Brussels improves Spain's economic forecasts while lowering those of the eurozone due to Trump.

BrusselsBrussels expects the gap in economic growth recorded in Spain compared to the rest of the Eurozone and the European Union to widen further. than I had previously predictedThe European Commission estimates that the Spanish economy will grow by 2.6% this year—three-tenths of a percentage point more than the latest economic forecasts indicated—and maintains Spain's position as the largest economy in the European bloc with the greatest growth; however, it lowers the growth rates of the eurozone and the European bloc by four-tenths of a percentage point, placing them at 0.9% and 1.1%, respectively. Thus, although it suggests that Spain will emerge unscathed from the first direct blow of the tariff war initiated by Donald Trump, it has worsened the EU's forecasts by making calculations as if the current 10% additional customs duties in the United States were to be maintained permanently.

As for 2026, the EU executive also increases the country's economic growth, which is expected to slow compared to the previous year and fall to 2%. However, although it is expected to be more in line with the eurozone average (1.4%) and the EU average (1.5%), it is still expected to remain 0.6 and 0.5 percentage points higher, according to the European Commission's spring economic forecast report published this Monday.

The country is also one of the member states with the highest growth in its gross domestic product (GDP) and the leader among the major economies. It far exceeds the continent's industrial engine, Germany, which is emerging from recession—last year it declined by -0.2%—and is expected to remain stable. It would not be until 2026 that the German economy would grow again, reaching 1.1%. As for France, GDP will increase by 0.6% this year and by 1.3% next year. And, as for Italy, GDP is expected to grow again by 0.7%, the same as in 2024, and by 0.9% in 2025.

According to the European Commission's own report, the reasons for the country's notable economic expansion are "the strong growth in domestic consumption and the positive contribution of clean external demand." That is, the increase in exports. In this regard, the European Commission points out that the Spanish economy's "direct exposure" to the tariffs imposed by the United States is "limited," although it counters that "political uncertainty surrounding international trade and customs duties will weigh on the growth of private investment."

Regarding inflation, Brussels predicts that it will continue to decline until it reaches the 2% target set by the European Central Bank (ECB). Specifically, it will increase inflation by one-tenth this year, to 2.3%, and reduce it by one-tenth for 2026, when it would remain at 1.9%. In this case, the countries of the single currency will register a lower price increase than the Spanish government, with this year's inflation rate expected to remain at 2.1% and next year at 1.7%. The inflation rate in the EU will be slightly higher: 2.3% in 2025 and 1.9% in 2026.

On the other hand, Brussels highlights the "robust progress" of the Spanish labor market and is particularly optimistic in this area. This year, it predicts that employment in the State will increase by 2.1% and the unemployment rate will fall to 10.4%, while in 2024 it will remain one percentage point higher, at 11.4%. Even the European Commission estimates that the percentage of working-age people who are unemployed will achieve Spain's target of falling below 10%, placing the percentage at 9.9% in 2026.

As the report from the European Commission points out, this downward trend in unemployment in the State is due to "the additional creation of jobs" and, at the same time, to the moderation of the influx of immigrants and the "total growth of the workforce," especially when compared to recent years. In this regard, Brussels indicates that wages will continue to rise in the State and, although it does not venture to predict specific rates, it assures that they will increase at a faster pace than prices, therefore above 2%. However, he expects wage increases to "moderate" again in the medium to long term.

Spain exceeds the deficit limit in 2024

On the contrary, the European Commission states in the report that Spain exceeded the deficit limit imposed by the European Union by two-tenths of a percentage point, recording a deficit of 3.2%. However, EU sources suggest that this is due to the measures implemented by the administrations due to the DANA (National Deficit in the Valencian Community), which would have increased the rate by three to four-tenths of a percentage point. However, Brussels applauds the fact that the State is reducing the deficit year after year and asserts that in 2024 it managed to lower it compared to the previous year thanks to "strong economic growth, favorable labor market development, and the lower cost of measures to reduce energy prices."

As for 2025, the EU executive estimates that Spain will manage to reduce the deficit to 2.8% and has already included €6 billion in public spending on defense, which comes from the €10 billion in Pedro Sánchez's plan for those that are not €4 billion. According to EU sources, this disbursement will have a 0.35 percentage point impact on this year's deficit. In any case, the EU executive almost assumes that, as it remains below the 3% deficit threshold, it will not initiate disciplinary proceedings against Spain, a decision expected to be confirmed on June 4.