Spanish lawmakers on Thursday rejected the minority left-wing government’s spending and deficit plans, moving one of the world’s most dynamic developed economies closer to another year without a new budget.
Socialist Prime Minister Pedro Sánchez’s coalition has been unable to squeeze a budget through the hung parliament since its formation in 2023. That severely limiting its room for manoeuvre in new spending projects.
This month it presented a 2026 spending ceiling and a deficit reduction timetable for 2026-2028. It would have been a key first step towards submitting a new budget and replacing the 2023 accounts, which have been renewed automatically.
The proposed 2026 spending ceiling provided €212 billion ($246 billion), an increase of 8.5 percent on the current framework, foreseeing the public deficit falling to 2.1 percent of annual economic output next year.
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But MPs threw out the bill by 178 votes to 164 with five abstentions.
The main opposition conservative Popular Party joined forces with far-right Vox and Catalan separatists Junts, which recently broke with the government, to reject it.
The government must present a new budget framework within a month. Another failure would lead to the 2023 budget being extended for a third consecutive year.
The impasse has not prevented the European Union’s fourth-largest economy from growing much faster than its peers.
The Spanish economy expanded 3.5 percent in 2024 and is forecast to grow 2.9 percent this year, more than double the figure predicted for the eurozone.
