Preparing for Demographic Change in Castilla y León, Spain

Executive Summary

Castilla y León is a vast but sparsely populated region in north-central Spain. With a surface of 94 224 km² and 2.4 million inhabitants, it has one of the lowest population densities in Spain and in the EU (25 inhabitants per km² vs. the EU average of 109). The region has faced decades of population decline and accelerated ageing, trends that are projected to persist despite the recent modest population increase between 2023 and 2025. By 2050, Castilla y León is expected to lose 450 000 inhabitants, or close to 20% of current population, with some provinces such as Zamora already recording old-age dependency ratios above 100. Depopulation is widespread, affecting over 86% of municipalities, including in large cities. The trend is mainly driven by natural population decline, low fertility rates (1.1 live births per woman) and sustained youth outmigration. The region has the highest interregional mobility rate of young people in Spain, particularly among graduates who leave in search of better employment opportunities. Persistent outmigration combined with limited skilled job creation places Castilla y León at risk of falling into a ‘talent development trap’.

Despite these demographic pressures, the economy performs relatively well. Castilla y León records unemployment levels below the national average. Agriculture and public services remain important, while manufacturing activities in agri-food and automotive, together with renewable energy remain key economic strengths. The region also benefits from strong cultural and natural assets, which support tourism and its attractiveness. However, GDP per capita remains slightly below the national average and knowledge-intensive industries remain underdeveloped. Skills shortages in health and technical professions reinforce labour market mismatches and limit its diversification.

Governance fragmentation adds complexity, with nine provinces and over 2 200 municipalities, many with low capacity. The region has nonetheless developed strategies such as the Talent Strategy 2031 and actively leverages EU Cohesion Policy funds (ERDF, ESF+, INTERREG) to support infrastructure, digital connectivity, service provision and youth employment. The 2025 mid-term review of EU programmes offers an opportunity to realign funding with emerging demographic needs, particularly housing, skills development and inter-municipal co-operation.

Adapting land use and spatial planning

In Castilla y León, demographic decline and ageing are reshaping settlement patterns, creating new pressures on land use and housing. At the same time, low-density development has continued straining infrastructure, raising service costs, and consuming land inefficiently. Many municipalities lack updated spatial plans, while outdated regulations contribute to sprawl and underuse existing housing. Updating territorial and municipal planning tools to reflect demographic realities is essential to build on recent regeneration initiatives and limit new land consumption. Against this backdrop, municipalities often lack incentives and technical capacity to support compact development. Smart densification can lower per capita service costs, preserve landscapes, and provide more affordable housing, helping to curb youth outmigration. Housing policies do not fully reflect demographic trends, while fragmented local planning capacities reinforce inefficiencies in service delivery. Stronger inter-municipal co-ordination will be needed to ensure more sustainable land use and service provision. To help address these challenges, the report provides detailed recommendations in four broad areas related to land use and spatial planning:

• Updating spatial planning to align with population projections to improve land use efficiency and create more attractive rural areas.

• Supporting smart densification to enhance environmental sustainability and public service efficiency.

• Matching housing supply with demand to alleviate housing pressures and support labour needs in rural areas.

• Promoting inter-municipal spatial planning to optimise service provision and resource allocation.

Adapting multi-level governance frameworks and subnational finances

Castilla y León’s ageing and shrinking population is increasing pressure on public finances, service delivery, and governance. Rising healthcare and long-term care costs combined with limited revenue growth, are compounded with a fragmented fiscal framework across regional, provincial and municipal levels, restricting flexibility. Reliance on intergovernmental transfers adds vulnerability, and declining capital investment risks widening territorial disparities. At the same time, local governments face capacity constraints that hinder project planning and delivery, particularly in small municipalities. While inter-municipal co-operation exists through mancomunidades, it provides a valuable foundation but remains fragmented and service-specific, limiting its ability to ensure efficiency and resilience. A stronger and more co-ordinated policy framework, supported by sustainable financing, long-term investment planning, and institutionalised inter-municipal collaboration, will be essential for the region to adapt to demographic pressures and sustain economic and social well-being. To help address these challenges, the report provides detailed recommendations in four broad areas related to governance frameworks and subnational finances:

• Strengthening fiscal resilience to demographic change.

• Maintaining public investment aligned with demographic change.

• Strengthening the policy framework for demographic change.

• Optimising inter-municipal co-operation.

Adapting service provision

Castilla y León faces persistent service gaps in healthcare, education, and digital connectivity, particularly in rural areas. Small schools and fragmented service networks increase costs, while healthcare and elderly care struggle with labour shortages. Telemedicine and home care have expanded, showing the region’s capacity to innovate in the delivery of services, but require sustained investments, workforce incentives, and structural reforms. Aligning vocational training with ageing-related sectors and digital health could help address labour gaps and foster innovation in the silver economy. Accessibility also remains a challenge. Despite progress with on-demand transport, remote villages lack essential services, and broadband gaps undermine inclusion. Expanding mobile services, connectivity, and digital skills – especially for the elderly – will be essential for inclusive and sustainable service provision. To help address these challenges, the report provides detailed recommendations in five broad areas related to the provision of services:

• Optimising rural service provision and school networks.

• Strengthening healthcare and social services for an ageing population.

• Aligning skills and talent with future labour market needs.

• Enhancing transport and mobile services to improve accessibility.

• Expanding broadband access and strengthening digital skills.