Brussels only revises upwards the forecasts for Spain and places it as the locomotive of Europe

BrusselsWhile the eurozone continues to register anemic economic growth, Spain remains the major economy that is growing the most. Brussels has improved the State's economic forecasts and estimates that this year it will increase its gross domestic product (GDP) by one tenth more than previously predicted, by 2.4%. This percentage significantly exceeds the 0.9% of the single currency countries and the 1.1% of the European Union as a whole. The difference is even more substantial when compared to Germany's rate, which will remain at 0.6%, or France and Italy, which will stand at 0.8% and 0.5%, respectively.

The report of the spring economic forecasts presented this Thursday by the European Commission indicates that Spain maintains these good figures due to "internal demand" and an "increase in consumption and investment," which benefits from "job growth in a context of sustained immigration and record low household debt."

In fact, Brussels indicates that unemployment in Spain will fall below 10% — a rate not seen since 2008 — and will stand at 9.9% this year and 9.6% in 2027. With these figures, Spain would cease to be the member state with the highest unemployment rate, and Finland would overtake it, reaching 10.1% this year and falling only to 9.9% next year. However, the European executive warns that, although "this downward trend will continue," the pace of reduction in unemployment and job creation in Spain will be "lower" than in recent years due to the projection of a "gradual slowdown" in economic growth.

In this regard, the European Commission is lowering its economic growth estimates for Spain in 2027 by one tenth, placing it at 1.9%. Nevertheless, the State will remain well above the average of the eurozone countries, which will rise to 1.2%, and those of the European Union as a whole, which will reach 1.4%. The major economies of the European bloc will continue to register low growth figures: Germany will be at 0.9%, France will rise to 1.1%, and Italy to 0.6%.

Brussels also points out that Spain will again comply with the European Union's deficit rules and, as last year, in 2026 it will again register a 2.4% deficit, 0.6% tenths less than the maximum allowed by community regulation. And, in 2027, the percentage will drop even further, to reach 2%. The European Commission explains that these percentages are due to the growth of the State's nominal GDP and, above all, to the fact that "direct tax revenues remain solid", as well as the entry into force of the global minimum tax on large multinational companies.

Once again, Spain's deficit situation continues to be better than that of France, Italy or, even, Germany, which is historically one of the great defenders of austerity. Although the EU ceiling is 3%, the French deficit will climb this year to 5.1% and 3.7%. As for Italy, for the moment it would comply with the community rule and will remain at 2.9%. The eurozone's average deficit this year will be 3.3%.

The effects of the war in the Middle East

Spain is also one of the member states that will least notice and be affected by the war initiated by Donald Trump in the Middle East. Brussels estimates that this year's price increase rate in the State will be one point higher than previously forecast before the energy crisis and places it at 3%, the same as the euro area average. However, the European Commissioner for Economy, Valdis Dombrovskis, explained that "not all regions or countries in the EU" suffer the consequences of the conflict in the Middle East in the same way and stated that the states "less dependent on fossil fuel imports" and with more renewables, like Spain, are emerging less harmed. Regarding 2027, the European Commission projects an inflation rate in the State of 2.5%.

However, the report from the community executive's technicians warns that one of the "main risks" facing the euro area and especially the State is a "potential weakening of tourist activity", particularly of "the arrival of tourists coming from long distances". "This may be due to rising travel costs and other mobility-related disruptions," the report warns. In the same vein, Brussels warns that international uncertainty caused by the Middle East war may lead to "a period of more cautious behavior from the private sector", which could lead to a reduction in investment and consumption.

Nevertheless, Moncloa has congratulated itself in a statement on Brussels' economic projections and highlights that, in a context "marked by the war in Iran and the volatility of energy markets", the European Commission "confirms the uniqueness of the Spanish trajectory". "It is the only major economy in the euro area that combines growth well above average, intense job creation, reduction of unemployment, and fiscal consolidation," remarks the Spanish government.