Spanish state fails to meet budget deadline for third year in a row

The Spanish Constitution requires that the draft state budget (PGE) must be submitted to Congress at least three months before the expiry of the previous year's budget, so before 30 September.

It also establishes that, if the new budgets are not approved before 1 January of the following year, the previous year's budgets will be automatically extended until there are new accounts. This is precisely what has been happening since 2023.

Pedro Sánchez's coalition government, still operating under accounts from two years ago, has not yet approved either the fiscal framework or the spending cap, and for the third consecutive year has failed to meet the deadline to present a draft budget. The government argues that presenting the accounts without the backing of Congress would be useless.

This Tuesday's cabinet meeting will take place without an approved spending ceiling or deficit path, important steps to comply with the constitutional requirement that obliges the government to submit the budget three months before the start of the new fiscal year.

The Minister of Finance and First Vice-President of the Executive, María Jesús Montero, explained on Monday that the project is "in the home stretch", and promised to bring the spending ceiling and the stability path to the cabinet "soon".

However, securing approval from the government’s parliamentary allies will not be easy, given the demands of some parties such as Junts, Puigdemont’s party. This group is demanding concessions, especially on regional powers and financing for Catalonia, in exchange for discussing the fiscal framework.

Extending the outdated 2023 accounts yet again leaves the government with less room to manoeuvre on new initiatives, investments, and social programs. It also complicates the country's medium-term economic planning. The Independent Authority for Fiscal Responsibility (AIReF) has warned that the lack of budgets and clarity in fiscal targets make it difficult to monitor public accounts.