Friday, 18 July 2025, 10:14
Spain’s economic growth remains robust, although the trade war and geopolitical instability are beginning to impact GDP (gross domestic product) forecasts being announced by major economic advisory bodies. Still, beyond the big numbers, Spain’s weak spot, its Achilles’ heel, continues to be the microeconomy, the economic situation for the nation’s households, especially those on middle and low incomes. In this regard, the latest economic information report from financial think tank Funcas warns that one in three families perceives a worsening of their economic situation since 2019, primarily due to rising prices and taxes, especially among young people, families with children and the middle classes.
The article examines the gap between macroeconomic data and public perception and reveals that, despite GDP growth and job creation, a third of households in Spain feel that their situation has worsened since the pandemic. Rising prices and taxes are at the heart of this discontent. The International Monetary Fund (IMF) itself referred to this problem in one of its latest reports, in which it stated that GDP per capita growth in Spain is below the eurozone average. The organisation calculated this indicator, which measures the population’s quality of life, from 2024 to 2030 and established that Spain’s per capita income will increase by 5.1% over the next five years. That figure is only slightly above that of neighbouring countries such as Belgium, Germany, France and Italy, countries that, in terms of GDP, will only see very modest GDP growth, far from the data forecast for Spain.
Furthermore, the Funcas report also analyses the financial situation of Spanish companies and the think tank experts conclude that, while households show a relative capacity to absorb interest rate hikes, “this resilience will be limited if the investment dynamism of the business community does not recover.”
Companies have seen their profitability fall and their investment is on the decline. In its analysis, Funcas detects a consolidated post-pandemic pattern: more cautious companies with lagging profitability and investment. These experts conclude that what has characterised household behaviour over the last two years has been spending restraint in a context of income growth and healthy accounts, which has boosted savings.
Spain’s General Council of Economists (CGE) – another professional body of economists with 65 associations spread across Spain’s main cities – also published its ‘economic barometer’ this Thursday, warning of increased uncertainty among economists as we head into the second half of the year. Its data reveals that more than half believe the country’s economic situation has worsened compared to the previous six months, with 56% of them anticipating it will worsen in the next six months. Tax pressure and labour costs continue to lead the ranking of “barriers to competitiveness”, according to six out of ten economists.