Video transcript
Spain’s economy has performed strongly in recent years, growing faster than many of its peers.
A growing labour force and strong job creation, services exports and investment have all supported this momentum.
But challenges remain.
GDP growth is projected to reach 2.9% in 2025, 2.2% in 2026 and 1.8% in 2027.
Public debt has fallen since 2021 but remains high.
Pension costs and ageing-related expenditure are on the rise.
To sustain growth and achieve fiscal sustainability, Spain can:
- Accelerate fiscal consolidation
- Rebalance tax revenues harmonising VAT rates and lowering labour taxes for low-income households
- Prioritise growth-enhancing expenditure
Limited access to finance continues to constrain investment among small and medium-sized enterprises, while innovation activity remains concentrated among few larger firms.
To foster productivity growth in SMEs, Spain can:
- Expand access to market-based finance
- Ease size-related regulatory thresholds
- Simplify access to public R&D support
- Streamline access to subsidized training
- Strengthen collaboration with research institutions
Expanding labour supply will also be vital.
Encouraging longer working lives, investing in adult learning and improving migrant integration can help offset demographic pressures.
To better harness the labour market potential of older workers and migrants, Spain can:
- Reform unemployment assistance to ensure equal conditions for all ages
- Tailor training to the needs of older workers
- Speed up degree recognition
Spain is among the European countries most exposed to climate change.
Rising temperatures, droughts, floods, and wildfires threaten the country's future growth, its environment, and the health of its population.
To strengthen climate resilience, decarbonisation and energy security, Spain can:
- Invest in protective infrastructure
- Improve water pricing and tradable water rights
- Accelerate investment in the energy grid
- Foster the roll-out of rapid charging infrastructure
To learn more, read the new OECD Economic Survey of Spain 2025 at oe.cd/spain.