Brussels improves Spain's forecasts and maintains it as the fastest-growing major European economy.

BrusselsSpain continues to lead the economic growth of the European UnionBrussels has revised its GDP growth forecast for 2025 upwards, increasing it by three-tenths of a percentage point to 2.9%, the same rate projected by the Spanish government. This makes Spain's economy the fastest growing among the major economies of the European bloc, remaining well above the eurozone average, which also improved by four-tenths of a percentage point to 1.3%, and the overall European Union average, which rose by three-tenths of a percentage point to 1.4%. According to the economic forecasts presented by the European Commission this Monday, Spain's exceptional performance within the European context is primarily due to the growth in domestic consumption, which is being boosted by population growth and the sustained integration of immigrants into the labor market.

Despite the positive momentum of the Spanish economy, the economic forecasts presented by the European Commission this Monday indicate that it will register more moderate growth next year and in 2027. The increase in Spanish GDP will remain at 2.3% and 2%, respectively. In any case, these figures will still be considerably higher than the average for the countries of the eurozone (1.2% in 2026 and 1.4% in 2027) and for the entire European bloc, which remains at 1.4% next year and improves by one-tenth of a percentage point in 2027. Brussels also links this slowdown in the Spanish economy to a reduction in the number of newcomers entering the Spanish labor market.

The percentage of economic growth in the other major EU member states is substantially lower than that of Spain. Germany continues to register anemic activity, although it is moving out of negative territory. In 2023 and 2024, it contracted by 0.9% and 0.5%, respectively, but this year, 2025, it will grow by 0.2%, two-tenths of a percentage point more than initially forecast by the European Commission. In 2026 and 2027, it will grow by 1.2%. Regarding France, Brussels has revised its economic growth forecast upwards by one-tenth of a percentage point, to 0.7% in 2026. Next year and 2027, it will reach 0.9% and 1.1%, respectively. The European Commission now indicates that Italy's GDP will increase by three-tenths of a percentage point less than initially projected in 2025, to 0.4%. The percentage will improve slightly next year and in 2027, reaching 0.8%. According to EU sources, this economic weakening in the main European countries could ultimately affect the Spanish economy, especially through tourism.

Germany and France fail in deficit

Spain is also registering positive macroeconomic data regarding its deficit. It will keep it below the maximum stipulated by the European Union, 3%, reaching 2.5% in 2025, seven-tenths of a percentage point lower than the previous year. Furthermore, Brussels indicates that Spain will bring its debt below 100%, largely thanks to the growth of the Spanish economy and its deficit reduction.

Spain's deficit figures also contrast with those of Germany and France. Although Germany has always been very strict in complying with fiscal rules, this year it will exceed them by one-tenth of a percentage point, reaching 3.1%. However, next year the rate increases substantially, to 4%. In 2027, it is expected to improve the situation somewhat, but only slightly, and will still remain eight-tenths of a percentage point above (at 3.8%) the limit that Berlin demanded in the negotiations on EU fiscal rules.

The situation in France, which is also in the midst of a political crisis, is even worse. According to Brussels' forecasts, the country will accumulate at least six years of a deficit of around 5%. Last year it was 5.8%, and now, although it shows a slight improvement, it is projected to reach 5.5%. In 2026 and 2027, it will be 4.9% and 5.3%, respectively. Despite the significant breaches of these two major European economies, the overall deficit for the eurozone will be 3.2%, and for the European Union, 3.3% this year, slightly above the limit stipulated by EU regulations. However, the strong performance of the Spanish economy also means that price increases are somewhat higher than the eurozone average. Inflation in Spain will be 2.6%, falling to 2% in 2026 and 2027. In the countries of the single currency, however, it will be 2.1% in 2025, 1.9% in 2026, and 2% in 2027, precisely the target set by the European Central Bank.

Immigration, the economic engine

The European Commission largely links Spain's economic growth to its substantial population increase. Brussels points out that strong investment and domestic consumption remain the main drivers of Spain's positive macroeconomic data. This domestic consumption, in turn, is primarily fueled by the sustained influx of newcomers into the labor market, leading Brussels to anticipate a slowdown in the coming years, coinciding with the decreasing number of immigrants entering the country. In this regard, EU sources indicate that immigrants, who currently primarily work in the service and construction sectors, ultimately contribute added value and improve productivity once integrated into the labor market. Along the same lines, the Commission notes that the number of employed individuals is growing at a very healthy pace, mainly due to the influx of newcomers. By 2025, employment was projected to increase by 2.6%, two percentage points above the eurozone average. However, next year and in 2027 this rate will decrease to 1.9% and 1.4%, respectively. It also indicates that unemployment will fall, reaching its lowest percentage in the last ten years: 10.4% this year, 9.8% in 2026, and 9.6% in 2027. Nevertheless, Brussels points out that Spain remains the European Union member state with the highest unemployment rate, at a time when the overall rate for the bloc is at a historic low of 5.9%.