Spain faces budget setback after parliament rejects 2027 spending plan

The Spanish Congress of Deputies rejected Prime Minister Pedro Sanchez's proposed 2027 spending framework and fiscal stability targets.

A total vote of 166-176 with five abstentions in Spain's lower house, rejected the government's proposed spending framework on Thursday, dealing with a fresh blow to its efforts to approve a state budget before the end of the legislature next year.

The measure was defeated by a combination of conservative, far-right, Catalan separatist, and hard-left parties including the People’s Party PP, Vox, Junts, and Podemos.

Spain has not passed a new budget since 2023 because the minority coalition lacks sufficient support in a fragmented parliament. Instead, the Spanish government has rolled over the 2023 accounts for three consecutive years.

Key rejections:

Main rejections include a record €226 billion spending cap for 2027 and the government's 2027–2029 fiscal stability path, which aimed to reduce the budget deficit to 1.8% of GDP in 2027.

The setback highlights the ongoing parliamentary deadlock facing the minority coalition government and complicates efforts to pass a formal state budget before the end of the legislative term.

Prime Minister Pedro Sanchez has repeatedly vowed to serve out the legislative term despite growing pressure from the opposition to call an early election. If he does so, Spain's next general election must be held no later than August 2027.

However the failure to secure backing from the conservative People's Party PP, far-right Vox, Catalan separatist party Junts and hard-left Podemos underscored the government's challenges to break the parliamentary deadlock and restore a normal budget calendar.

Lawmakers did, however, approve separate government measures aimed at shielding consumers and businesses from the economic impact of recent international conflicts.