Spain's government is racing to approve major reforms in July, hoping to shift public attention from ongoing judicial scandals and show legislative progress before the summer recess. High-profile investigations are putting the legislature under strain, including the recent indictment of Guardia Civil Director General Mercedes González. Ministers are stepping up efforts on housing and dependency care, as well as regional financing.
The most anticipated move is a sweeping housing decree, expected to reach the Council of Ministers this month. Negotiated by Isabel Rodríguez (PSOE) and Pablo Bustinduy (Sumar), the proposal would do more than extend rental protections. It would also reform seasonal rentals and give parliamentary groups room to add their priorities in the hope of securing broad support. The outcome hinges on Junts, especially with the European Court of Justice due to rule on Carles Puigdemont's possible return to Catalonia on July 16. Despite the uncertainty, PSOE and Sumar remain optimistic, pointing to strong social pressure for housing reform and room to negotiate.
In a subsequent housing measure announced in October 2026, the Council of Ministers approved a royal decree establishing €180 million in direct grants for autonomous communities with officially designated stressed residential-market areas. The government identified 317 municipalities across five communities, covering more than nine million residents. Catalonia was allocated €119.4 million for 271 municipalities, the Basque Country €31 million for 18, Navarre €13.3 million for 21, Asturias €5.9 million for five, and Galicia €10.2 million for A Coruña and Santiago. The funding can support the construction or refurbishment of affordable and social rentals. It can also go toward land acquisition and development, the purchase of existing homes for public housing, infrastructure, and rental guarantees or insurance for young people. Separately, the State Housing Plan allows public authorities to finance up to 80% of the purchase cost of an existing property acquired for affordable rental use. Together, the measures support new construction and bring existing homes into the affordable housing stock.
Another basic key stage is the planned overhaul of Spain's dependency system. A decree is scheduled for a vote on July 14. It would raise state funding for dependency care to €7.2 billion annually by 2027 and introduce legal reforms. Sumar, which is redefining its political space and searching for a new candidate, sees the measure as impressive to justifying its role in government. Support from the opposition Partido Popular (PP), but, remains unclear.
Budget negotiations are also gathering pace. The Council of Fiscal and Financial Policy begins discussions this week with regional finance ministers on deficit targets. Finance Minister Arcadi España is expected to secure approval with PSOE votes and support from a handful of allied regions, while the PP remains opposed. Two parliamentary votes on the deficit path are set for July 14 and 21 and are likely to fail. The budget process will continue under previous guidelines. Later in July, attention will turn to reforming the regional financing system, a contentious issue. Some PSOE-led regions are wary of changes that could favor Catalonia, Valencia and Andalusia, despite overall funding increases.
Prime Minister Pedro Sánchez will attend the NATO summit in Ankara. His wife, Begoña Gómez, is seeking judicial permission to travel after her passport was withdrawn. Sánchez remains the only European leader opposing a 5% defense spending target, arguing it would require deep social cuts. The summit comes amid Donald Trump's threats regarding Spain's NATO membership. The threats are considered unrealistic, but they raise the political stakes.
Official figures on the extraordinary regularization of immigrants are also due in July. Sánchez wants to present the measure as a unique political achievement in Europe. Polls show a divided public, but Sánchez believes a strong pro-immigration stance is the best response to the far right, rather than adopting exclusionary rhetoric.
Meanwhile, the new PP-Vox agreement in Andalusia gives the government ammunition to challenge the PP's image of moderation. The deal incorporates much of Vox's platform. Sánchez's team is using it to mobilize the left, warning that a PP-Vox government in Madrid is becoming more likely, as similar coalitions already govern in several regions.
Separately, Supreme Court investigating magistrate Pablo Llarena confirmed the lifting of Spain's national arrest warrants for Puigdemont and former Catalan ministers Antoni Comín and Lluís Puig, applying Constitutional Court doctrine on how the amnesty law treats embezzlement. The order covers the warrants and any imprisonment orders arising exclusively from them. It does not, by itself, close all related proceedings. The ruling changes the immediate status of the national detention orders without resolving every legal question surrounding the case.
Despite the government's vulnerability amid judicial investigations and scandals, officials remain confident that PP missteps, including the controversy over the 'ley de nietos', will help it regain ground. The government is counting on legislative achievements and positive economic data to shift the narrative. The PP, meanwhile, is focused on amplifying the impact of ongoing scandals.
Spain's political field in 2026 is marked by intense competition between the government and opposition, with legislative productivity and judicial scrutiny shaping public debate. Millions of residents face the housing crisis. Dependency care and regional funding also remain central issues. Official data show that Spain's labor market has reached a record 22.47 million affiliates, reflecting economic ability to recover despite political turbulence. The outcome of July's legislative push could influence both the government's legacy and the direction of the next general elections.
