Spain's government presents deficit path to regions in first step toward 2027 budget, amid financing reform tensions

The CPFF meeting

Finance Minister Arcadi España chairs his first Fiscal and Financial Policy Council (CPFF) on Monday, presenting the fiscal path that will cap spending for regional and local administrations. The government needs the council's endorsement to move the stability objectives to the Council of Ministers and then to parliament. Although the ministry holds half the votes and requires only one regional government's support, the session is expected to be contentious.

Deficit targets and EU commitments

The proposed path aligns with European Commission requirements: a public deficit ceiling of 1.8% of GDP in 2027, falling to 1.6% in 2028 and 1.5% in 2029. These figures will bind all public subsectors (central government, social security, regions and municipalities) when drafting their own budgets. The government last attempted to pass stability objectives in December 2025, proposing a reduction from 2.1% in 2026 to 1.8% in 2027 and 1.6% in 2028, but that effort failed in Congress.

2027

1.8 %

2028

1.6 %

2029

1.5 %

Political tensions over financing reform

Although regional financing reform is not on the official agenda, PP-governed communities plan to force the issue. They reject the government's proposal, which was negotiated with ERC, and have boycotted bilateral meetings on the matter.

There will have to be another CPFF where they present another model, because this model, all communities, regardless of political colour, are against it.

A separate CPFF is scheduled for July to discuss financing reform.

Next steps in the budget process

If the CPFF approves the objectives, the Council of Ministers could adopt the spending ceiling and full stability path as early as Tuesday. The package would then go to the Congress of Deputies for a vote on 14 July, with a second extraordinary plenary on 23 July if it is rejected. The government aims to table the 2027 budget bill after the summer, likely in late September or early October, replacing the repeatedly extended 2023 accounts.

1. Jul 6, 2026CPFF meeting to set deficit, debt and spending rule objectives
2. Jul 7, 2026Council of Ministers expected to approve spending ceiling and stability path
3. Jul 14, 2026Congress votes on stability objectives (first extraordinary plenary)
4. Jul 23, 2026Second vote in Congress if first attempt fails
5. Late Sep / early OctGovernment plans to table 2027 budget bill

We have to give ourselves the opportunity for negotiation. It's our central scenario. We've had a complex budgetary scenario due to the extensions, but it has not meant a limitation for carrying out the Executive's agenda.