, while public debt is projected to fall to 99.1% of GDP in 2026 and 97.4% in 2027. GDP growth was revised up a tenth of a point to 2.6% for 2026 and to 2.2% for 2027, while inflation is seen at 3.6% and 3% in those years.

2026

2.8 %

2027

2.6 %

Data from the article text

Rail maintenance and the next government

The report follows the Urda rail accident, which has refocused attention on how the network is maintained. Olóndriz said the authority's 2019 infrastructure report is now outdated and did not value the funding needed to keep the network in good condition. She offered to update that assessment if the government asks for it.

“We are always open to being commissioned assessments, so if the government considers it appropriate, we are of course ready to update our report.”

Asked about the room to raise rail investment, she said the margin is scarce, since debt is still around 100% of GDP and the authority projects it at 95% by the end of its horizon. The measures approved to tackle the crisis, along with other unforeseen costs, will have a fiscal impact of almost 20,000 million euros across 2026 and 2027, of which 15,800 million will be spent or forgone through tax cuts in 2026 alone. Olóndriz said the government that emerges from the 29 November election should draft a medium-term fiscal strategy and set priorities for the years ahead. She also renewed the call for new budgets, after three years of extensions of the current state budget.