Pedro Sánchez is determined to present the Budgets in Congress, even if that means running the high risk of a heavy parliamentary defeat. According to government sources, the decision has been made at the highest level and is immutable. Until a few weeks ago, the Executive insisted that it would only present the Budgets if it had support to approve them. In fact, Sánchez decided not to present the 2024 Budgets, which were in full negotiation with the partners, when ERC brought forward the Catalan elections when the Budgets of that community fell through, something that greatly complicated the possibilities of passing the Budgets of the entire country. But now the Government is completely determined, according to these sources, to take the Budgets to Congress with the obvious risk that its parliamentary weakness will be clearly seen. The Executive wants to force all groups to take a stand and assume the political cost of overturning expansionary Budgets that would be beneficial for millions of citizens.
However, Sánchez, who could not present the Budgets but has decided to go ahead, is also absolutely clear that this parliamentary defeat, the most serious that a Government can suffer, will not imply the early elections or the fall of the Executive. If they are overturned, Sánchez, according to these sources, will go ahead with an extended Budget as other governments have done in the past, including the last one of Mariano Rajoy. In La Moncloa they point out that obviously the Government wants to approve the Accounts to be able to fully develop its political project, and it hopes to achieve this despite the obvious political difficulties especially with Junts, but it can go ahead with the extended Budgets because those in force are already its own, the third ones that the coalition Government has approved, and they contain the main lines of the Executive’s economic policy. The Moncloa is thus determined to offer messages of calm and political stability the day before a decisive PSOE Federal Committee because it will be the first after the pact with ERC that opens the door for the Generalitat to collect and manage all the taxes of the Catalans, something that has put several socialist federations on alert.
In 2019, when ERC and PdeCAT -Junts did not yet exist- defeated his budget with a comprehensive amendment, Sánchez decided to call early elections and achieved a good result in April of that year, although they were later repeated because he did not reach an agreement with Podemos and finally in November he obtained fewer seats than in April but was still able to govern by accepting a coalition with Pablo Iglesias’ group. Sánchez, therefore, called early elections the last time his budget was defeated in Congress, and with those of 2024 he decided not to present them directly. However, now, according to the Government sources consulted, the situation is completely different from a political point of view and Sánchez would not have to call early elections if his budget is defeated.
The president, they explain, has shown that he can move forward with his project with specific negotiations for each reform, and above all he has already approved the most difficult ones, those that were also a condition for receiving European funds – labour reform, pension reform – although Brussels is now also demanding a tax reform. Sánchez’s negotiators see it as very difficult to approve the Budgets given the current political situation, with Junts very much at odds with the Government after the setback that it has meant for them to be left out of the Generalitat and see how Salvador Illa became president thanks to a PSC-ERC agreement that includes singular financing very similar to that demanded by Carles Puigdemont’s group.
Furthermore, Junts is very upset because the Supreme Court has so far prevented its leader from benefiting from the amnesty, one of the central elements of the negotiation for Sánchez’s investiture. Even so, the Executive trusts that Junts will gradually reflect and see that it is much more positive for them to be in the majority and negotiate specific issues within the Budgets, as they have done so far with other laws to offer their support. And in any case, if they overturn the Accounts, La Moncloa does not believe that they will vote against all the other laws that go to Congress.
For the moment, as Sánchez announced on Wednesday, the Council of Ministers will approve this Tuesday the same path of stability that Junts, Vox and the PP already rejected in July. It is a challenge for the Government, which does not intend to change that figure that Junts rejected because they demand that the autonomous communities have more deficit margin. In any case, even if they reject it again, the Budgets will not be dead. It would be possible to continue with the path approved last year, and the same Accounts could be made with that previous number. But those that would have less deficit margin are the autonomous communities, which with the previous figure, from 2023, would have to adjust more than with the one proposed by the Executive for 2025.
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The Government would thus have political space, as it is already doing, to criticise not so much Junts but the PP, which governs 13 autonomous regions, to explain that by voting against, its own communities and town councils will be able to spend 10.5 billion euros less on public services than they could have if they supported the path to stability. “Voting against the path to stability as the PP did implies removing two-tenths of a percentage point of fiscal margin from the autonomous communities in 2025 and 2026. That means an adjustment of 3 billion in each of those years. That is, a total cost of 6 billion. For local councils, the new fiscal path means having one-tenth more fiscal margin in 2025 and two-tenths more in 2026. Therefore, voting against means a negative impact for local councils of 1.5 billion in 2025 and 3 billion in 2026. In total, 4.5 billion,” explains the Executive.
In any case, the negotiations would continue until the final vote on the Budgets, that of the amendments to the whole. And then, if Junts votes in favour of knocking down the Accounts with the PP and Vox, it would be final and they would have to be extended again for an indefinite period of time, until the political reality changes or there are elections. In any case, the Government sources insist that there will be no immediate early elections and Sánchez himself clearly stated on Wednesday that “there will be a Government for a while”. In La Moncloa they trust that after the congresses of Junts and ERC, and also of the PSOE, which in this autumn will mark the strategic lines of three large parties of the majority that supports the Executive, things will calm down and with a horizon without elections ahead, it will be possible to try to negotiate reforms and think about other Budgets for 2025 already at the start of the year, as was attempted to do this year until the early Catalan elections led La Moncloa to give up on presenting the Accounts.
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