Germany cuts spending as Spain hopes to avoid austerity

Germany starts cutting, but Spain still thinks it won't happen here

Germany has already begun to cut back. With the Next Generation funds set to run out in 2027, Spain continues to look the other way. But reality is more complex: not all cuts are equal, and Spain's position in the EU is not as weak as portrayed.

The end of Next Generation funds in 2027

2027 is the deadline for executing European recovery funds. Germany, which has already started its budget adjustment, has raised the need to contain spending. In Spain, the debate centers on whether Brussels will demand the same. The answer is not clear-cut: while some argue that fiscal discipline will be imposed by the EU, others recall that Spain is one of the four major net contributors to the community budget and has room to negotiate.

Germany: Cuts or rearmament?

There is no consensus on what is happening in Germany. One school of thought suggests Merz's government is cutting social spending to finance rearmament, driving up debt. Another interpretation argues there are no real cuts, but a shift in priorities toward military spending. What is evident is that the German economy faces rising unemployment and tax pressure unseen in decades.

Spain: Net contributor or recipient?

The discussion about Spain's net position in the EU is recurring. Eurostat data shows that, in the ordinary budget, Spain contributes more than it receives. But if extraordinary funds like Next Generation are included, the balance flips. This nuance is key to understanding why some argue Spain cannot refuse to adjust, while others defend its veto power.

Pensions: The elephant in the room

Pensions are the great taboo. Any attempt to touch them carries an immediate electoral cost, as seen with VOX's decline among voters over 60. The solution being considered is raising contribution bases and the MEI (revaluation index), but this does not solve the underlying problem: a system promising more than it can pay. Immigration is presented as a patch, but its effect is limited.

What awaits us?

If the European economy cools down, Spain will have to adjust. But recent history suggests the adjustment will come late and poorly, with the political cost already paid. The question is not whether there will be cuts, but when and who will bear them.