Spain and France manage economic growth and budget tensions

Spain and France are navigating significant economic and budgetary challenges. In Spain, Economy Minister Carlos Cuerpo indicated that the economy is projected to grow by 0.6% in the third quarter. The government maintains its forecast of 2.6% GDP growth for 2026, supported by consumption, investment, and high employment levels. Additionally, the Spanish government is preparing documentation to request a final disbursement of approximately 26 billion euros from Brussels under the Recovery Plan.

In France, the government is facing intense political and market scrutiny regarding the 2027 budgets. Prime Minister Sébastien Lecornu has called for new savings to fund aid for farmers affected by drought, alongside existing commitments to defense, justice, and education. The French economy faces headwinds, with a weak first quarter making the annual 0.7% growth target difficult to reach. Meanwhile, the deficit risks exceeding 5% of GDP, and sovereign debt yields remain above 4%. Opposition leaders, including Jean-Luc Mélenchon, have threatened to censure the budget, adding political uncertainty to the fiscal adjustments.