The Independent Authority for Fiscal Responsibility (AIReF) takes for granted the failure to comply with the spending rule committed to the European Union already this year "even with the maximum flexibility allowed," according to the report presented this Wednesday by its president, Inés Olóndriz. This will force adjustment measures for the Government that comes out of the polls that Olóndriz sees as still difficult to quantify.
"In its constant policy scenario, it foresees that the deviations in primary spending net of income measures will exceed the margins of the fiscal framework from 2026 and throughout the period of validity of the Plan, even considering the maximum flexibility allowed," states AIReF. "For this reason, it considers measures necessary to fulfill the commitments, although their amount depends on pending institutional factors."
Olóndriz therefore does not see "fiscal margin" for new challenges such as the maintenance of railway infrastructure, but points out that it will be up to the new Government to "order priorities."
It is a narrowing margin. "The institution also identifies risks of non-compliance with the national spending rule and estimates a deterioration of the public deficit in the medium term, in a context of still high economic growth and increase in structural spending," he adds in a blow to the inheritance that the head of the Treasury, Arcadi España, leaves to his successor if the PSOE loses power.
The factors that prevent the adjustment from being quantified include whether Spain will request the escape clause applicable to expenses to alleviate the cost of the energy crisis. Even asking for it will require adjustment, but not of such magnitude. Another factor is whether the Government that emerges from the polls presents a new fiscal plan to Brussels.
In any case and in this context, "AIReF revises upwards its forecast for the growth of primary spending net of income measures for 2026 to 7.3%, as well as the deficit of public administrations, which would reach 2.8% of GDP" contrary to what the Government had been ensuring. "This review responds to the new measures adopted and the greater growth in spending observed in the latest execution data, despite the dynamism of public income," the organization justifies.
"In 2027, AIReF estimates that the withdrawal of part of the temporary measures would allow the growth of net spending to be moderated to 5.1% and reduce the deficit to 2.6% of GDP, although the decline would be weighed down by the increase in structural spending."
Whoever comes out of the polls will have a problem with Brussels. "AIReF estimates an average of primary spending net of income measures of 5.7% annually, compared to the 3.2% collected" in the plan submitted by the first vice president, Carlos Body. "In accumulated terms since 2023, the increase would reach 29.8%, compared to the 20.1% committed."
All this regarding the European spending rule, but the national one, which is stricter, will probably be breached "by the Central Administration and almost all the Autonomous Communities in 2026 and 2027 and the following years."
"Thus, AIReF confirms that both compliance with the national and European fiscal framework requires the adoption of measures," insists Olóndriz and his team. Implicitly, he sees it as difficult for whoever wins power to take additional spending measures or cut income without a new agreement with Brussels. "AIReF recommends developing a medium-term fiscal strategy that allows us to meet European commitments and avoid new measures that structurally increase spending or reduce income without permanent financing."
Improved economic growth
On the positive side, "AIReF raises its real GDP growth forecasts for 2026 and 2027 by one tenth, to 2.6% and 2.2%, respectively. The revision responds mainly to the better performance of the economy in the second quarter of 2026 and its carry-over effect on 2027," the institution notes.
Its chief economist, Esther Gordo, highlights that "private consumption will continue to be the main engine of growth, as in 2025, supported by the increase in population and job creation, while investment will be supported by the final phase of implementation of European funds." However, it foresees "a gradual moderation of growth in the medium term, reaching 1.7% in 2031."
The problem is that "the strength of activity will be accompanied by greater and more persistent inflationary pressures, both due to the increase in the cost of imported energy and the persistence of price increases in services. AIReF predicts that inflation will increase by 3.6% in 2026 and 3% in 2027, three and six tenths more than the previous forecast."
Regarding regularization, Gordo estimates "an administrative job creation of 300,000 people." His figures differ from the official Government figures, because he maintains that there were regularized workers who were already working.
