HE spending ceiling is the one-year statutory limit approved by the government this Tuesday. It represents the maximum spending across all public administrations for the year. After approval, it moves to the Fiscal and Financial Policy Council (CPFF) for review by autonomous communities; the Cabinet gave its nod on Tuesday.
This figure embodies the total spending cap within a macroeconomic framework that includes growth projections, inflation, and the budget deficit context. It acts as the starting point for drafting the accounts that shape the national budget. For 2024, the General State Budgets are built around this ceiling. In 2023, the ceiling stood at 198.221 billion euros, up 1.1 percent from 2022. Excluding European Next Generation funds, the figure rose 1.9 percent to 173.065 billion, including a 19.888 billion transfer to Social Security. The 2022 ceiling, as approved by the Council of Ministers, was 196.142 billion. Looking back, 2021 marked a historic jump in the ceiling, reaching 196.097 billion, largely boosted by roughly 26 billion euros from Next Generation European funds, included for the first time.
What does it include?
The spending ceiling covers non-financial expenditures. Debt service, loan payments, and Social Security contributions are excluded. This cap reflects the maximum amount that city councils, autonomous communities, and the central government can allocate. The 2021 approval remains the highest on record, aided by Next Generation European funds. Those resources helped the ceiling rise to 196.097 billion euros, a 53.7 percent increase year over year, with new records broken progressively. When comparing the non-financial expenditure across years, the 2021 homogeneous figure rose by 7.2 percent to 136.779 billion euros. Including extraordinary transfers to autonomous communities and Social Security, the total climbed to 168.661 billion, and with about 26 billion euros from European funds, it surged by 53.7 percent to 196.097 billion euros. The trend continued in 2022: excluding European funds, the ceiling edged up to 169.787 billion. In addition, a transfer of 18.396 billion euros to Social Security was included, and 25.622 billion from European funds plus a 0.733 billion React fund allocation to Health further contributed to the total.
How to edit?
The expenditure ceiling is set by Organic Law 2/2012 of 27 April, establishing budget stability and financial sustainability. It is approved by the Government and Article 30 governs the process, prescribing that the ceiling must be confirmed before 1 August each year. This year, the deadline shifted to December due to general elections on July 23. The same statute assigns the Ministry of Finance the responsibility to inform the Finance and Fiscal Policy Council about the non-financial expenditure limit of the State Budget.
The rule also outlines the budget stability path in Article 15, which includes the debt targets and related measures. Unlike the spending cap, it requires approval by Congress — the Congress of Deputies and the Senate decide on the targets proposed by the Government. Finance Minister Maria Jesus Montero warned that a veto in the upper chamber could curb the spending capacity of the autonomies while potentially increasing the center’s control. The government intends to implement the targets set last April and expects to finalize budget accounts in the first quarter of next year. This perspective was shared in an interview with El Periódico de Catalunya from Prensa Ibérica.
In 2021 and 2022, fiscal rules related to deficits, debt, and public spending were temporarily relaxed with Brussels’ authorization to ease pandemic effects. The same held for 2023. Although there were reference targets, a deficit objective still existed. The plan is to reimpose fiscal rules by 2024, narrowing the gap for autonomous communities. The proposed path outlined that the 0.1% of GDP deficit target would replace the originally planned budget balance. For local entities, instead of a 0.2% GDP surplus, the plan would push budget balance toward the central administration, targeting 2.7% of GDP instead of 3%. A 0.2% GDP security target was also established. These targets align with the references sent to Brussels on 15 October and reflect proposals that could change if the PP vetoes them in the Senate.
How is the spending ceiling calculated?
After estimating potential revenue from taxes, fees, and other resources, the Ministry of Finance assesses how much the administrations can spend, factoring in the current deficit target (3 percent of GDP). The calculation draws on the gross domestic product for all administrations and the spending rule, currently around 2.6 percent. In addition to tax revenues or asset sales, the budgets through 2021 and 2026 include European funds as a recurring component of resources.