SPAIN’S budget deficit was cut to just 2.2% of GDP at the end of 2025- the lowest figure since the financial crisis 18 years ago.
It beat the government’s own target of 2.5% helped by a boost in tax collections by over 10% which reached €325 billion.
Soaring tax revenues were linked by the Ministry of Finance to the good pace of the economy and job creation last year.
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An improving labour market left the unemployment rate below 10% for the first time in over a decade.
Personal income tax was, once again, the great tax collected, with 142,466 million euros, 10.1% more than in the 2024 financial year.
The overall 2.2% deficit compares to a 1.9% surplus recorded at the end of 2007.
The financial crisis then hit hard the next year, as the surplus evaporated to deficit of 4.9% within 12 months.
The deficit bottomed out in 2012, when it registered 11.5%, and again in 2020, due to the effects of the pandemic, when it sank to 9.9%.
Since then, it has improved by 7.7% according to the government.
The Ministry of Finance said in a press release that this was the sixth time that the final figure had been better than the target set and had surpassed forecasts from the International Monetary Fund, the European Commission, and the Bank of Spain.
It stated that the deficit fall was so significant, that it has almost met the 2026 target of 2.1%.
The Ministry commented that there is enough financial slack to fund support in response to the economic effects of the war in the Middle East.
Recently-appointed Finance Minister, Arcadi España, said: “Spain is a reliable country with a credible and responsible budgetary policy.”
“It is not only important to reduce our deficit, but also the way we have achieved it as Spain is improving its fiscal balance without applying social cuts,” he added.
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