Electoral and political intelligence 2026-04-26 10 minute read

Spain at the Hinge: The Sanchez Sumar Coalition, Catalan Amnesty, and the Fiscal Path to 2026

Pedro Sanchez survived the July 2023 cliff edge with 122 PSOE seats, paid the political price of the June 2024 amnesty law, and rode a 3.2 percent 2024 GDP print past the EU excessive deficit threshold. The remaining bet is whether the Singular Financing pact with Catalonia, the Sumar labour reform pipeline, and a debt stock above 102 percent of GDP can coexist with an EDP-adjacent fiscal trajectory through 2026.

The Spanish 23 July 2023 general election produced a hung parliament: Partido Popular won 137 seats, PSOE 122, Vox 33, Sumar 31, with Junts and ERC holding 14 seats between them. Pedro Sanchez secured investiture on 16 November 2023 with 179 votes by negotiating an amnesty law with Carles Puigdemont's Junts. The Ley de Amnistia, approved 30 May 2024 and published in the BOE on 11 June 2024, covered Catalan independence offences committed between 1 November 2011 and 13 November 2023. The Catalan parliamentary election on 12 May 2024 ended the pro-independence majority: PSC won 42 seats, Junts 35, ERC 20, and Salvador Illa was invested as president of the Generalitat on 8 August 2024. Spain's 2024 GDP grew 3.2 percent according to INE, the fastest among the four largest euro area economies. The general government deficit closed at 3.0 percent of GDP and gross debt at 101.8 percent of GDP, narrowly avoiding the EU Commission's June 2024 excessive deficit procedure that captured France, Italy, Belgium, Hungary, Malta, Poland, and Slovakia. AIReF's October 2024 outlook projects deficit decline to 2.6 percent in 2025 and 2.4 percent in 2026, with debt stabilising near 100 percent. The Singular Financing pact with the Generalitat, signed by PSOE and ERC in July 2024, transfers fiscal autonomy on personal income tax and roughly 21 billion euros of FLA debt assumption. This brief assesses the coalition mechanics, the post-amnesty institutional damage, and the fiscal envelope that finances it.

The 23 July 2023 election and the price of investiture #

The 2023 general election produced the most fragmented Cortes since the transition. PP under Alberto Nunez Feijoo finished first by seats and votes but fell short of a governing majority even with Vox. PSOE held second place with 122 seats, a result widely read as a defeat that turned out to be a survival. Sumar, the new platform led by Vice President Yolanda Diaz that absorbed Unidas Podemos, posted 31 seats, below the 38 that the previous Unidas Podemos plus IU coalition had carried into 2019. The decisive variable was Junts per Catalunya, the party of Carles Puigdemont in self-exile in Waterloo since the failed 2017 independence bid, which held 7 seats and made itself the median voter for any non-PP government.

Sanchez secured investiture on 16 November 2023 with 179 votes against 171, the narrowest margin since 1979. The price was an amnesty for Catalan independence offences. The bill was registered on 13 November 2023, was approved on 30 May 2024 by 177 to 172, and was published in the Boletin Oficial del Estado on 11 June 2024 as Ley Organica 1/2024. It covered acts connected to the independence process between 1 November 2011 and 13 November 2023, including the 2017 referendum and the 2019 Tsunami Democratic protests. The Tribunal Supremo and Tribunal de Cuentas referred constitutional questions and preliminary EU rulings, and the Tribunal Constitucional admitted appeals filed by PP and Vox in autumn 2024. As of April 2026 the Court had not delivered a final ruling on the substantive challenges, leaving the law operative but legally contested.

Party	Seats 2023	Vote share	Change vs 2019
PP	137	33.1	+48
PSOE	122	31.7	+2
Vox	33	12.4	-19
Sumar	31	12.3	-7
ERC	7	1.9	-6
Junts	7	1.6	-1
EH Bildu	6	1.4	+1
PNV	5	1.1	-1

Spanish Congreso de los Diputados, 23 July 2023, seats and percent of valid votes. Source: Ministerio del Interior.

Catalonia after the amnesty: from independence majority to PSC government #

The Catalan election on 12 May 2024 produced the structural shift the amnesty was designed to enable. PSC under Salvador Illa, a former health minister, won 42 seats and 28.0 percent of the vote, the first time the Catalan socialists led both seats and votes since 2003. Junts under Puigdemont returned to second with 35 seats and ERC under Pere Aragones collapsed to 20 seats, well below its 33 in 2021. The combined pro-independence bloc fell from 74 seats in 2021 to 59 in 2024, below the 68 absolute majority threshold for the first time since 2015. The CUP held 4 seats, Comuns Sumar 6, PP 15, Vox 11, Aliança Catalana 2.

The investiture turned on ERC. Aragones lost an internal referendum and stepped down. The party voted on 30 July 2024 to support Illa in exchange for the Singular Financing pact. Illa was invested on 8 August 2024 with 68 votes, ending eleven years of pro-independence administrations under Mas, Puigdemont, Torra, and Aragones. Puigdemont staged a brief return to Barcelona on 8 August 2024 before crossing back to France. The Tribunal Supremo ruled in July 2024 that the amnesty did not cover the 2017 embezzlement charge under the EU Protection of Financial Interests directive, and a March 2026 ruling upheld that exclusion.

The Singular Financing pact and the asymmetric federal question #

The financing pact signed by PSOE and ERC in July 2024 contains three operative mechanisms. First, the Generalitat will collect personal income tax (IRPF) for residents of Catalonia in full from 2026 under a transition path, with the Spanish state retaining a fixed quota for shared services and solidarity. The Catalan tax agency, the Agencia Tributaria de Catalunya, will absorb collection capacity that the AEAT currently operates in Catalonia. Second, the Spanish state will assume roughly 21 billion euros of Generalitat debt accumulated under the Fondo de Liquidez Autonomico (FLA) since 2012. Third, Catalonia commits to a solidarity contribution to the rest of Spain, the size of which remained subject to bilateral negotiation as of April 2026.

The pact has structural implications beyond Catalonia. The Madrid government of Isabel Diaz Ayuso has run an explicit tax competition strategy since 2022, using regional surcharges on inheritance, wealth, and IRPF brackets to attract residency. AIReF estimated in its 2024 fiscal sustainability report that interregional tax differentials on IRPF brackets above 60,000 euros now exceed three percentage points. Andalusia, Valencia, and Galicia, all PP governed, signalled in autumn 2024 that they would seek parallel arrangements. The Conferencia de Presidentes Autonomicos held in Santander on 13 December 2024 ended without consensus on a new financing model to replace the 2009 system. The Sanchez strategy of bilateral pacts with Catalonia and the Basque Country, rather than multilateral reform, is the central institutional fault line of the second half of the legislature.

Macro print: Spain as the upside surprise of the euro area #

Spain's 2024 macro outturn was the most favourable in the major euro area. INE reported real GDP growth of 3.2 percent in 2024, against 0.7 percent for France, 0.7 percent for Italy, and minus 0.2 percent for Germany according to Eurostat flash estimates. The drivers were threefold. Tourism receipts crossed 126 billion euros for the first time in 2024 according to INE Tourism Satellite Accounts, with 94 million international visitors. Net immigration of 470,000 in 2023 and 510,000 in 2024 lifted potential output and labour force participation. And NextGenerationEU disbursements, with Spain having received 47.9 billion euros in grants and 8.0 billion in loans by end-2024 of the 163 billion total envelope, financed Recovery Plan investments in rail, hydrogen, and grid.

The labour market reflects the structural tightening. Affiliations to social security crossed 21.4 million in March 2026 according to the Ministry of Inclusion, Social Security and Migration, the highest series level. The unemployment rate fell to 11.2 percent in Q4 2024 according to the EPA, the lowest since Q3 2008, although still well above the 5.7 percent EU 27 average. The Yolanda Diaz labour reform of 2021, which restricted temporary contracts and raised the cost of dismissal, has been credited by Banco de Espana research with reducing temporary employment from 25 percent to 17 percent of dependent employment by end-2024. The Sumar wing of the coalition pushed in 2024 and 2025 for a 37.5 hour statutory work week and a further minimum wage increase. The minimum wage (SMI) rose to 1,184 euros per month for 2025 according to the Ministry of Labour, a cumulative increase of 61 percent since 2018.

Indicator	2022	2023	2024	AIReF 2025
Real GDP growth, percent	5.8	2.7	3.2	2.4
Headline HICP, percent	8.3	3.4	2.9	2.1
Unemployment rate, percent EPA	12.9	12.1	11.2	10.6
General government deficit, percent GDP	4.7	3.5	3.0	2.6
General government debt, percent GDP	111.9	105.1	101.8	100.4
Current account, percent GDP	0.6	2.5	3.0	2.6

Sources: INE national accounts, Eurostat, Banco de Espana Boletin Estadistico, AIReF Informe sobre la ejecucion presupuestaria October 2024.

Fiscal envelope: the EDP that did not happen and the path through 2026 #

The European Commission's June 2024 fiscal package opened excessive deficit procedures against France, Italy, Belgium, Hungary, Malta, Poland, and Slovakia. Spain narrowly avoided the EDP. The 2023 deficit of 3.5 percent breached the 3.0 percent reference value, but the Commission's analysis of the Medium Term Fiscal Structural Plan submitted by Madrid in October 2024 accepted Spain's adjustment path under the new Stability and Growth Pact framework. The 2024 outturn of 3.0 percent of GDP, reported by the Ministerio de Hacienda in March 2025, came in 0.3 percentage points below the AIReF June 2024 projection and avoided the structural escalation that would have triggered an EDP in the 2025 spring package.

The composition is not flattering. Roughly two thirds of the deficit improvement between 2023 and 2024 came from cyclical revenue growth. The structural primary balance improved by 0.4 percentage points, below the 0.6 point effort the Council of the EU requires under the new framework. AIReF's October 2024 informe projects deficit at 2.6 percent in 2025 and 2.4 percent in 2026 on no policy change. The Escriva pension reform of 2023, indexed to headline inflation, is recognised by AIReF as adding 0.7 points to the deficit by 2050 absent further measures, and the Authority's March 2025 opinion calls for structural revenue or expenditure measures of at least 0.5 percent of GDP per year through 2030.

Treasury has benefitted from the bond market. Spain's inaugural sovereign green bond came in September 2021, and by end-2024 cumulative green issuance crossed 30 billion euros according to the Tesoro Publico. The 10 year Bono yield traded at 3.05 percent in April 2026 with a spread to the German Bund of 75 basis points, well inside the 130 basis point average of 2018 to 2019. The ECB Transmission Protection Instrument and Spain's structural growth premium have compressed the risk premium even with debt above 100 percent of GDP.

Implications: housing crackdown, immigration regularisation, and the 2026 risk map #

Three policy fronts crystallise the political economy of the second half of the legislature. First, housing: Barcelona, under mayor Jaume Collboni since June 2023, announced in June 2024 the non renewal of all 10,101 short term tourist apartment licences by 2028. The 2023 Housing Law capped rents in stressed zones, and Catalonia activated the cap across 140 municipalities in 2024. INE data show transaction prices up 8.4 percent year on year in Q4 2024, above the 6.6 percent eurozone average. Second, immigration: the new Reglamento de Extranjeria of November 2024 projects residency for roughly 300,000 irregular migrants per year through 2027, opposed by Vox but underpinning the labour force projection in the AIReF baseline. Third, taxation: the bank levy was confirmed for 2025 in the December 2024 budget, and the energy windfall levy lapsed after Repsol and Endesa lobbied PSOE and PNV.

The risk map for 2026 has three vectors. The first is constitutional: a Tribunal Constitucional ruling that strikes down core provisions of the amnesty would create an immediate confidence question, and Junts has signalled it could withdraw budget support. The second is fiscal: the 2025 General State Budget was rolled over from 2023 because Junts and ERC blocked the 2024 budget, and a similar block in 2026 would force a third consecutive prorogated budget, a regime AIReF flags as eroding fiscal control. The third is electoral: PP holds a stable 4 to 6 point lead in CIS tracking polls through Q1 2026, Vox has consolidated above 14 percent, and Sumar polls under 5 percent. The base case is Sanchez completes the legislature to mid 2027, the Singular Financing pact is implemented in stages, and the deficit lands at 2.4 to 2.6 percent in 2026 with debt near 100 percent of GDP. The downside case, conditional on a Junts withdrawal of confidence, brings forward elections to late 2026 and a fiscal slippage of 0.4 to 0.6 points of GDP from a transitional budget.

Sources #

Cite this brief

@misc{hossen2026spainsumarfiscal2026,
  author = {Hossen, Md Deluair},
  title  = {Spain at the Hinge: The Sanchez Sumar Coalition, Catalan Amnesty, and the Fiscal Path to 2026},
  year   = {2026},
  url    = {https://deluair.com/consultancy/insights/spain-sumar-fiscal-2026},
  note   = {Deluair Consultancy briefs}
}

Hossen, M. D. (2026). Spain at the Hinge: The Sanchez Sumar Coalition, Catalan Amnesty, and the Fiscal Path to 2026. Deluair Consultancy briefs. https://deluair.com/consultancy/insights/spain-sumar-fiscal-2026

Hossen, Md Deluair. "Spain at the Hinge: The Sanchez Sumar Coalition, Catalan Amnesty, and the Fiscal Path to 2026." Deluair Consultancy briefs, 2026-04-26. https://deluair.com/consultancy/insights/spain-sumar-fiscal-2026.

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