The EthiFinance Ratings agency maintains the A- rating of the Barcelona City Council taking into account the improvement in the risk profile and social situation of the city, which has lower unemployment rates and GDP per capita levels above the Spanish average .
In 2022, Barcelona's economy maintained and even improved the growth trend that had started in 2021, registering a municipal Gross Domestic Product (GDP) growth rate of 6.6%. However, although the first quarter of 2023 continued in the same growth dynamic with 4.3%, the second quarter experienced a notable decrease, reaching 2.1%.
This downward trend is expected to persist until the end of the year, in view of geopolitical uncertainties, inflation and the tightening of financial conditions, among other actors affecting the city of Barcelona.
Regarding the social bloc, Barcelona is in the high range of EthiFinance's rating due to its GDP per capita levels substantially above the Spanish average. However, the agency warns of a rising unemployment rate, which is expected to reach 8%. Despite this worsening, this figure is still lower than that recorded before the pandemic.
The agency points out structural challenges, such as the duality of the labor market and the high youth unemployment rate.
Regarding public finances, EthiFinance Ratings highlights the solid fiscal and liquidity position of Barcelona City Council, which has allowed it to face the adverse effects of the pandemic and other economic challenges. Thus, the municipality maintains a positive level of gross savings and this trend is expected to continue.
Budget execution shows that revenues are running in line with the previous year, but expenses are increasing, which could result in a smaller fiscal margin than expected at the end of 2023. Public debt at an absolute level has increased, although It remains below the own limit of 60% with respect to current income and the payment terms to suppliers are very low, complying with the legal limit.
At the institutional level, the rating is affected by the climate of political fragmentation that made it difficult to approve the 2023 budget. The May 2023 elections did not resolve this division, posing additional challenges for the minority government of socialist Jaume Collboni and the approval of the budgets for 2024. Ultimately, this could require an extension of the current budgets.
In the context of the Sustainable Development Goals (SDGs) of the 2030 Agenda, Barcelona City Council has led, according to the ratinh agency, "significant efforts to improve the sustainability of the city." In addition, it has promoted social sustainability through the Citizen Agreement for an Inclusive Barcelona.
In April 2021, the Barcelona Green Deal was launched, considered in this report as "an ambitious agenda to make the city more competitive, sustainable and equitable in the next decade."
