The Spanish economy grows, but with nuances. In his autumn economic forecasts, Funcas has left his GDP growth forecasts intact - an advance of 2.5% this year and 1.8% in 2027 - but warns of a progressive slowdown that will leave growth at 1.7% in 2028. A consequence, above all, of the high inflation rate - which would reach 3.7% this year and 3.1% next year. However, even if this figure decreased, there are financial variables that would curb expectations and represent extra spending that would leave the Government with no room for maneuver in the face of new emergencies.
The central scenario on which Funcas bases its analysis and the forecast of the economic slowdown for 2028, in fact, is based on the assumption that inflation will drop to 2% from 2029 and 10-year bonds - which in 2027 are expected to reach an annual average of 4% - would be reduced to 3% in 2030. If the Government does not apply adjustment measures, the public deficit would inevitably once again exceed the European limit of 3% of GDP from 2030. This leads to interest payments on public debt increasing by around 20 billion euros - from around 43.5 billion in 2026 to 63.7 billion in 2031.
In the long term, the debt ratio, that is, the thermometer to measure the country's financial health and determine whether the accounts are sustainable, will fall from the 98.1% expected for this year to 96% in 2029, when it would stagnate. At first glance it seems positive that the debt is going down, but it is stuck at a level higher than the reference level set by the European Union (60%) and means that Spain owes practically the same as it produces in an entire year. And, by not continuing to decline, the economy is left without a safety cushion to face future emergencies, as it has done, for example, with the pandemic or the effects of wars in recent years. «This result shows that the room for maneuver of the AA.PP. to respond to exogenous shocks or a possible recession is practically zero," warns the think tank in its forecasts. "Any situation that involves an increase in spending or lower economic growth would place the debt rate on a path of unsustainability - that is, increasing -."
However, it is necessary to be even more cautious if financial tensions do not ease. In a more tense scenario, "not excessively unfavorable", with inflation at a somewhat higher level and with interest rates somewhat higher throughout the analysis period (3% for the one-year Euribor, and 4% for the 10-year public debt), GDP growth would be lower than expected, but public spending would rise "unequivocally," he explains. The public deficit would be above 3.5% from 2030 and interest payments would rise above 70 billion euros, which places the debt-to-GDP ratio on an unsustainable path.
In any case, it is necessary to take adjustment measures. Raymond Torres, Director of Economics at Funcas, insists on the urgency of "trying to generate and raise the budget cushion so as not to be in that situation of completely losing the room for budgetary maneuver in the future", especially in the current phase of growth.
