Spanish Prime Minister Mariano Rajoy. | Miguel Rajmil

Spain's budget risks breaking EU fiscal rules in 2016 as it is based on growth forecasts that do not take into account the country’s exposure to emerging markets where growth is slowing, a European Commission report said on Monday. The Commission’s rebuke comes ahead of the Spanish general election on 20 December, when the government is expected to emphasize its handling of the economy as it seeks to win back voters after imposing big spending cuts.

Spain has left behind recession and is now growing at one of the fastest rates in the euro zone, but the Commission said the macroeconomic scenario forming the basis for Spain’s 2016 budget appeared “somewhat optimistic.” “According to the ad-hoc Commission forecast, risks to growth projections appear skewed to the downside and are mainly related to the external sector, should the deceleration in emerging markets intensify,” the European Union’s executive said in a report on Spain published on Monday.

The Commission said its opinion was that Spain’s draft budget plan risked non-compliance with the Stability and Growth Pact, which sets out rules on the size of deficits and debt for EU member countries. The Commission said it believed the Spanish economy would grow by 3.1 per cent in 2015 and by 2.7 per cent next year - less than the 3.3 and 3.0 per cent forecast by the Spanish government but higher than the Commission’s last forecasts in May. Then, Brussels expected Spanish GDP would grow by 2.8 per cent in 2015 and 2.6 per cent next year.