Spain | Missed opportunities

Summary

The public deficit looks to have ended 2024 at 2.8% of GDP (excluding the funds set aside to support the victims of the flash floods that struck in October). It is exactly the size of the fiscal imbalance recorded back in 2019.

Key points

• Key points:
• This has taken place with a sharp increase in spending accompanied by extraordinary revenue growth.
• The danger moving forward is that much of the increase in public spending that has occurred could become structural, justified by the strong revenue performance in recent years.
• Some of the factors behind the increase in revenues may be petering out, which could threaten the improvements seen in the deficit, especially if spending continues to grow as it has been in recent years.
• In this context, the government has pledged that, in the absence of other offsetting measures, much of its spending will grow over the next few years at below 3% on average per year, below the expected growth in nominal GDP (4%).
• To achieve a fiscal adjustment that is transparent and efficient and does not stir up social tensions, it is key to make progress in having a proper set of budgets for all government bodies.

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