Brussels improves Spain’s economic forecasts while lowering those of the eurozone.

As for 2026, the European Commission also increases the Spanish economic growth, which is expected to slow compared to the previous year and fall to 2%. However, despite the fact that it is expected to be more in line with the eurozone average (1.4%) and the EU average (1.5%), it is still expected to remain 0.6 and 0.5 percentage points higher, according to the European Commission’s autumn economic forecast report published this Monday.

The Spanish economy is also one of the member states with the highest growth in its gross domestic product (GDP) and the leader among major economies. It far outpaces the continent’s industrial powerhouse, Germany, which is emerging from recession—it fell by -0.2% last year—and is expected to remain stable. It would not be until 2026 that the German economy will grow again, reaching 1.1%. As for France, its GDP will increase by 0.6% this year and by 1.3% next year. Italy’s GDP is expected to grow again by 0.7%, as in 2024, and by 0.9% in 2025.

According to the European Commission’s own report, the reasons for the country’s notable economic expansion are “the strong growth in domestic consumption and the positive contribution of clean external demand.” That is, the increase in exports. In this regard, the EU executive points out that the Spanish economy’s “direct exposure” to the tariffs imposed by the United States is “limited,” although it counters that the “political uncertainty surrounding international trade and customs duties will weigh on the growth of private investment.”

Regarding inflation, Brussels predicts that it will continue to decline until it reaches the 2% target set by the European Central Bank (ECB). Specifically, it will increase inflation by one-tenth this year, to 2.3%, and reduce it by one-tenth by 2026, when it would remain at 1.9%. In this case, the countries of the single currency will register a lower price increase than the Spanish government, with this year’s inflation rate expected to remain at 2.1% and next year at 1.7%. The inflation rate in the EU will be slightly higher: 2.3% in 2025 and 1.9% in 2026.

On the other hand, Brussels highlights the “robust progress” of the Spanish labor market and is especially optimistic. This year, it predicts that employment in the state will increase by 2.1% and the unemployment rate will fall to 10.4%, while in 2024 it remained one percentage point higher, at 11.4%. The European Commission even estimates that the percentage of working-age unemployed people in Spain would achieve the target of falling below 10% and puts it at 9.9% in 2026.

As the EU executive report points out, this downward trend in state unemployment is due to “additional job creation” and, at the same time, to the moderation of the influx of immigrants and the “total growth of the workforce,” especially when compared to recent years. In this regard, Brussels indicates that salaries will continue to rise in the state and, although it does not venture to predict specific rates, it assures that they will increase at a faster pace than prices. Therefore, above 2%. However, it expects wage increases to “moderate” again in the medium to long term.

Spain exceeds the deficit limit in 2024

On the contrary, the European Commission states in the report that Spain exceeded the deficit limit imposed by the European Union by two-tenths of a percentage point, recording a deficit of 3.2%. However, the EU executive points out that this is due to the measures implemented by the administrations for the Valencian Community’s Dana. However, Brussels applauds the fact that the Spanish government is reducing its deficit year after year and asserts that in 2024 it managed to reduce it compared to the previous year thanks to “strong economic growth, favorable labor market development, and lower costs of measures to reduce energy prices.” As for 2025, the EU executive estimates that Spain will be able to reduce its deficit to 2.8%, although it remains awaiting the military spending that the Spanish government will ultimately undertake in the midst of European rearmament.