The European Commission has sent Madrid an unambiguous warning. There is a real risk that in 2026, the country will not be able to keep the growth of public spending within the agreed limits. The situation is further complicated by the fact that for the second year in a row, Spain has ignored the requirement to submit a detailed budget plan, forcing European officials to rely solely on their own economic forecasts made back in the autumn.
According to European experts, the growth in Spain’s net budget expenditures in 2026 will exceed the limit recommended by the EU Council. However, Brussels notes that the projected deviation is not critical. It amounts to less than 0.3% of GDP per year and less than 0.6% of GDP in total. Nonetheless, this formally puts Spain at risk of not meeting its commitments to keep treasury spending under control.
Notably, the European Commission’s conclusions almost entirely coincide with the estimates presented a month earlier by Spain’s Independent Authority for Fiscal Responsibility (AIReF). This watchdog oversees the country’s public finances. Based on the latest available data, AIReF analysts also predict that primary spending growth in 2026 will reach 4.6%, while the medium-term fiscal plan agreed with Brussels sets a target of 3.5%.
Spanish experts, like their European counterparts, believe that the annual limit will be exceeded by approximately 1.2 billion euros. However, the cumulative limit for the entire period will not be breached. This suggests that in 2025, the government will not need to implement additional spending cuts. And in 2026, despite a slight annual overrun, the country will still remain within the overall agreed framework.
Notably, Valdis Dombrovskis—who presented the European Commission’s position—is one of the key figures in European economic policy. His political career began in Latvia, where he served as prime minister three times, becoming the country’s longest-serving head of government. He has worked in Brussels for more than a decade, holding several senior posts within the European Commission. Currently, he serves as the Executive Vice-President overseeing the economic portfolio. Dombrovskis is known for his commitment to strict budgetary discipline and fiscal responsibility. He is often referred to as a “fiscal hawk” due to his steadfast support for stringent rules among EU member states. He was one of the main architects of financial assistance mechanisms during the eurozone debt crisis. His statements are always closely watched by both markets and governments. That is why his current warning to Spain carries significant weight. He has repeatedly emphasized the importance of adhering to common rules to maintain the stability of the entire European economy. His experience managing Latvia during a severe economic crisis lends his words additional authority. Dombrovskis is fluent in several languages, including English, German, Russian, and Spanish. His persona embodies the conservative approach to public finance management within the European Union.
