The rating agency believes that the elections on November 29 could not resolve fiscal consolidation and warns that political stagnation has already undermined decisive measures in this area.
The rating agency Fitch Ratings has warned that the call for early general elections on November 29 "highlights the political and fiscal challenges facing Spain." According to information published by Bolsamania, the firm states that the outcome of the elections "may not resolve the uncertainty regarding fiscal consolidation."
Fitch emphasizes that polls indicate the Popular Party would secure the most seats, "but will likely need the support of the far-right and anti-immigration party Vox to govern." It adds that "the political dynamic is complicated by political and regional fragmentation."
"Political stagnation has undermined more decisive fiscal consolidation and Spain's public debt/GDP ratio has remained higher than that of other countries"
In its analysis, the agency explains that the electoral outcome will determine whether a new government can secure the parliamentary majority needed to approve the General State Budgets (PGE) and develop a new fiscal consolidation strategy.
It recalls that the minority government of Pedro Sánchez has repeatedly failed to secure budget approval and has extended the 2023 budget for the third consecutive year, thus freezing the budget limit at the levels of that year and increasingly relying on royal decrees to implement policies that require retroactive parliamentary approval.
Fitch points out that while strong tax revenue has helped reduce the deficit to 2.4% of GDP in 2025, it expects it to rise to 2.8% in 2028 due to the normalisation of growth and increased spending pressures.
On the other hand, the agency notes that potential changes in a future government's stance on migration "could affect economic growth."
You may also like
