The European Commission approved Spain's fiscal plan on Tuesday, submitted in mid-October, aimed at improving the country's public accounts over the next seven years and meeting EU deficit and debt regulations. 

According to Spain's public broadcaster RTVE, the Brussels executive stated that the plan proposed by Prime Minister Pedro Sánchez's government aligns with the EU's fiscal oversight standards and “sets out a credible fiscal path to ensure the sustainability of public finances in the medium term.” 

“The Commission supports the investment and reform roadmap that underpins our model of balanced, sustainable and fair growth,” Spanish Economy Minister Carlos Cuerpo (PSOE) said on Tuesday. 

Following the positive news from Brussels, the minister stated that Spain will be able to “protect the welfare state for the future and maintain strategic investments while continuing to reduce the weight of debt and deficit in GDP.”

This marks the first instance of the European Commission assessing the adjustment plans that EU member states are required to submit under the new fiscal rules introduced this year, Euractiv reports.

These rules prioritise controlling net public expenditure, excluding items like interest payments on debt, investments funded by European grants, and certain unemployment benefits.

Although the European Commission recommended last June that Spain adopt slightly stricter public spending limits than those outlined in the government's targets, it ultimately approved Madrid's draft fiscal plan.

In its earlier recommendation, the Commission suggested an average annual increase in public spending of 2.8% for the 2025-2031 period. However, the fiscal plan approved on Tuesday allows for a 3% increase, providing an additional spending margin of 0.2 percentage points, equivalent to approximately €3 billion beyond the reference path.

The Spanish government projects a 3.7% increase in public spending for 2025, exceeding the 3.2% recommended by Brussels. For subsequent years, it forecasts 3.5% in 2026 (compared to 2.8%), 3.2% in 2027 (2.7%), 3% in 2028 (2.7%), 3% in 2029 (2.7%), 2.5% in 2030 (2.6%), and 2.4% in 2031 (2.5%).

This plan implies an average annual structural adjustment to the public deficit of 0.4 percentage points of GDP. According to the text of the Spanish plan, this would bring the public deficit down to 3% of GDP this year, 1.6% in 2028, and 0.8% in 2031.

Meanwhile, the EU executive confirmed on Tuesday that there is no basis for initiating an excessive deficit procedure against Spain, as the analysis conducted by Brussels last spring “remains valid.”