The Fiscal Authority (Airef) has improved Spain's growth forecasts for this year, from 1.7% to 2%. The deficit will also drop to 3% of GDP, an objective committed to Brussels, but the margin to reduce it will be reduced if additional measures are not taken.
Spain will have to send in September a four or seven-year structural fiscal plan required by the new European fiscal framework. The deployment of the Recovery Plan will be crucial to meet the GDP growth forecasts, the Airef says. The organization calculates that the increase in spending will be higher than what Brussels advises and that the budget balance will remain above 3% in the medium term. The better-than-expected GDP growth is based on a buoyant labor market that has pushed domestic consumption in 2023 above expectations. The other side of the coin is the weakness of investment, despite the injection of European funds, and stagnation in productivity. The AireF estimates that in 2025 the deficit will drop to 2.9%, but that it will drop again in 2028.