Esquerra Republicana de Catalunya (ERC) has implicitly approved a budget agreement with the Socialist Party of Catalonia (PSC), paving the way for the budget's passage in Catalonia. The party's national council was informed of the deal on 18 May 2026, with a majority refusing to vote on it, according to sources. This support from ERC's highest body between congresses will help the PSC govern for the remainder of the legislature, as these may be the only budgets of the term.
The agreements aim to resolve the issue of IRPF (personal income tax) collection, a condition ERC had set for negotiations. These pacts move away from the initial investiture agreements but depend significantly on the Spanish government's actions. A bilateral commission between the Generalitat and the Spanish state, along with a mixed transfers commission, will meet in Madrid to detail the agreement. They will focus on an alternative to the investment consortium, which was previously rejected, and the orbital railway line, presented by Salvador Illa and Oriol Junqueras.
Detailing IRPF Alternatives
The two governments will specify the main alternatives to direct IRPF management. One option is the creation of an investment consortium, which ERC initially wanted to be a parity body allowing Catalonia to ensure the execution of planned investments. Following its veto in the Spanish parliament, a state-affiliated commercial company is now proposed, with equal participation from the Spanish government and the Generalitat. This company would be responsible for executing projects and works. A key detail will be the extent to which the Catalan side can influence investment planning and act if deadlines or budgeted investment volumes are not met.
Another central element of the budget agreement is the orbital railway line. The project's presentation brought Illa and Junqueras together, signalling the broader understanding. The bilateral commission will formalise this agreement to connect Mataró and Vilanova i la Geltrú by train without passing through Barcelona. However, the project's construction, announced after Rodalia's collapse and a history of underinvestment, will depend on the political will of future Spanish governments, not just the current one. The line will be built in phases until 2021, with the first phase between Granollers and Terrassa being the only one with guaranteed funding through the Rodalia plan. Spanish government commitments will be critical for its viability. The new section of this phase between Santa Perpètua-Barberà and Sabadell is expected to be completed by 2034.
ERC has also demanded that the Generalitat and Barcelona City Council hold a majority in the management of the Consorci de la Zona Franca de Barcelona. The bilateral commission will need to clarify how this majority would operate, as the Consorci is a public law entity attached to the Spanish Ministry of Finance, with three governing bodies: the plenary, the executive committee, and the management. The current delegate for Sánchez is Pere Navarro, former PSC leader. The bilateral meeting will also address issues such as coastal management competencies, according to government sources. Parliamentary groups will meet with the executive to discuss the Madrid meeting's contents.
Funding and Future Plans
The budget agreement is also expected to include a programme contract to stabilise the funding of the Catalan Tax Agency (ATC) in the coming years, given the absence of Catalan management of income tax. Specifically, for this year, the ATC would receive an additional €21 million beyond the resources outlined in the budget project previously withdrawn from parliament, according to La Vanguardia. ERC and the government have also agreed to invest €400 million over four years in the neighbourhood plan, benefiting less populated municipalities with renovation investments, as reported by El Periódico. The Comuns had already agreed with the government to double the plan's investments in a second call for municipalities. However, Jéssica Albiach's party wants to renegotiate the agreement it had already finalised. After meeting this afternoon, the Comuns decided to demand more progress before sealing any pact.
The budget agreement moves away from the investiture deal, which saw ERC's leadership defend investing Illa in exchange for fiscal sovereignty. This is why ERC has sought agreements beyond the budget, requiring collaboration with the government to include advances in self-government, even if not at the level of income tax collection or a truly unique financing model. The current government's reform is also pending, awaiting the new Minister of Finance to promote it now that the Andalusian elections have taken place, a matter that concerned the former minister, María Jesús Montero.
