MADRID (Reuters) -Spain's government approved on Tuesday a spending ceiling for 2026 that is 8.5% higher than this year's limit, while also targeting lower budget deficits in 2026-27 as its economy grows faster than those of European peers.
The new ceiling, announced by Budget Minister Maria Jesus Montero, envisages public spending of 216.2 billion euros ($250.7 billion) for next year's budget, which the government has yet to draw up and submit to parliament.
The limit includes around 4 billion euros
in European recovery funds.
The government has rolled over its 2023 budget twice without even presenting a bill to parliament, but Montero said it still intended to have a new spending plan for 2026, hoping this would be "perceived by most parties as a necessity that we must implement so that households can benefit".
Meanwhile, Economy Minister Carlos Cuerpo said Spain would target a budget deficit of 2.1% of gross domestic product in 2026, down from 2.5% projected for this year, and 1.8% in 2027. The targets, however, exclude spending for Valencia's recovery from last year's catastrophic floods.
On Tuesday, the government lifted its growth forecast for this year to 2.9% from between 2.6% and 2.7%, with the fourth quarter expected to grow between 0.6% and 0.7%.
Spain's overall growth this year would more than double the average pace in the 27-nation European Union.
Next year, the government expects growth to decelerate to 2.2%, and remain at 2.1% both in 2027 and 2028, Cuerpo said.
Cuerpo said new economic targets would from now on link macro- and microeconomic data to measure how Spain reduces inequality and poverty levels, including the difference in income between the highest-earning 20% of the population and the lowest-earning quintile.
"It's extremely important for us to highlight the impact that this growth has as a necessary condition for reducing inequality and poverty - that is, improving the day-to-day living conditions of citizens," Cuerpo said.
($1 = 0.8624 euros)
(Reporting by David Latona and Jesús Aguado; Editing by Andrei Khalip and Mark Heinrich)
