Presupuestos, quita de deuda y financiación autonómica caen tras el fin de la legislatura

With the end of the political term, several key measures and reforms for the government are in limbo, as the early election call prevents the implementation of many economic, fiscal, and labor policies. According to sources in the Congress of Deputies, all initiatives that were in the stages of consideration, full debate, or amendments could be resurrected when the new legislature begins on December 23, but would have to restart the entire process.

This applies to the debt reduction for autonomous communities, which negotiations had stalled in recent months due to separatist demands for more subsidized funds for Catalonia. The early election also eliminates the promise of presenting a General State Budget project, marking the first legislature in history where the executive has failed to fulfill its constitutional duty.

The government also loses ground on autonomous financing reform and a labor package that included a new increase in the minimum wage or the recording of work hours. After three years governing with the 2023 General State Budgets, the early election forces the government to start the next fiscal year with the same public accounts, despite promises from Prime Minister Pedro Sánchez, Vice President Carlos Cuerpo, and Finance Minister Arcadi España to present a project before the end of the year.

Since 2024, when the last budgets expire, the government has had to redirect over €330 billion from credit expansions and inter-ministerial transfers in a context of rising defense spending, the Valencia de Valencia crisis, the La Palma volcano eruption, or the recent Middle East conflict. The reform of autonomous financing, approved by the Finance department on September 4, will not even reach the Congress of Deputies, after the government delayed its approval in the Council of Ministers.

The new system was controversial since it benefitted Catalonia more than other regions, angering several autonomous communities that voted against it. The last major economic issue to fall is the condonation of debt for autonomous communities with common regime, which was in parliamentary stage until the election call, having already been debated for several postponements due to separatist demands for more debt forgiveness for Catalonia.