Balancing Deficit Reduction, Economic Growth and Social Protections: Spain’s Financial Landscape in 2023

Spain meets deficit goal and finishes 2023 with 3.64% GDP.

In 2023, Spain closed its financial year with a public deficit of 3.64% of GDP including financial aid, slightly lower than the provisional 3.66% reported by Minister of Finance Mara Jess Montero last week. The Ministry stated that the data changed minimally after receiving the definitive national accounting data, with the deficit standing at 3.65% excluding financial aid.

Despite the reduction in the public deficit, Spain maintained and even expanded its welfare state and social protections to combat the effects of war in Ukraine. Since the start of the pandemic in 2020, Spain has reduced its deficit by over 60 billion euros while expanding public services. The Social Security system closed 2023 with a deficit of 8,627 million euros, equivalent to 0.59% of GDP, despite record contributions and increased employment.

The closing data for 2023 show a negative balance of 8,211 million euros, equivalent to 0.56% of GDP, for the Social Security Funds, which include the Salary Guarantee Fund (Fogasa) and the Spanish Public Employment Service (SEPE). Social Security received 43,908 million euros in transfers last year, showing a 2.8% increase. Overall, the Spanish financial landscape in 2023 displayed a mix of deficit reduction, economic growth, and reinforcement of social protections.

In addition to reducing its budget deficit and expanding public services since the pandemic began in

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