Spain Prepares for Crucial 2026 Budget Talks Amid Financing Reform Debate

The Spanish Ministry of Finance, under First Vice President María Jesús Montero, has convened the Council of Fiscal and Financial Policy (CPFF) meeting for Monday, November 17, 2025, marking a significant step towards establishing the 2026 General State Budgets. This meeting, crucial for Spain's fiscal planning, will involve regional finance ministers and aims to set the new spending ceiling—the maximum non-financial expenditure allowed for public administrations—as part of a broader effort to ensure budgetary stability (140664).

Key issues on the agenda include agreeing on deficit and debt objectives for autonomous communities, vital for their regional budget preparations. The meeting's importance is underscored by the continued extension of Spain's current public accounts from 2023 through 2025 due to previous failures in Parliament to approve financial stability objectives (140664, 140668). The government faces tight deadlines, with the 2026 budget needing to be presented to the Lower House by October 1, and parliamentary approval processes expected to take around three months.

Although the CPFF meeting will address the financing reform, no finalized autonomous communities' financing model will be proposed yet, as negotiations between the PSOE and Esquerra continue (140668). The reform under discussion seeks to modernize the system, shifting towards granting greater fiscal autonomy to regions by allowing them to manage taxes such as personal income tax (IRPF) with real-time revenue transfers rather than delayed payments. The proposed reform anticipates an additional €20 billion in state contributions while grappling with implementation complexities like the ordinality principle, ensuring regional funding aligns with tax contributions (140667).

The financing debate remains contentious, particularly among regions governed by the Partido Popular (PP), complicating consensus-building. Montero has called on the PP for a unified stance to facilitate reforms to a system that has been outdated since 2009 (140667). This friction is further intensified by the opposition from Junts, which has previously rejected proposed deficit targets for autonomous communities, advocating instead for more flexibility (140668).

Notably, representatives like Elisenda Alamany of ERC have stressed the need for increased resources for regions like Catalonia to combat pressing social issues like child poverty. Estimates suggest the new financing model could provide Catalonia with an extra €4.5 to €5 billion, although the lack of guaranteed ordinality remains a concern (140668). Moreover, regional political events, including the December 21 elections in Extremadura, may impact the timetable for finalizing financing reforms.

Prime Minister Pedro Sánchez has expressed his intention to complete the current legislative term through 2027, even if he must govern "with or without budgets," following the loss of support from parties like Junts (140664). Thus, this CPFF meeting represents a pivotal moment in Spain's fiscal policy, bridging immediate budgetary needs with longer-term structural reforms of fiscal federalism and regional financing.