AIReF anticipates that the Generalitat will breach the spending rule in 2026 and 2027

The computable spending of the Generalitat will grow by 5.2% in 2026 and 8.7% in 2027, well above the set limits. The regional deficit would be 2% of GDP in 2026.

The computable spending of the Generalitat will grow by 5.2% in 2026 and 8.7% in 2027, according to the forecast by the Independent Authority for Fiscal Responsibility (AIReF) in its report on the fundamental lines of the 2027 budgets, as published by Valencia Plaza. The agency believes that the Comunitat Valenciana will breach the national spending rule in both years, as the limits are 3.5% and 4.0%.

This deviation would push the regional deficit to 2% of GDP in 2026 and 1.8% in 2027. If extraordinary spending related to the dana is excluded, the figure drops to 1.4% in 2026 and rises to 1.6% in 2027.

The Consell expects to close 2026 with a deficit of 1.3% (0.7% without dana) and reduce it to 0.8% in 2027 (0.3% without dana). It also hopes to comply with the spending rule with a growth of 4% in 2027. AIReF considers that its budgets are based on a more optimistic resource scenario than theirs and on a lower forecast of public jobs.

According to the agency, the accounts do not adequately reflect the revenue effect of the income tax cuts approved with Decree 1/2026 and Law 5/2026, of July 31. AIReF estimates this at 641 million euros, of which 178 will affect the spending rule for 2026, 390 for 2027, and 74 for 2028.

Regional spending, excluding those financed with PRTR funds, will rise by 6% in 2027 to 17.9% of GDP. Debt interest will grow by 19% that year, and the financial burden will reach nearly 1.3% of regional GDP by 2031.

Personnel agreements with unions will add 235 million euros in 2027, aimed at salary improvements in education and justice and a 35-hour work week. The Consell plans to offset this with healthcare savings of 185 million, but AIReF warns that

“the precise content of the actions included and the justification for their valuation is unknown.”

In the medium term, net primary spending will increase by an average of 5.6% between 2025 and 2028, compared to 3.4% in the Medium-Term Fiscal and Structural Plan. Debt will stand at 40.9% of GDP by the end of 2026 and 41.2% in 2027, and will not fall below 40% at least until 2031.

In its previous report, AIReF had urged the Generalitat to ensure compliance with the spending rule in 2026. It now recommends that the Consell avoid new measures that structurally increase primary spending, as the plan for tax cuts and personnel spending, without compensatory savings, exacerbates the risk of non-compliance in 2027.