Spain | Deficits so similar and so different

By the end of 2024, the public deficit is expected to finish at levels similar to those of 2019. However, this apparent similarity hides profound differences in the composition of revenues and expenses.

Key points

• Key points:
• Both fiscal resources and expenditures will have grown by approximately 4 percentage points of GDP in these 5 years, reflecting a considerably larger public administration.
• BBVA Research estimates that over the next 4 to 7 years, annual measures for around 0.4 pp of GDP will have to be executed to reduce the deficit.
• The increase in spending can be accounted for by the trend in welfare benefits, investment and intermediate consumption.
• The other way in which the deficit will be different from that of 2019 is in revenues. In this regard, the increase in the tax burden has focused on household and corporate income and social security contributions.
• Future fiscal consolidation will require a balanced approach that considers how sustainable the increase in certain items of expenditure is, as well as a restructuring of tax revenues that minimizes negative effects on employment and investment.

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