The Government approves a record spending ceiling of 199.12 billion euros for the 2024 budgets

The Government approved this Tuesday in the Council of Ministers the State spending ceiling and the stability objectives of all the country's public administrations, an essential prior step to carry out the 2024 General State Budgets, the preparation of which officially began at the end of November.

The non-financial spending limit of the State will be 199,120 million euros in 2024. A figure that includes the European recovery funds and that implies an increase of 0.5% compared to the amount set for 2023. This means that the Government will not be able to spend more than those almost 200,000 million euros of reference in 2024, a figure that does not include the payment of interest on the public debt or transfers to the autonomous communities through the regional financing system.

If the recovery funds are discounted—which can only be used for specific projects—the spending ceiling stands at 189,215 million, 16,150 million more than in 2023 (9.3%).. However, a good part of those 16,150 million euros have already been committed. Of them, at least 4,746 million will go to pay the salary increases of state public employees. In addition, it must be taken into account that the Executive has committed to extending the VAT reduction on certain foods until June 2024 or to making all public transport free for young people and the unemployed.

With regard to stability objectives – the legal deficit limits that public administrations can incur – the Treasury has established a maximum of 2.7% of GDP for the State, 0.1% for the communities autonomous, 0% for local corporations and 0.2% for Social Security.

These references, which the minister communicated on Monday to the autonomies in the Fiscal and Financial Policy Council (CPFF), are less demanding for communities and city councils than what was established in the Stability Program sent to Brussels in April. Therefore, these administrations will have a little more spending margin. The autonomous communities of the PP voted en bloc against the fiscal path proposed by the Government in a tense meeting in which they accused the Government of giving preferential treatment to Catalonia in the negotiation on regional financing. In addition, the Treasury informed the communities on Monday that they will have 154.5 billion euros from the financing system in 2024, again, the largest figure in history.

The fourth vice president and Minister of Finance, María Jesús Montero, has declared that this is a “realistic” spending limit and that it will allow “continuing with the policies of modernization of the economy.”. Furthermore, he has indicated that the Government has reserved a margin to maintain or extend some of the anti-crisis measures if necessary, a decision that in any case would be adopted at the end of the month when more price data is available.

“We have not exhausted the entire capacity spending ceiling that we had according to the Budget Plan committed to Brussels. We have been very prudent regarding budgeting to allow us more flexibility to be able to address any priority measure that we have to select,” added the Minister of Finance.

Overcome the Senate veto

After approving the spending ceiling and stability objectives for the entire public administration, the Government must present them to Congress and the Senate, where they must receive the approval of both chambers. It is assumed that the Popular Party will use its absolute majority in the Upper House to veto the two initiatives. What is not clear is whether that veto power will be enough to overthrow the budgets.

One of the possibilities is that the spending ceiling and stability objectives decline and the budget process is interrupted.. If this were to happen, the Government would have to reform the Budget Stability Law so that the Senate's yes is not necessary, as is the case in practice with most bills and bills.

However, María Jesús Montero maintains that in that case the stability objectives that the Government sent to Brussels in April would be applied, an interpretation that is supported by the State Attorney's Office, as the minister noted on Monday.. If the minister finally gets her way, the public accounts could continue in their processing with that deficit path, which, in addition, is stricter for the autonomous communities and city councils than the one approved this Tuesday by the Executive.

This is one of the arguments that Montero uses to try to dissuade the popular party from using their veto power.. Following his reasoning, since the PP controls a good part of the regional and municipal governments after the last elections, vetoing the deficit path would be counterproductive for its own interests since it would imply less margin for spending for the autonomies it manages.. “It would be throwing stones at one's own roof,” said Montero, who repeated a phrase he already said on Monday.

The Minister of Finance has set March next year as the ideal date to have the public accounts ready. Of course, he has clarified that the processing does not depend on the Government and has taken the opportunity to launch a new blow at the PP.. “I have no reason to think that the PP is going to oppose those stability objectives that are good for the autonomous communities and city councils that they govern,” he concluded.