Catalonia's Credit Outlook Upgraded to Positive

Credit Rating Upgrade Confirmed

International credit rating agency Morningstar DBRS has upgraded the outlook for the Generalitat de Catalunya from 'stable' to 'positive', while maintaining its long-term issuer rating at BBB (high) and short-term rating at R-2 (high).

The decision, reported in an agency document published on 16 October 2026, reflects Catalonia's improved fiscal trajectory, driven by robust operating revenue growth and prudent spending management.

Fiscal and Economic Strength

According to the DBRS report, Catalonia’s operating revenues have risen by 37.2% over the past five years. This, combined with spending containment, enabled the region to achieve an operating surplus of 1.6% of operating revenues in 2025, up from 1.0% in 2024. This marks a reversal of more than a decade of consecutive operating deficits.

Despite a slight widening of the general financing deficit to 2.7% of operating revenues in 2025, largely due to the end of capital inflows from the European Recovery and Resilience Mechanism, DBRS expects the deficit to remain below 5.0% over the next three years.

The region's credit quality is on an upward trajectory thanks to its fiscal performance and resilient economic growth.

2026 Budget and Fiscal Goals

The approval of Catalonia’s 2026 budget, the first fully validated after three years of budget extensions based on the 2023 accounts, presents the main short-term challenge for fiscal consolidation. The new budget increases spending by €9 billion (22%), with significant allocations to healthcare (€2.4 billion), education (€1.6 billion), dependency care (nearly €1 billion), and a €4 billion boost to public investment.

Despite this expansion, DBRS affirms that prior fiscal improvements provide sufficient room for manoeuvre. The agency supports the Catalan government’s target to limit the deficit to 0.1% of GDP annually between 2026 and 2028.

Debt and Political Factors

Catalonia’s debt-to-operating revenue ratio fell from 205% in 2024 to 200% in 2025, though adjusted debt rose slightly to €95.7 billion by June 2026 due to ongoing financing deficits.

Financing needs for 2026 stand at approximately €8.5 billion, notably lower than the 2019–2022 average of €10.9 billion. Around €7.9 billion of this will be refinanced through state mechanisms, reducing refinancing risk.

However, DBRS notes that the announcement of early general elections in Spain on 29 November 2026 has reduced the likelihood of near-term debt relief, as the proposed central government mechanism requires approval by a now-dissolved Congress of Deputies.

Economic Outlook

The Catalan economy grew by 2.5% in 2025 and is projected to maintain that pace in 2026. Private consumption, tourism, and a strong labour market are key drivers. In the second quarter of 2026, employment reached a record high of nearly 4 million workers, and the unemployment rate fell to 7.9%, two percentage points below the national average of 9.9%.

Primary sources: Generalitat de Catalunya, Generalitat de Catalunya - Departament d’Economia i Finances. Reported by cronicaglobal.elespanol.com, David Expósito J, moncloa.com, Parlament de Catalunya, dbrs-dr.crcc2f9.eas.morningstar.com, Crónica Global.