The Government plans to submit this Monday, June 29, to the Council of Ministers the new package of actions to face the economic impact of the war in the Middle East, along with the macroeconomic framework that will serve as the basis for the General State Budgets of 2027.
The Executive has opted to process both matters in an ordinary Council of Ministers brought forward to Monday, June 29, instead of Tuesday, the usual date for these meetings, because a large part of the current anti-crisis measures cease to be in force on June 30.
Although the specific initiatives have not yet been detailed, the President of the Government, Pedro Sánchez, has already announced that it will be “a new royal decree-law for the protection of the productive fabric and also of the country’s citizens.”
The outbreak of the international conflict derived from the war in Iran led the Government to approve a decree-law last March with tax reductions and other support measures to mitigate the effect, especially on energy prices.
However, some of these measures, such as the reduction of VAT on electricity or the reduction of the Special Tax on Electricity, have expired this June due to the favorable evolution of prices.
During these months, the Government has closely monitored the situation and has maintained contact with social agents and with the sectors most affected by the ‘shock’ to outline the new package of responses.
As with any decree-law, the text will first be approved in the Council of Ministers and subsequently published in the Official State Gazette (BOE). From then on, it will have a maximum period of thirty days to be sent to Congress, which will decide whether to validate or repeal it.
In this context, the President of the Government has already called on parliamentary groups to support the new royal decree-law when it reaches the General Courts and has reiterated that he will deploy State resources “for as long as necessary” to protect the economy from the consequences of the war in Iran.
NEW MACRO FRAMEWORK FOR THE BUDGETS
In parallel, Pedro Sánchez has reiterated on several occasions his commitment to present the Budgets for the next fiscal year, and the Ministry of Finance has already published the ministerial order that formally initiates the processing of the project.
The next milestone will be the presentation of the macroeconomic framework, which will be marked by geopolitical uncertainty and the effect of the war in the Middle East on inflation and price trends.
For this reason, the Executive has decided that the update of the forecasts will be approved simultaneously with the royal decree-law with the measures against the consequences of the conflict.
Once the macroeconomic framework is made public and the measures that will remain in force after June 30 are specified, the next step in the budgetary process will be to convene the Council of Fiscal and Financial Policy (CPFF), in order to inform the autonomous communities of the budgetary stability objectives and the deficit distribution among the different public administrations.
The Government will have to approve in the Council of Ministers both the limit of non-financial spending – the so-called spending ceiling – and the budgetary stability objectives, after consulting the CPFF, in order to subsequently send that framework to the Courts.
The deficit path will have to be voted on in the Congress and the Senate, although in the current legislature this procedure has not been fully completed. Once this step is overcome, it is expected that, after the summer, the Executive will present the General State Budget Law project for 2027.
Some parliamentary partners of the Government, such as the PNV, have urged the Executive to register the public accounts project as soon as possible and, if its approval is not achieved, to consider calling general elections.
A GDP FORECAST OF 2.2% FOR THIS YEAR
Currently, the Government maintains a forecast of 2.2% growth in Gross Domestic Product (GDP) for this year, slightly below other organizations such as the Bank of Spain, which calculates a progress of 2.3%, or the Independent Authority for Fiscal Responsibility (AIReF), which considers raising its projections to around 2.4%.
In the international arena, the European Commission places Spanish GDP growth at 2.4% in 2026, while the International Monetary Fund (IMF) adopts a more cautious stance and estimates that it will remain at 2.1%.
On the occasion of the presentation a few months ago of the “Annual Progress Report”, which each Member State must submit to Brussels before April 30 within the framework of the new fiscal rules system, the Government announced its decision to maintain, for now, its growth forecast at 2.2% for the year 2026, the “prudent range” of projections disseminated by the various institutions.
On the fiscal front, the deficit projection for the close of 2026 has been revised downwards, from the 2.1% proposed in November to the current 1.6% —excluding specific one-off expenses—.
Likewise, the Executive expects that by the end of 2026 the public debt ratio will fall below the 100% threshold and stand at 99.3%, bringing forward by one year the objective of reducing debt below that level, initially set for the end of the legislature.