The Government of Spain improves economic forecasts for 2024, 2025 and 2026

Moncloa Palace, Madrid

Pool Moncloa / Jose Manuel Álvarez

The Minister for Economy, Trade and Enterprise, Carlos Cuerpo, presented the updated macroeconomic scenario and forecasts up to 2026 at the Council of Ministers. "It is a day of good economic news", summarised the economy minister at the press conference following the meeting of the Executive.

Carlos Cuerpo has based the improvement in the forecasts on the information known in recent months, from the good growth data in the second quarter to the positive quarter-on-quarter evolution of social security membership and the industrial production index. These figures have led analysts to revise their forecasts upwards, an update that the Government has now joined.

Balanced and responsible growth

The Executive has also taken into account the revision of the National Accounts data published by the National Statistics Institute (INE), which indicates that "the Spanish economy has grown more in recent years, in a more balanced and responsible manner", according to Cuerpo.

This change implies bringing the recovery to pre-COVID levels forwards: already in 2022, Gross Domestic Product (GDP) was almost one point above the 2019 level. And if we compare this evolution with the international one, the Spanish economy shows greater strength in its exit from the crisis, despite having been the most affected among the large European economies.

Pool Moncloa / Jose Manuel Álvarez

The updated INE profile reflects a greater contribution from investment, which constitutes an "additional element of balance and sustainability", according to the economy minister. Moreover, the higher GDP growth in recent years has been accompanied by 160,000 more jobs than initially estimated, and with a positive contribution from productivity.

The INE revision also improves the public debt to GDP ratio: with the new data, the Spanish economy would have reached the 2024 target in 2023. Carlos Cuerpo underlined "the responsibility" with which the Government has acted in the area of debt and deficit and the effectiveness of the Executive's policies, which are making it possible to overcome the consequences of the pandemic and the war in Ukraine "without scars".

Strength of exports, investment and private consumption

The Executive's new forecasts raise the growth forecast for 2024 by 3 tenths to 2.7%. In 2025 and 2026, the economy will grow 2.4% and 2.2%, respectively, 2 tenths more than the Government's estimates so far. This macroeconomic framework has been backed by the Independent Authority for Fiscal Responsibility, as it serves as a basis for the preparation of the 2025 State Budget and for submitting the structural fiscal plan for 2025 and 2026 to Brussels.

With respect to 2024, the economy minister explained that the main change is the greater contribution to growth by the foreign sector, thanks to exports of tourism and non-tourism services. Cuerpo pointed out that the latter account for 100 billion euros compared to 90 billion euros for exports of tourism services and have a higher added value.

For 2025 and 2026, growth will be mainly driven by private consumption and investment. The minister highlighted the positive impact of the Recovery, Transformation and Resilience Plan and the expectation of investments in construction, hand in hand with the policies for the recovery of the housing supply and, in particular, the affordable rental actions planned for the next two years.

Record employment and purchasing power gains

Pool Moncloa / Jose Manuel Álvarez

Private consumption will increase thanks, on one hand, to the good performance of the labour market: some 500,000 jobs will be created per year, which will allow the number of people employed to reach 22 million in 2025. Moreover, the unemployment rate will be progressively reduced, which is essential for it to converge with the EU average in a sustained manner.

Private consumption will also be boosted by wages rising more than prices. In the opinion of Carlos Cuerpo, this is "an element of translation from the macro to the micro, from these large aggregate figures to the day-to-day, to the everyday life of citizens, who will continue to recover purchasing power".

In short, the economy minister foresees that the Spanish economy will maintain the "good economic pulse" of the previous year in 2024 and that in 2025 it will maintain its leadership among the major European economies, "with a robust, balanced, responsible and, therefore, more sustainable growth model".

Update of the National Integrated Energy and Climate Plan 2023-2030

The Council of Ministers has approved the update of the National Integrated Energy and Climate Plan (PNIEC 2023-2030) approved in 2021, which will be sent to Brussels forthwith.

The Third Vice-President of the Government of Spain and Minister for Ecological Transition and Demographic Challenge, Teresa Ribera, recalled that the plan is a document that offers a strategic orientation and framework that allows us to visualise how the link between climate and industrial policies is a great opportunity to generate "development, employment, innovation and transformation of the energy system". In addition, she stressed that the ecological transition will reduce health problems for people, generate employment and reduce electricity bills, something that positively affects households and industrial consumers.

The new plan sets "more ambitious" objectives than the previous one, which established goals in terms of the penetration of renewable energies, reduction of greenhouse gas emissions, increase in energy efficiency, both industrial and in housing infrastructures, thermal uses and mobility, stressed Ribera. The document has been adapted to the new European regulatory framework and includes resources linked to the Recovery, Transformation and Resilience Plan and the NextGenerationEU funds and responds to the solvency of the Spanish economy.

Pool Moncloa / Jose Manuel Álvarez

The minister argued that the plan that has been in place since 2021 has had a very positive impact on the cost of electricity: "Thanks to the increased presence of renewable energy in our electricity system, Spaniards have paid up to 40% less in electricity prices".

The plan update, according to Ribera, will make it possible to achieve "an ambitious but possible objective: that 81% of the electricity produced in Spain in 2030 will be from renewable sources".

The document proposes a 32% reduction in greenhouse gas emissions in 2030 compared to 1990 emissions. It also increases the share of renewables to 48% and will reduce imports of fossil fuels from abroad, said the minister.

Teresa Ribera said that the new plan "gives more security to the system, more employment, that is capital, much more efficiency in the economic resources as a whole and, therefore, frees up resources to continue reinvesting in innovation and generating quality employment".

National Energy Commission

The Council of Ministers has agreed to submit the draft law restoring the National Energy Commission as an independent regulatory authority in energy matters to Parliament.

The third vice-president stressed that Spain is undertaking the transformation of the energy system, which is why it is necessary to recover the functions that this specialised, energy-focused body once had. In addition to ensuring the proper functioning of markets, the Commission will enhance consumer protection and "intelligently drive forward the opportunities linked to decarbonisation", she said.

"With this dialogue between energy officials and with the guarantee of an optimal routine functioning between the competition authority, the National Markets and Competition Commission, and the new National Energy Commission, we believe that we are taking a major step forwards in facilitating this key regulatory accompaniment", she added.

New regulation of offshore wind and offshore renewable energies

Pool Moncloa / Jose Manuel Álvarez

The Government has regulated the production of electricity from offshore renewable energy sources. The new regulatory framework will allow such facilities to be developed in a participatory manner, so as to minimise their environmental impact and maximise socio-economic benefits, such as employment and industry generation. The regulation affects offshore wind installations and other renewable energies that can be located at sea or harness their energy.

Teresa Ribera stressed that the initiative gives continuity to some chapters of the Strategic Energy and Climate Framework and seeks to "take advantage of the potential of our marine space and the great industrial development that has made us leaders in some of the most important patents in the offshore wind value chain as a whole".

The minister added that 0.46% of marine waters under national sovereignty or jurisdiction could be used to develop wind energy parks.

Challenge to Canary Islands' provisions on unaccompanied foreign minors

The Council of Ministers has agreed to to challenge an agreement of the Government of the Canary Islands and a protocol subsequently approved in relation to unaccompanied foreign minors. The Minister for Territorial Policy and Democratic Memory, Ángel Víctor Torres, has explained that the opinion that the Executive requested from the Council of State on these provisions concludes that there is "sufficient legal basis" to appeal it in the Constitutional Court.

Torres stressed that the opinion is "clear" regarding the infringement of competences in the care of unaccompanied minors: "An autonomous community cannot not comply with its own competencies and attribute others to the State". The opinion also states that the suspension of the reception of unaccompanied foreign minors violates the right to protection and assistance of these vulnerable persons.

Pool Moncloa / Jose Manuel Álvarez

The territorial policy minister indicated that, in any case, the Government will continue working to achieve a legal amendment that will allow minors arriving in "border territories" to be distributed throughout Spanish territory.

In addition, the Council of Ministers has agreed to appeal in the Constitutional Court an article of the Law of the Autonomous Community of La Rioja 13/2023, on tax and administrative measures for 2024, on the grounds that it encroaches on State and even EU competences. This article, as explained by the minister, allows the community to process contracts related to the execution of expenses related to the funds of the Recovery and Resilience Mechanism on an emergency basis.

Postponement of the processing of the deficit package

The Minister for Education, Vocational Training and Sports and Government Spokesperson, Pilar Alegría, has reported on the Council of Ministers' agreement to remove the deficit path adopted by the Government on 10 September from the agenda of the Lower House of Parliament next Thursday, thereby postponing its processing in order to "give a new opportunity for dialogue and negotiation".

According to Alegría, the postponement of the processing of the stability objectives for 2025-2027 will allow more time for an agreement to be reached that benefits all autonomous communities and local authorities. "What is at stake is very important because we are talking about 12 billion euros with a clear objective: to improve the quality of life of our citizens", said the spokesperson.

The stability path presented by the Government, which was backed by the communities at the Fiscal and Financial Policy Council held last July, makes the deficit targets for communities and local authorities more flexible in 2025 and 2026. Specifically, it offers two tenths more fiscal margin each year to the autonomous regions. In the case of local authorities, this means one tenth more in 2025 and two tenths more in 2026, compared to the previous path in force. In total, this means almost 12 billion euros more spending capacity for communities and local authorities.

Support for the livestock sector

Pool Moncloa / Jose Manuel Álvarez

Pilar Alegría has also informed of the distribution of 23 million euros in aid earmarked for the livestock sector. These funds will be used to combat animal diseases and maintain the health status of cattle and beef farms.

This measure, which responds to a complaint from the sector, seeks to compensate for the costs incurred by the Epizootic Haemorrhagic Disease, as well as to finance the national programme for the eradication of bovine tuberculosis and the purchase of vaccines against bluetongue serotype 8. The aid is intended to compensate for animal losses, disinsectisation of holdings and veterinary costs for the control of the disease, including the purchase of vaccines.

Other topical issues: Lebanon

During the answers to questions posed by the media, the Government spokesperson referred to the situation of the Spanish troops stationed in Lebanon. "Taking up the words of the Minister for Defence herself, we also wanted to send this message of calm, especially to so many relatives who have their children and loved ones in the country", said Alegría, who explained that, at the moment, everyone's "morale is very high" and, for security reasons, they are at the base with the rest of the blue helmets on the mission.

Alegría explained that the trip of the President of the Government of Spain, Pedro Sánchez, together with the Minister for Foreign Affairs, European Union and Cooperation, Jose Manuel Albares, to attend the 79th UN General Assembly in New York will also serve for a meeting to be held between Albares and the United Nations Deputy Secretary General, in charge of the peace mission in Lebanon, to analyse the current situation. On this point, Alegría reaffirmed the "resounding" condemnation of the Israeli bombardment of Lebanon and Hezbollah's firing of rockets into Israel.

Non official translation