Brussels improves the growth forecast for Spain by three tenths in 2025 and 2026 and doubles the EU average

Brussels maintains a good diagnosis of the Spanish economy and predicts a growth of 2.9% in 2025 and 2.3% in 2026both three tenths above what was calculated last May. Furthermore, Spain’s projection doubles that of the EU average, whose growth is expected to be 1.4% in 2025 and 1.5% in 2026, having overcome the effect of the possible trade crisis with the United States.

On the other hand, and according to the analysis of the European Commission, which this Monday published the autumn calculations, the public deficit in Spain will continue to decrease, going from 2.5% of GDP in 2025 to 2.1% in 2027thanks to the package of fiscal measures adopted last year, the gradual elimination of energy measures and the favorable evolution of the economy. The debt/GDP ratio will continue to decrease and will be below 100% next year, explains the Community Executive.

Regarding employment, the European Commission is much more cautious and expects the unemployment rate to maintain its downward trend, reaching 10.4% in 2025 and falling below 10% in 2026 and 2027. These levels have not been seen for over ten years, but remain among the highest in the EU; That is to say, the improvement in the data is consolidated, but not enough to leave the Union’s lead in unemployment levels.

Domestic demand “will be the main driver of growth between 2025 and 2027, driven mainly by private consumption and good investment results.” On the contrary, Brussels hopes that net exports will contribute slightly negatively to GDP growth in 2025 and 2026due to a less buoyant evolution of exports and the sustained growth of imports, before becoming slightly positive in 2027. The main risks facing the economy are related to the possible indirect effects derived from weaker than expected economic activity on the part of Spain’s main trading partners.

This could negatively affect the evolution of tourist activity and cause a prolonged period of cautious behavior by the private sector, delaying business investment or maintaining the household savings rate well above its long-term historical average. Domestically, a sharper-than-expected slowdown in migration flows could reduce the dynamism of the labor market, leading to less favorable prospects for private consumption and investment, the report concludes.

Inflation, for its part, also leaves good figures for Spain and the Commission expects it to continue to slow down, to reach 2.6% in 2025 and 2% in 2026, driven by moderation in food prices and, to a lesser extent, services, which are expected to soften more gradually in line with lower real wage growth. However, nominal wage growth is expected to remain above the inflation rate in 2025, with real income gains moderating over the next two years. In 2027, if nothing changes, it will stabilize at that 2%.

Brussels continues in the line of other international organizations in the case of Spain. For example, The IMF projects growth of 2.5% in 2025 and 1.8% in 2026; The OECD estimates 2.4% for this year and around 1.9% for next year; Meanwhile, the Spanish Government places its own forecasts at 2.7% in 2025 and 2.2% in 2026, although in the next review it will be more similar, if the forecast is met, to what was set this Monday by the Community Executive.

A little more optimism than a few months ago

The general diagnosis is more promising than a few months ago, when the shadow of a trade war loomed. Economic activity is expected to continue expanding at a moderate pace over the forecast horizon, despite a difficult external environment. This year’s autumn forecasts point to GDP growth of 1.4% in the EU in 2025 and 2026, rising to 1.5% in 2027. The euro area is expected to follow this trend, with real GDP growth of 1.3% in 2025, 1.2% in 2026 and 1.4% in 2027. Inflation in the euro area is expected to continue its decline, reaching 2.1% this year, and remaining around 2% over the forecast period. In the EU, inflation will remain slightly higher, falling to 2.2% in 2027.

Inflation in the euro area has been revised slightly upwards compared to the spring forecast. It is now expected to fall from 2.4% in 2025 to reach the ECB’s target of 2% in 2027. Trends vary across components, with declines in services and food inflation offset by rising energy inflation.

These nuances are not so associated with employment, where the vision is more optimistic: Brussels states that the gradual slowdown in employment growth that began in 2022 continued in the first half of 2025. Even so, The EU economy generated 380,000 jobs during that period. Employment is expected to continue growing moderately – by 0.5% in 2025 and 2026 – before slowing to 0.4% in 2027. The unemployment rate is expected to continue falling, from 5.9% this year and 2026 to 5.8% in 2027. EU wage growth will slow but remain above inflation, modestly improving power household purchasing power.

The Commission, in fact, has welcomed the fact that the European economy is resilient in such a complex environment. “Even in an adverse context, the EU economy has continued to grow. Now, given the difficult external context, the EU must take decisive measures to boost internal growth. This means accelerating our work on the competitiveness agenda, among other things simplifying regulations, completing the single market and boosting innovation,” commented the European Commissioner for the Economy, Vladis Dombrovskis, after the publication of the data.