AIReF Lowers Forecasts and Warns Fiscal Measures Will Be Needed in 2027 to Comply with EU

AIReF, the Independent Authority for Fiscal Responsibility, has downgraded its growth forecasts for the Spanish economy for 2025 and 2026 due to uncertainty, warning that fiscal measures will be necessary from 2027 to meet European commitments.

The independent body led by Cristina Herrero presented its first report on the monitoring of the Medium-Term Fiscal and Structural Plan this Wednesday, analysing the progress presented by the Government at the end of April and updating its macroeconomic and fiscal forecasts.

According to AIReF's projections, Spain's Gross Domestic Product (GDP) will grow by 2.3% this year and 1.7% in 2026, representing a reduction of two and three tenths compared to the previous forecast by the organisation. In the medium term, the institution projects a gradual slowdown in economic growth, reaching 1.5% by 2029.

This contrasts with the Government's estimates, which point to GDP growth of 2.6% in 2025 and 2.2% in 2026. AIReF President Cristina Herrero explained that the Government is more optimistic about the evolution of domestic demand, which, according to the Government's projections, will offset the deterioration of the external balance, a view not shared by the independent body.

AIReF also noted that the Government's greater optimism extends to 2028, projecting GDP growth rates of 2.1% in 2027 and 2028, compared to the 1.7% growth projected by the independent body.

AIReF believes that the Government's progress report, sent to Brussels at the end of April, complies with the European Commission's guidelines but "lacks ambition" for a true medium-term orientation.

In fact, the independent authority has warned that, under a constant policy scenario, no adjustment measures will be necessary for 2025 and 2026, but they will be needed for 2027 and 2028. Specifically, AIReF estimates an average growth of net primary expenditure from income measures of 4.1% in 2025 and 2028, compared to the 3.4% estimated by the Government, asserting that the margin generated in 2024 allows for no measures to be taken until 2027.