PSOE-Bildu Agreement Influences Spain's Economic Policies Amid Record Tax Revenues in 2025

Spain's economic landscape in late 2025 is being significantly shaped by the political agreement between the ruling PSOE and Bildu, which is intertwined with transformative fiscal measures and record-breaking tax revenues, according to recent reports. The alliance has implications for future economic strategies, as detailed in a discussion by leading economic analysts including Marta García Aller.

In 2025, Spain's tax authority reported a remarkable 10% increase in tax revenues through November, totaling 301.355 billion euros. This represents a 27.362 billion euro rise over the prior year and is largely driven by income tax (IRPF), which alone rose 10.1% to 133.282 billion euros. Corporate tax (Impuesto de Sociedades) also contributed significantly, generating 35.942 billion euros—an increase of 5.9%. Meanwhile, VAT revenues climbed 9.3% to 93.416 billion euros, buoyed by the normalization of previously reduced rates on food and energy. Special taxes grew by 5%, adding an additional 21.309 billion euros.

These gains stem not only from economic growth but also strategic fiscal policies. The government chose not to adjust tax brackets for inflation-driven wage hikes, leading to increased withholding on minimum wage earnings, which will be refunded during the 2026 income tax campaign. Additionally, recent tax reforms imposing new levies on banks and e-cigarettes have raised revenues by nearly 5.5 billion euros.

Despite increased public spending by 4.2%, Spain is projected to close the year with a fiscal deficit of 31.321 billion euros (1.86% of GDP), consistent with government targets to keep the deficit under 2.5% of GDP. This fiscal discipline underpins the Finance Minister María Jesús Montero's plans to introduce a revamped autonomous community financing model in 2026, promising greater financial support across regions.

Further relevant developments include changes announced by Hacienda regarding digital payment systems like bizum, signaling a shift in tax authority policies. The broader backdrop includes external economic pressures such as China imposing tariffs on dairy products, impacting Spain’s trading sectors.

As these elements converge, the PSOE-Bildu agreement marks a pivotal point influencing Spain’s economic direction, tax policy adjustments, and regional financing, all amidst an evolving domestic and international economic environment.