COMMISSION STAFF WORKING DOCUMENT 2025 Country Report - Spain Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Spain
Date: 2025-06-04
Institutions: European Commission, Reform and Investment Task Force
Subjects: Spain, budget policy, economic policy, economic recovery, economic reform, employment policy, housing policy, management of resources, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 4.6.2025  SWD(2025) 209 final  COMMISSION STAFF WORKING DOCUMENT 2025 Country Report - Spain Accompanying the document Recommendation for a COUNCIL RECOMMENDATION  on the economic, social, employment, structural and budgetary policies of Spain {COM(2025) 209 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

Spain's sustained growth proves 
its resilience in a shifting 
landscape 

In  2024,  economic  activity  maintained 
strong momentum, driven by both private 
and  public  consumption  and  tourism 
activity.  The  positive  developments 
in 
consumer  spending  were  upheld  by  dynamic 
job  creation  and  real 
income  gains  for 
households. In turn, overall investment growth 
remained 
relatively  subdued,  particularly 
housing  investment.  The  positive  contribution 
of  net  exports  to  overall  GDP  expansion  (see 
Graph 1.1)  was driven by tourism activity  and 
growth  in  the  export  of  non-tourism  services, 
together  with  limited  growth  of  imports.  GDP 
growth  is  expected  to  soften  this  year,  but  to 
remain  on  a  robust  growth  path,  reaching 
2.6%  and  2.0% 
in  2025  and  2026 
respectively.  Economic  activity  is  set  to  be 
driven  by  domestic  demand  resulting  from 
households’  real  income  gains,  strong  net 
migration, a supportive monetary and financial 
in  the 
environment,  and  an  acceleration 
implementation of the recovery and resilience 
plan 
(RRP).  The  contribution  of  external 
demand  to  GDP  growth  is  expected  to  be 
moderate, due to the normalisation of tourism 
inflows,  the  weaker  economic  situation  of 
Spain’s main trading partners and the pick-up 
in  total  imports.  Headline  inflation  is  set  to 
slow  down  further  in  2025,  to  2.3%,  down 
from  2.9%  in  2024,  with the downward  trend 
of  underlying 
to 
continue over the coming quarters. 

components  projected 

The  robust  increase  in  employment  over 
recent years was sustained, thanks to the 
continued inflow of foreign-born workers 
and  recent  policy  actions.  The  strong 
migration  flows  that  Spain  has  experienced 

in  the 

included 

recent  years,  such  as 

over  recent  years  (particularly  from  Latin 
America)  have  helped  to  expand  the  labour 
force and underpinned the robust job creation, 
especially  in  certain  services  sectors  (see 
Annex 10). The unemployment rate fell further 
in  2024,  to  11.4%  (see  Social  Scoreboard  in 
Annex  13),  on  the  back  of  the  strong 
employment  growth  and  the  impact  of  the 
labour  market 
measures 
reforms  of 
the 
streamlining  of  the  menu  of  contracts.  The 
unemployment  rate  is  projected  to  drop  to 
in  2026, 
10.4% 
supported  by  additional  job  creation  and  a 
moderation 
force. 
Nonetheless,  it  remains  one  of  the  highest  in 
the  EU,  especially  in  terms  of  long-term 
unemployment  and  among  the  older  and 
young  populations  (see  Box  1).  As  regards 
wage  developments,  dynamic  wage  growth 
coupled with the easing of overall inflation has 
contributed  to  the  increase  in  purchasing 
power, 
pressures, 
particularly in housing, remain a concern. 

in  2025  and  to  9.9% 

cost-of-living 

though 

labour 

total 

the 

in 

Graph 1.1: Real GDP growth, contributions by 
demand component in percentage points 

Source: European Commission’s 2025 Spring forecast 

Downside  risks  to  the  outlook  include 
overall  uncertainty,  and 
lower  than 
expected  growth  in  the  euro  area  and 

2 

-15-10-5051017181920212223242526Net exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
 
   
restraining 

among  Spain’s  main  trading  partners. 
Prolonged  uncertainty  linked  to  domestic  and 
international  events  could  weigh  on  economic 
activity,  particularly  by 
the 
expected  pick-up  in  private  investment  and 
disrupting access to export markets. The direct 
impact on the Spanish economy  of the tariffs 
imposed  by  the  US  government  is  set  to  be 
contained, due to the low exposure of Spanish 
exports  of  goods  to  the  US.  Furthermore,  a 
greater 
the 
than  expected  slowdown 
economic  activity  of  Spain’s  main  trading 
partners,  such  as  Germany  and  France,  also 
due  to  their  relatively  higher  exposure  to  US 
markets than Spain, could create certain spill-
overs that affect activity in Spain. On the other 
hand,  a  faster  reduction  in  the  (elevated) 
savings 
ratio  of  households,  which  are 
currently  above  long-term  historical  averages, 
could  provide  additional  impetus  to  private 
consumption. 

in 

the  positive 

The 2024 general government deficit has 
decreased as a result of the phase out of 
energy  support  measures.  The  strong 
momentum  of  revenues  from  direct  taxation, 
driven  by 
labour  market 
developments and sustained corporate profits, 
has  improved  public  finances.  Revenues  from 
indirect  taxation  also  showed  dynamism  as 
value  added  tax  (VAT)  and  excise  revenues 
benefited  from  the  end  of  rate  reductions  on 
gas and electricity. 

The  measures 
to 
the 
alleviate 
recent  catastrophic 
consequences  of 
floods  had  an  impact  in  2024  and  are 
expected  to  have  a  somewhat  lower 
in  2025.  The  set  of  packages 
impact 
approved  to  support  the  recovery  from  the 
devastation  caused  by  the  floods  in  Valencia 
and  other  regions  is  projected  to  have  a 
budgetary  impact  of  approximately  0.6%  of 
GDP (to be split between 2024 and 2025). This 
counteracts  the  deficit  reduction  resulting 
from  the  fiscal  measures  approved  in  the 
context of the medium-term plan. Overall, the 
deficit is expected to narrow to 2.8% in 2025 
from 3.2% in 2024. 

Graph 1.2: General government budget balance 
and gross debt 

Source: European Commission’s 2025 Spring forecast 

Since  2020,  the  debt-to-GDP  ratio  has 
fallen  by  17.5  p.p.s.  (from  119.3%  in  2020 
to 101.8% in 2024). The government debt-to-
GDP ratio is projected to continue declining in 
2025  to  100.9%,  thanks  to  strong  nominal 
GDP  growth  outpacing  the  cost  of  servicing 
debt  (see  Graph  1.2).  It  should  then  remain 
broadly  stable  at  100.8%,  i.e.  decrease  by 
0.1p.p.s.  in  2026  due  to  the  less  favourable 
interest-growth rate differential. 

cumulative  growth  of  net 
Spain’s 
expenditure(1) 
in  2024-2025  remains 
below  the  recommended  expenditure 
maximum.  In  2024,  net-expenditure  in  Spain 
grew  by  3.5%  (see  Annex  1).  This  increase  is 
mainly  driven  by  social  benefits  other  than  in 
kind. 
grew 
dynamically  but  is  not  included  in  the  net 
expenditure. 
is 
forecast by the Commission to grow by 4.2%, 
which  is  above  the  maximum  growth  rate 
recommended  by  the  Council(2),  driven  by  a 

In  2025,  net  expenditure 

expenditure 

Interest 

also 

(1)  Net expenditure is defined in Article 2(2) of Regulation 
(EU) 2024/1263 as government expenditure net of (i) 
interest expenditure, (ii) discretionary revenue 
measures, (iii) expenditure on programmes of the Union 
fully matched by revenue from Union funds, (iv) 
national expenditure on co-financing of programmes 
funded by the Union, (v) cyclical elements of 
unemployment benefit expenditure, and (vi) one-off 
and other temporary measures 

(2)  Council Recommendation of 21 January 2025 

endorsing the national medium-term fiscal-structural 

3 

0102030405060708090100110120130-12-10-8-6-4-2017181920212223242526% of GDPGross debt (rhs)Budget balance (lhs)forecast% of GDP 
  
 
 
robust growth of gross fixed capital formation, 
including  in  defence.  The  cumulative  growth 
rate  of  net  expenditure  in  2024  and  2025 
taken  together  is  projected  at  7.9%,  which  is 
below  the  maximum  rate.  The  reforms  and 
investments underpinning the extension of the 
fiscal adjustment to 7 years  that were due by 
the  30  April  2025  have  been  implemented 
with  the  exception  of  certain  elements  of 
Spain’s  RRP  measure  C28.R3  and  the  related 
milestone  on  the  entry  into  force  of  tax 
reforms  derived  from 
the  expert  group 
recommendations  or  other  analyses  by  the 
Ministry of Finance.  

Spain faces challenges amid 
strong economic momentum 

The  full  implementation  of  the  medium-
term  plan  and  improved  quality  and 
efficiency  of  public  spending  are  needed 
to  ensure  both  fiscal  consolidation  and 
competitiveness. Spain needs fiscal space to 
finance  policies 
that  boost  productivity, 
address high levels of child poverty, and close 
the  innovation  gap.  Fiscal  sustainability  risks 
are mostly driven by the projected increase in 
ageing-related  costs  (see  Annex  1)  in  the 
context of an ageing workforce (see Annex 10) 
and by the unfavourable initial deficit and debt 
levels.  Together  with  the  commitments  in  the 
medium-term  plan,  the  implementation  of 
reforms  and  investment  under  the  RRP  will 
help 
fiscal  sustainability.  A 
consistent  application  of  the  ‘closure  clause’ 
introduced by the 2023 pension reform should 
fiscal 
help 
sustainability  gaps  relating  to  public  pension 
expenditure. 
the 
Furthermore, 
investments  and  reforms  under  the  RRP  help 
to support the efficiency of the Spanish health 
system,  measures  may  be  required  to  further 
improve its  efficiency  and  fiscal  sustainability 
(see Annex 1). Among others, Airef’s (Autoridad 
Independiente  de  Responsabilidad  Fiscal) 
identified  savings 
spending  reviews  have 

the  emerging 

to  address 

to  support 

while 

potential in the health sector, in relation to the 
more reasonable use and price of medicines. 

is  a 

innovation 

for 
substantial  need 
There 
and 
in 
investments 
digitalisation,  while  maintaining 
the 
focus  on  upskilling  the  labour  force.  An 
uptick  in  R&D  investments  and  adequate 
provision  of  skills  to  the  labour  market  can 
have  a  positive  ripple  effect  in  the  country’s 
economic 
overall 
competitiveness  (see  Annexes  3  and  12). 
Productivity per hour worked is still below the 
EU  average  (see  Annex  4),  while  substantial 
regional disparities remain in higher education, 
lifelong learning, labour market conditions and 
innovation (see Annex 17). 

performance 

and 

in 

labour 

supply 

Supporting  the  housing  supply  is  key  to 
sustainable  growth  and  social  fairness. 
Targeted  increases in  the volumes  of  housing 
development  can  have  fundamental  benefits 
in  Spain,  as  they  would  improve  the  capacity 
crowded 
to  absorb 
metropolitan  areas,  while  promoting  internal 
labour  mobility.  The  growth  of  tourism  has 
contributed  to  an  increase  in  tourist  rental 
properties. This shift has subsequently reduced 
the  availability  of  rental  homes  for  primary 
residences,  coupled  with  the  low  stock  of 
social housing and a relatively slow pick-up in 
new  construction  or  redevelopments  to  meet 
the  growing  demand.  The  scarcity  of  housing 
supply  is  having  an  impact  on  households' 
disposable  income  and  presents  a  challenge 
for  low-income  families  and  young  people. 
Data from the Bank of Spain show that nearly 
40% of Spanish tenants now allocate 40% of 
their income to rent and utilities, compared to 
the  EU  average  of  27%.  Addressing  labour 
shortages 
is 
fundamental, as over 50% of employers report 
significant  difficulties  in  finding  workers  (see 
Annex 10). 

the  construction  sector 

in 

Further  effort  is  required  to  increase  the 
housing supply, as the Spanish economy faces 
a  housing  deficit  of  approximately  600 000 
units, according to estimates from the Bank of 
Spain(3). The reform of the land law is pending 

plan of Spain (OJ C, C/2025/643, 10.2.2025, ELI: 
http://data.europa.eu/eli/C/2025/643/oj). 

(3)  Informe anual, Banco de España, 2023 

4 

 
 
 
Box 1: 

UN Sustainable Development Goals (SDGs) 

Spain  is  making  progress  in  all  SDGs  related  to  competitiveness  and 
productivity (SDGs 4, 8, 9), yet it has not closed the gap with the EU average on 
some  of  them.  Sustainable  economic  growth  and  employment  indicators  (SDG 8)  are 
below the EU average even after quickly catching up over recent years. The employment 
rate  is  below  the  EU  average  despite  increased  labour  market  tightness  and  the 
percentage  of  young  people  not  in  employment,  education  or  training  aged  15-29 
remains  above  the  EU  average  (see  Annex  10).  However,  labour  reforms  implemented 
since  2021  are  improving  employment  indicators,  favouring  the  achievement  of  the 
SDGs.  SDG 9  related  to  innovation,  industry  and  resilient  infrastructure  is  catching  up 
with the EU average thanks to EU funds, but R&D expenditure remains lower than the EU 
average (see Annex 15). 

Out of the 17 indicators, 10 SDGs Spain remains below the EU average in 10 
out  of  the  17  SDGS.  Besides  those  highlighted  above,  these  relate  to  environmental 
stability (SDGs 6, 13, 14, 15), fairness (SDGs 1, 8 and 10) and macroeconomic stability 
(SDG 16). 

stability 

reducing  processing 

and would facilitate new housing development 
times,  promoting 
by 
regulatory 
eliminating 
and 
unnecessary administrative bottlenecks. In this 
context,  the  authorities  have  launched  a  new 
strategic  project  for  economic  recovery  and 
transformation  (PERTE)  with  a  focus  in  the 
and 
industrialisation, 
sustainability of housing construction. 

digitalisation, 

According  to  the  Bank  of  Spain(4),  Spain’s 
social  rental  housing  stock  represents  just 
1.5%  the  total  stock,  compared  to  the  EU 
average  of  9%.  Mobilising  public 
land, 
expanding  the  social  rental  housing  stock  and 
increasing  financing  for  affordable  and  social 
housing  would  boost 
the  availability  of 
housing.  The  factors  constraining  supply  need 
to be reversed in a timely manner, in order to 
enhance  residential  construction  and  expand 
the  rental  market,  with  a  particular  focus  on 
affordable  housing,  especially  for  young 
people and low-income households (see Annex 
11). 

by 

environment 

There is potential to further enhance the 
reducing 
business 
administrative  burden  and  regulatory 
restrictions  on  businesses.  By  aligning 
permitting  with  best  practices  and  reviewing 
and  standardising  administrative  procedures 
its 
across 

regions,  Spain  could 

improve 

(4)  El mercado del alquiler de vivienda residencial en 

España: evolución reciente, determinantes e indicadores 
de esfuerzo, Banco de España, 2024 

5 

boost 

environment, 

business 
private 
investment  and  enhance  its  productivity  (see 
Annexes 4 and 6). Reducing the administrative 
burden  on  firms  and  investors,  favouring  a 
simpler 
for  businesses  and 
reducing  unjustified  delays  in  administrative 
proceedings  by 
fragmented 
tackling 
should  boost  private 
regional 
investment (see Box 2 and Annex 17). 

framework 

system, 

the 

These steps are critical to eliminating barriers 
to  strong  growth,  investment  and  innovation, 
including 
those  posed  by  size-dependent 
regulations (as highlighted in recent OECD and 
IMF  reports).  In  this  context,  the  development 
of  an  initiative  with  the  objective  to  promote 
regulatory  standardisation  (20th  Regime),  a 
commitment in the Spanish medium-term plan 
that the authorities say is already in progress, 
aims  to  reduce  administrative  burdens  on 
businesses  and  promote  a  more  coordinated 
regulatory approach to enhance the efficiency 
of the national single market (see Annex 4). 

the 

institutional  and 
Strengthening 
regulatory  framework 
is  essential  to 
enhancing  the  business  environment.  To 
achieve  this,  Spain  faces  the  challenges  of 
simplifying  the  complexity  and  volume  of 
regulations,  improving  collaboration  between 
levels  of  administration,  and 
different 
addressing  delays  in  the  judicial  system  (see 
Annex 6). 

Keep up the pace in progress on the green 
transition.  While  Spain  is  a  leading  producer 
of  renewable  energy,  more  effort  is  required 

 
 
 
its  autonomy  through  the 
to  strengthen 
availability of critical raw materials for the net 
zero  industry  and  the  transformation  of  the 
automotive  industry  (see  Annexes  7  and  11). 
Continuous  efforts  are  needed  to  drive  the 
decarbonisation  of  the  economy,  support  the 
electrification  of  industry  and  transport,  and 
enhance  the  economy’s  preparedness  for 
including 
climate  change 
through  the  provision  of  green  skills  (see 

(see  Annex  9), 

Annex  12).  Moreover,  Spain’s  manufacturing 
sector  remains  heavily  reliant  on  imported 
critical  raw  materials  for  both  the  green  and 
digital transitions (see Annex 7). 

Box 2: 

Barriers to private and public investment 

Spain  is  one  of  the  largest  receivers  of  funding  under  the  Recovery  and  Resilience 
Facility  (RRF)  and  the  increase  in  public  investment,  concentrated  on  transport 
and  urban  infrastructure,  is  probably  related  to  the  implementation  of 
investments  under  the  Recovery  and  Resilience  Plan  (RRP).  In  addition  to  the 
EUR 163  billion  funding  from  the  RRF  in  2021-2026,  EU  cohesion  policy  funds  are 
providing  EUR 35.6  billion  to  Spain  (amounting  to  EUR 52.1  billion  with  national  co-
financing) for 2021-2027 to boost competitiveness and growth. 

The implementation of Spain’s RRP faces considerable challenges. At present, Spain has 
fulfilled 30% of the milestones and targets in its RRP. 

Bottlenecks  to  EU  fund  implementation  are  related  to  absorption  capacity,  especially 
given  the  concentration  of  investments towards the end  of  the  implementation  period. 
These  challenges  are  exacerbated  by  the  large  volume  of  funds  channelled  through 
financial  instruments.  In  addition,  strengthening  coordination  among different  levels  of 
administration,  along  with  the  streamlining  of  procedures,  would  help  accelerate  the 
absorption of funds and ensure timely support reaches final beneficiaries.  

It remains important to accelerate the implementation of cohesion policy programmes. 
The  mid-term  review  offers  opportunities  to  speed  up  progress  and  better  address  EU 
strategic priorities related to competitiveness, defence, housing, water resilience and the 
energy transition. 

While  Spain has leveraged STEP to reallocate some Cohesion Policy resources towards 
this  priority,  it  can  further  support  the  development  or  manufacturing  of  critical 
technologies  in  the  areas  of  digital  and  deep  tech,  clean  and  resource  efficient 
technologies, and biotechnologies. 

As  regards  private  investment,  various  factors  continue  to  constrain  the  ability  of 
Spanish firms to invest, innovate and improve their productivity (see Section 2): 

•  Capital markets in Spain are not sufficiently developed to meet all  the 

financing needs of innovative firms (see Annex 5). 

•  Business  regulation  and  taxation  has  been  identified  as  a  major 
obstacle to investment by the majority of Spanish SMEs (53%) (see Annex 2). 

6 

 
 
 
 
 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

Boosting productivity and 
competitiveness in Spain through 
innovation 

into 

improved 

Spain  has  a  strong  scientific  foundation, 
but  its  excellence  in  research  has  yet  to 
translate 
innovation 
performance. Spain performs well in terms of 
scientific  excellence  and  has  a  research 
system  that  attracts  both  domestic  and 
foreign  talent.  Nevertheless,  it  continues  to 
perform  below  the  EU  average  in  terms  of 
overall innovation performance (see Annex 3). 

The  RRP  has  provided  a  major  boost  in 
the  field  of  research  and  innovation  and 
provided the largest investment in this area (in 
absolute  terms)  of  all  of  the  recovery  and 
resilience  plans  (with  EUR 17.6  billion  of  the 
RRP being allocated to research and innovation 
measures). An additional amount of 4.5 billion 
is  planned  for  R&I  investments  in  the  context 
of  the  European  Regional  Development  Fund. 
However,  Spain’s  R&D  spending,  especially 
private  R&D  investment,  remains  well  below 
the  EU  average  (0.84%  of  GDP  compared  to 
the EU average of 1.49%) and heterogeneous 
between  regions  (Annex  3,  Annex  17  and 
Graph  2.1).  In  addition,  private  research  and 
innovation 
increasingly 
activities 
specific  group  of 
concentrated  on  a 
recently 
companies.  Although  Spain  has 
introduced  several  public  support  schemes  to 
support  private  R&D  investment,  their  uptake 
is  limited  due  to  their  complexity  and  the 
excessive administrative burden they entail for 
potential 
R&D 
spending  and  innovation  outcomes  remain 
subject to regional disparities that are in large 
fragmented 
to 
part 
governance  and  inefficient  coordination  of 
R&D  policies  and  to  the  different  regional 

beneficiaries.  Moreover, 

attributable 

are 

the 

Spain 

lacking 

innovation  ecosystems,  with  less-developed 
incentives,  experience  and 
regions 
resources. 
to 
underperform  with  regard  to  science-business 
linkages,  despite  recent  initiatives  included 
both in the Spanish RRP and outside of it (see 
Annex 3). 

continues 

also 

Graph 2.1: R&D expenditure as a share of the 
total GDP, per Spanish region, 2022 

Source: Eurostat 

Simplifying the regulatory 
environment and improving 
institutional quality 

The  regulatory  volume  and  complexity 
have increased in recent years. To enhance 
the  competitiveness  of  businesses  in  Spain,  it 
is  crucial  to  tackle  the  escalating  volume  of 
that  hinders 
regulation  and 
companies'  growth  and  operation,  especially 
those that are smaller and newer. The increase 
in the volume of regulation affects the number 
of businesses, productivity and the functioning 
of judicial bodies (see Annex 6). 

complexity 

There  is  scope  for  Spain  to  enhance 
coordination  between  territories  and 
the 
government 

to  address 

levels 

7 

2.231.961.891.811.441.351.171.081.081.071.050.90.870.840.70.670.550.460.350.2100.511.522.5País VascoComunidad de MadridCataluñaComunidad Foral de…EspañaCastilla y LeónComunitat…GaliciaRegión de MurciaAragónAndalucíaCantabriaLa RiojaPrincipado de…ExtremaduraCastilla-La ManchaCanariasIlles BalearsCiudad de MelillaCiudad de CeutaEU average 2.28 
 
  
to 

laws 

reduce 

investment  (60.4%  in  2024  compared  to  the 
EU  average  of  24.5%)(5).  Spain  has  adopted 
several 
financial  and 
administrative  barriers  to  the  development  of 
firms.  The  Law  on  Business  Creation  and 
Growth and the Law on Start-ups (both under 
the RRP) introduced incentives for the creation 
and growth of companies, including innovative 
ones (see Annex 4). 

to 

and 

activity 

business 

regulatory 

Spain’s  ‘20th  regime’  proposal  has  the 
potential 
the  business 
improve 
environment  for  companies.  Spain  has  a 
competition-friendly 
framework 
that  performs  better  than  the  OECD  average 
(see  Annex  4).  In  this  context,  the  authorities 
say  that  a  new  initiative  to  simplify  regional 
requirements  (‘20th  regime’),  a  commitment 
under the Spanish medium-term plan, is in the 
process of being created. This proposal aims to 
reduce 
support 
procedures.  The  ‘20th  regime’  would  mirror 
Letta’s  28th  regime  proposal(6).  It  includes 
standardise 
measures 
administrative  procedures,  fostering  better 
collaboration  among  administrative  bodies  to 
the  benefit  of  companies  operating  nationally 
and across regions, including among others (i) 
a  repository  of  local  regulations;  (ii)  the 
implementation  of  digital  labelling;  (iii)  the 
adoption  of  a  standard  ordinance  for  retail 
commercial  activities;  (iv)  the  reduction  of 
barriers  to  the  deployment  of  electric-vehicle 
(v)  a  tool  to  simplify 
charging  stations; 
interaction  between  companies  and 
the 
administration (see Annex 4). 

revisit 

and 

to 

Leveraging more private 
investment 

economy  has 

shown 
The  Spanish 
dynamism  since  the  aftermath  of  the 
level  of  private 
pandemic,  but  the 
In 
investment  has  remained  subdued. 
contrast  to  the  robust  evolution  in  exports  of 

(5)  Commission calculation based on EIB Investment 

Survey 2024. 

(6)  Much more than a market, Enrico Letta, April 2024. 

to 

to 

reinforce 

However, 

there 
improve 

regulatory and administrative burdens on 
businesses. Spain’s RRP contains reforms and 
investments 
administrative 
collaboration  between  the  different  levels  of 
remains 
government. 
inter-
significant  potential 
administrative  collaboration,  particularly 
in 
regulatory  and  administrative  procedures  that 
have  a  direct  impact  on  business  operations. 
Regulatory  differences  between 
territories 
discourage  companies  from  expanding  across 
regions  simultaneously,  limiting  opportunities 
innovation,  growth,  specialisation  and 
for 
efficiency 
example,  waste 
For 
management  regulations  often  change  from 
one  municipality 
requiring 
companies  to  familiarise  themselves  with 
dozens of pages of regulations in each case. 

to  another, 

gains. 

result 

While Spain’s RRP has introduced reforms 
to  enhance  judicial  efficiency,  it  still 
takes  a  long  time  to  resolve  civil  and 
commercial  cases.  This  can 
in 
numerous  economic  inefficiencies,  including 
less  functional  real  estate  markets,  reduced 
entrepreneurship  and  lower  credit  availability 
(see  Annex  4).  Spain  can  further  improve  the 
efficiency  of  its  justice  system  by  reinforcing 
human  and  material  resources  and  ensuring 
an  equal 
level  of  digitalisation  between 
territories. 

Deepening the single market while 
addressing fragmentation in the 
domestic market 

The 

single  market. 

Spain  can  deepen  its  participation  in  the 
EU’s 
significant 
difference  between  Spain’s  intra-EU  trade  of 
15%  (ratio  of  trade volumes  to GDP)  and  the 
EU  average  of  43%  suggests  that  Spanish 
businesses  have  an  opportunity  to  increase 
their  participation  in  the  EU’s  single  market 
and boost economic growth (see Annex 4). 

A  significant  majority  of  firms  in  Spain 
see  regulation  as  a  major  obstacle  to 
investment.  Spain  is  one  of  the  Member 
States  with  the  highest  share  of  firms  that 
identify  regulation  as  a  major  obstacle  to 

8 

 
 
services  and  both  private  and  public 
consumption  since  2021,  private  investment 
growth has remained sluggish. It stands below 
the  EU  average  for  the  period  2019-2024 
(3.5%  compared  to  the  EU  average  of  4.0%) 
(see  Annex  4)  and  only  surged  above  its  pre-
pandemic  level  in  2024.  This  is  despite  Spain 
having  benefited  from  relatively  lower  energy 
prices compared to most EU Member States in 
recent years, thereby limiting cost and creating 
a certain buffer for investment, particularly in 
energy-intensive sectors. 

opposed  to  listed  shares  or  bonds.  As  bank 
lending  is  rebounding  and  Spanish  firms  are 
able  to  cover  their  investment  needs  through 
internal  funding,  the  overall  financing  gap  is 
limited.  However,  firms  with  limited  capacity 
for  internal  funding,  such  as  innovative  start-
ups and SMEs, are constrained by low market 
liquidity  and  relatively  small  capital  markets 
(see  Annex  5).  To  address  these  constraints, 
policy  action  could  focus  on  incentives  for 
retail  and  institutional  investors  to  participate 
in  capital  markets,  and  on  overall  financial 
literacy. 

the 

resulting 

factors  underlying 

Some 
the  weak 
evolution of private investment appear to 
have  been  cyclical.  Beyond  the  broader 
international 
uncertainty  surrounding 
environment,  the  unfavourable  monetary  and 
financing  conditions 
from  high 
interest rates in very  recent years has limited 
the  appetite  of  non-financial  corporations  for 
capital  investments,  while  encouraging  them 
to  strengthen  their  financial  situation  by 
reducing  their  stock  of  outstanding  liabilities 
and debt. Furthermore, the relative increase in 
labour  costs  experienced  throughout  2024, 
coupled with the simultaneous gradual drop in 
profit margins for non-financial corporations –
despite  a  high  degree  of  heterogeneity 
further 
between 
sectors  –  may  have 
constrained 
for 
business  investment.  This  has  occurred  in  a 
context  of  tighter  liquidity  from  the  bank 
lending channel. 

resources  available 

the 

(21%),  although 

Taxation  has  contributed  to  a  limiting  of 
private  investment.  The  general  corporate 
income  tax  rate  in  Spain  (25%)  is  above  the 
EU-27  average 
it  has 
decreased  from  35%  in  1995.  With  R&D 
expenditure  remaining  well  below  the  EU 
average,  tax 
incentives  are  not  currently 
designed  to  unlock  the  full  potential  of  such 
investments.  (see  Annex  2).  Moreover,  the 
uptake  of  investment  from  large  corporations 
could be  discouraged by  the end of the lower 
statutory  corporate  tax  rate  and  by  the 
resulting  increased  compliance  burdens  they 
could face. 

Access  to  finance  remains  a  challenge, 
especially  for  innovative  SMEs.  Spanish 
firms  rely  heavily  on  bank  financing  as 

9 

 
 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

Supporting strategic autonomy 
and technology for the green 
transition 

It 

a 

for 

has 

solar 

recovery 

involving 

diversified 

Spain 
net-zero 
manufacturing sector, which is supported 
by  strategic  projects 
for  economic 
recovery  and  transformation  (PERTEs). 
Spain  is  a  leading  manufacturer  in  Europe's 
the  wind  power  supply  chain(7). 
is  a 
manufacturer 
photovoltaic 
of 
components  (3%  of  EU  capacity)  and  has  at 
least  27  facilities  producing  heat  pumps. 
Spain’s  regulatory  framework  for  net-zero 
technologies  is  complemented  with  strategic 
projects 
and 
economic 
transformation  (PERTEs).  These  are  public-
private 
public 
collaborations 
administrations,  companies  and 
research 
centres.  There  are  three  PERTEs  focusing  on 
clean  energy  and  technologies:  one  on  the 
electric  vehicle  value  chain,  a  second  one  on 
industrial  decarbonisation,  and  a  third  one  on 
renewable  energy  technologies,  renewable 
hydrogen  and  storage.  Furthermore,  the  draft 
industry  and  strategic  autonomy  law  (under 
the  Spanish  RRP)  seeks  to  accelerate  the 
decarbonisation  and  circularity  of  industry, 
reducing 
increase 
dependencies,  support  the  digital  transition, 
and  guarantee 
strategic 
autonomy.  This  draft  ordinary  law  (approved 
is  currently 
by  the  Council  of  Ministers) 
undergoing  the  parliamentary  process  under 
an  extended  period  for  amendments  (see 
Annex 7). 

country’s 

security 

energy 

the 

by 

is 

is 

of 

10% 

the  sector 

the  second 

largest  vehicle 
industry 
in  Europe  and  production 
manufacturer 
GDP(8). 
Spanish 
represents 
Nevertheless, 
facing  new 
challenges  due  to  decreasing  demand  and 
supply  chain disruptions, which could  result in 
a  loss  of  competitiveness  (see  Annex  7).  To 
boost 
Spanish 
automotive  industry  sector(9)  has  identified 
factors  such  as  tighter  control  over  the  value 
chain,  increased  emphasis  on  technology  and 
research and innovation, better regulation and 
greater  adaptation  to  the  new  electric  vehicle 
model, which, in turn, would increase demand. 

competitiveness, 

the 

Spanish  manufacturing 

The 
sector 
depends  heavily  on  imports  of  critical 
raw  materials  needed  for  the  green  and 
digital  transitions.  While  Spain’s  imports  of 
critical  raw  materials  are  lower  than  the  EU 
average, its clean tech manufacturing industry 
is  heavily  reliant  on  raw  materials  such  as 
lithium,  cobalt  and  rare  earths,  which  are 
essential  for  the  production  of  high-tech 
products, 
including  electric  vehicles,  wind 
turbines  and  electronics.  This  presents 
significant 
of 
sustainability  and  resilience,  such  as  supply 
chain  risks,  environmental  degradation  and 
social  concerns.  With  42%  of  material  inputs 
in manufacturing production being imported in 
2023  (EU  average:  22%), Spain  is particularly 
vulnerable  to  supply  chain  disruptions  (see 
Annex  7).  Actions  to  address  this  dependence 
include  promoting  import  diversification  and 
the circular economy (see below). 

challenges 

terms 

in 

The  Spanish  automotive 
is 
exposed  to  risks.  The  Spanish  automotive 

industry 

(7)  Bruegel. European tracker 

(8)  Informe ANFAC/SERNAUTO: Nuevos retos del sector de 

la automoción en España, 2023. 

(9)  Represented by ANFAC (Asociación Española de 
Fabricantes de Automóviles y Camiones) and 
SERNAUTO (Asociación Española de Proveedores de 
Automoción). 

10 

 
 
 
 
Boosting the decarbonisation of 
industry 

and 

product 

processes 

Spain  has  put  in  place  policies  to  support  the 
decarbonisation of industry, but more effort is 
needed. A high share of Spain’s manufacturing 
emissions  relate  to  energy  use;  the  sector  is 
relatively  emission-intensive.  63%  of  Spain’s 
greenhouse  emissions  from  manufacturing 
result from energy use, the fifth highest share 
in  the  EU,  as  opposed  to  emissions  from 
industrial 
use, 
compared  to  57%  in  the  EU.  To  speed  up 
decarbonisation efforts, Spain has put in place 
a PERTE on industrial decarbonisation; adopted 
laws  to  support  decarbonisation  efforts  such 
as  the  climate  change  and  energy  transition, 
green  bonds,  tax  incentives;  and  the  smart 
industry  strategy.  These  policies  support  the 
deployment  of  renewable  energy,  energy 
storage, carbon capture, use and storage, and 
promote  renewable  hydrogen.  Furthermore, 
Spain  is  strengthening  its  sustainable  finance 
framework,  with  measures  as  the  creation  of 
the Spanish Council for Sustainable Finance, a 
governance  mechanism  aimed  at  fostering 
public-private  cooperation,  which  will  play  a 
central role in promoting and coordinating the 
use  of  sustainable  financial  instruments  to 
accelerate the decarbonisation of industry and 
in  green 
support 
investment 
technologies.  However,  given 
the  high 
greenhouse  emissions  intensity  of  Spain’s 
manufacturing industry overall, further efforts 
are  needed  to  support  the  decarbonisation  of 
manufacturing  production,  particularly 
in 
energy-intensive sectors. This includes support 
low-carbon 
for  the  development  of  new 
technologies  (e.g.  under  the  Innovation  Fund), 
the  scaling  up  of  existing  solutions,  the 
promotion  of  sustainable  supply  chains,  the 
energy  renovation  of  its  building  stock  and 
circular economy practices (see Annex 7). 

long-term 

The  electrification  of 
industry  and 
transport  needs  continued  support.  In 
industry,  electricity  represents  31.3%  of  final 
energy  consumption.  For  transport,  its  share 
(see  section 
remains  negligible,  at  1.2% 
below).  Further  progress 
in 
required 
is 
electrification  across  sectors,  to  decarbonise 
the  economy  and  to  enable  consumers  to 

benefit  from  affordable  renewable  energy 
sources.  The  electrification  of  production 
processes  below  200o  C  could  also  be 
expanded  (e.g.  transport,  tourism,  paper,  food 
production).  For  industries,  electricity  prices, 
and electricity taxation in particular, are higher 
than 
in  the  case  of  gas  (but  also  for 
consumers, where levies and taxes account for 
24%  of  the  electricity  bill),  disincentivising 
electrification (see Annex 8).  

Increasing green energy 
production to ensure affordable 
transition 

industry’s 

Renewable  energy  production  represents 
57% of the electricity mix, yet electricity 
accounted for just 24.7% of Spain’s final 
energy consumption. This was above the EU 
average  of  22.9%  and  has  been  increasing 
over the last decade (see Graph 3.1). Electricity 
accounts for 45.4% and 31.1% of households’ 
final  energy  consumption 
and 
(see  Annex  8).  Channelling 
respectively 
household 
energy 
renewable 
consumption  could  help  to  decarbonise  the 
economy  and  enable  consumers  to  benefit 
from  affordable  renewables.  This,  in  turn, 
could help to reduce the high levels of energy 
poverty, which remained high in 2024(10), with 
a particular impact on low-income households,  
despite the extraordinary measures adopted to 
protect  consumers  due  to  the    COVID-19 
pandemic  and  the  energy  price  crisis  derived 
from  the  Russia's  war  of  aggression  against 
Ukraine. 

towards 

into 

Spain is implementing permitting reforms 
but  has  not  yet  transposed  the  new 
in  the  revised  Renewable 
provisions 
Energy  Directive 
the  national 
legislation  on  permitting.  Spain  has  taken 
important  measures  to  accelerate  permitting 
include 
processes  for 
knowledge-sharing, 
grid 
the  system  operator,  and 
capacity  of 
for 
regulatory 
developing 

renewables.  These 
publishing 

sandboxes 

the 

(10)  Statistics | Eurostat 

11 

 
 
innovative  projects.  In  July  2024,  the  central 
government  finalised  28 GW  of  construction 
permits  for  renewables  capacity  across  280 
projects. However, the new EU provisions need 
to be implemented quickly in order to simplify 
and standardise the permitting requirements. 

Graph 3.1: Spain's electricity generation mix by 
source of energy, 2024 

the significant disparities between regions (see 
Annex 17). 

On  28  April  2025,  Spain  and  Portugal 
faced  an  unprecedented  power  outage, 
which  also  affected  parts  of  France. 
According  to  EU  law,  ENTSO-E  will  lead  an 
independent  investigation  into  the  causes  of 
the  blackout.    The  European  Commission  will 
inform  all  Member  States  of  the  progress  of 
the 
the  Electricity 
investigation 
Coordination Group. 

through 

to 

electricity 

Additional  expansion  of  Spain’s  cross-
border 
interconnection 
capacity is key to further integrating the 
production  of  renewable  energy  and 
improving  the  Iberian  Peninsula’s market 
integration.  Spain  needs 
continue 
improving  its  interconnectivity  (the  overall 
level was below 5% in 2025).  The completion 
of  the  interconnection  project  between  Spain 
and  Portugal  is  expected  to  be  commissioned 
by the end of 2025, with which Spain’s current 
interconnection  capacity  will 
to 
3.2 GW.  The  Bay  of  Biscay  interconnection 
project  between Spain and France is expected 
to  be  commissioned  by  2028  and  to  increase 
exchange  capacity  further  to  5 GW.  Further 
interconnection  projects  are  planned  between 
Navarra  (Spain)  and  Landes  (France),  and 
between Aragón (Spain) and Marsillon (France) 
(see Annex 8). 

increase 

Promoting the circular economy 

Despite  the  progress  made  in  recent 
years,  improving  waste  management  and 
developing  the  potential  of  the  circular 
economy remains a significant challenge. 
In  2020,  Spain  approved  a  comprehensive 
national  circular  economy  strategy  entitled 
‘España  Circular  2030’,  with  three-year  action 
plans.  Autonomous  Communities  have  also 
adopted  regional  strategies  for  the  circular 
economy. The effects of Law 7/2022 on waste 
and  contaminated  soils  were  followed  by 
various  implementing  regulations,  which  are 
currently  being  implemented.  However,  there 
have  been  limited  improvements  in  results  in 

12 

Source: IRENA, Ember 

of 

A  friendlier  permitting  environment  and 
easier  deployment  of  infrastructure  are 
key  to  supporting  the  development  of 
renewable  energy.  Spain  is  one  of  the 
countries  with  the  highest  production  of 
in  Europe.  This  production 
renewables 
advantage  offers  an  opportunity  to  increase 
robust 
Spain's 
renewables  capacity.  The 
in  the 
deployment  of  permitting  reforms 
context 
and 
transposition 
the 
implementation  of  RED  III  and  investment  in 
infrastructure  are  key  to  supporting  the 
In  this 
deployment  of  renewable  energy. 
current  annual 
context, 
investment  cap,  both  at 
transport  and 
distribution levels (0.065% and 0.13% of GDP 
respectively in place since 2013), will allow for 
the  uptake  of  additional  renewables  capacity. 
Lastly,  simplifying  and  standardising 
the 
requirements  for  permitting  (which  currently 
takes  an  average  of  18-24  months)  would 
improve  the  deployment  of  renewable  energy 
infrastructure  throughout  Spain,  thus  tackling 

increasing 

the 

27%28%24%13%8%Solar photovoltaicNon-renewable (excl. nuclear)Onshore wind energyHydropowerNuclear and others 
   
the waste sector. Spain is one of the countries 
that missed the EU target of recycling 50% of 
municipal  waste  by  2020  (the  rate  in  Spain 
was 36%) and it is at great risk of missing the 
new EU waste targets for 2025(11). Despite the 
EU  funding  from  the  European  Regional 
Development  Fund  and  the  Recovery  and 
Resilience  Facility,  it  is  estimated  that  Spain 
needs additional investments of EUR 2.3 billion 
per  year  for  the  circular  economy  transition, 
including for waste management(12). 

is 

implementing  policies 

to 
Spain 
strengthen  supply  chains  and  the  uptake 
of  circular  solutions  for  critical  raw 
materials,  but  more  action  is  needed  to 
achieve circularity. In 2023, the circular use 
of  material  in  Spain  stood  at  8.3%  (EU 
average  11.8%).  To  reverse  this  low  rate, 
Spain  has  published  a  roadmap  for  the 
sustainable  management  of  mineral  raw 
materials.  It  has  adopted  specific  legislation 
for 
electronic 
equipment,  vehicles,  and  construction  and 
demolition  waste,  with  measures  to  improve 
the circularity of those products (see Annex 7). 
Furthermore,  under  the  RRP,  Spain  has  put  in 
place a PERTE on circular economy, with focus 
on  key  sectors  as 
textile,  fashion  and 
footwear,  plastic  materials,  and  renewable 
energy  equipment,  including  wind,  solar  and 
batteries. 

electrical  and 

batteries, 

Strengthening climate adaptation, 
preparedness and water 
management 

Spain needs to step up efforts to improve 
water  management  and  water  resilience. 
Large  areas  of  Spain  are  water-stressed, 
meaning  that  water  demand  exceeds  the 
water  resources  available  under  sustainable 
conditions  due  to  demand  from  agriculture, 
tourism and energy. These sectors are heavily 

(11)  European Commission, 2023 Waste early warning 

report,. 

(12) See: EMF, Achieving growth within; Eunomia/COWI., 
Study on waste management investment needs. 

13 

dependent  on  water  supply,  and  irrigation  is 
crucial  in  most  rural  areas.  Improving  water 
management  remains  a  major  issue  in  Spain, 
particularly  in  terms  of  water  governance, 
water  body  rehabilitation  and  restoration  and 
water efficiency. Furthermore, Spain has faced 
serious  difficulties  in  implementing  the  Urban 
Wastewater  Treatment  Directive,  which  is  an 
Further 
area 
infrastructure  investment  is  needed  to  make 
the water system resilient (Annex 9). 

particular 

concern. 

of 

Spain should enhance efforts to adapt to 
climate  change.  Climate  risks  directly  affect 
Spain’s  economy  and  society,  with  a  high 
number  of  fatalities  and  economic  losses 
resulting  from  weather  and  climate-related 
extreme  events  (see  Annex  9  and  map  A7.1). 
Spain  uses  several  EU  funds  to  improve  its 
including  the  Recovery  and 
preparedness, 
the 
(EUR 13.6  billion), 
Resilience  Facility 
European 
Fund 
Development 
(EUR 1.26  billion),  and  the  forthcoming  Social 
to  EUR 6.8  billion). 
Climate  Fund 
Anticipating  and  adapting  to  the  adverse 
effects  of  climate  change,  such  as  floods, 
coastal  and  soil  erosion,  desertification, 
droughts, heat waves and forest fires, remains 
a  core  challenge  in  Spain.  Reinforcing  these 
efforts  would  also  enhance  the  country's 
water resilience. 

Regional 

(up 

The  state  of  nature  and  ecosystems 
continues  to  degrade  in  Spain,  reducing 
the  country’s  climate  resilience.  Spain  is 
one  of  the  most  biologically  diverse  countries 
in the EU. However, only 8.9% of the country’s 
habitats  and  18.9%  of  species  have  a  good 
status,  lower  than  the  EU  averages  of  14.7% 
and 27% respectively, showing a deteriorating 
trend  compared  to  the  previous  reporting 
period (see Annex 9). 

to 

Spain's 

economy 

Nature  degradation  presents  significant 
risks 
and 
competitiveness,  as  it  is  one  of  the 
highest 
Member  States  with 
dependency  on  ecosystem  services.  Spain 
is  the  Member  State  with  the  highest  supply 
chain  dependency  on  ecosystem  services. 
Several  sectors  such  as  agriculture,  fisheries, 
construction and water utilities are particularly 
dependent  on  ecosystem  services,  with  100% 

the 

 
 
of  the  gross  value  added  of  those  sectors 
directly  dependent  on  them  (Annex  9,  Graph 
A7.1). This means that failure to maintain the 
capacity  of  ecosystems  to  deliver  services 
could  entail  significant  costs  or  even  halt 
production  in  these  sectors.  Protecting  and 
restoring  key  ecosystems  would  ensure  that 
the 
these 
long-term  competitiveness  of 
economic sectors is preserved (Annex 9). 

Spain’s agricultural sector needs to adapt 
better  to  climate  risks  and  reduce  its 
carbon  footprint.  Spanish  agriculture  is  still 
a notable source of greenhouse gas emissions 
(14%  of 
the  country’s  emissions)  and 
continues  to  have  a  significant  impact  on  air, 
water  and  soils.  The  emissions  from  the 
agricultural  sector  include  27.9  million  tonnes 
of  CO2eq  from  livestock  and  Spain's  utilised 
agricultural  area  (UAA)  has  grown  by  5.2%  in 
one decade, increasing the sector’s carbon and 
environmental  footprint.  While  Spain  has 
started its transition towards more sustainable 
its  agri-food  system 
agriculture  practices, 
continues  to  have  significant  climate  and 
environmental  impacts,  warranting  additional 
action  to  support  the  uptake  of  sustainable 
agriculture practices (Annex 9). 

14 

 
 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

Strengthening the labour market 
inclusion of disadvantaged groups 

the  EU  average, 

The  labour  market  continued  to  improve 
in  2024,  driven  by  dynamic  job  creation 
and  robust  economic  growth.  Although  it 
the 
remains  below 
employment rate is rising, keeping the national 
target  of  76%  by  2030  within  reach.  While 
unemployment is falling, it remains among the 
highest  in  the  EU.  Labour  market  reforms 
under  the  RRP  have  substantially  reduced 
fixed-term  contracts  in  the  private  sector,  but 
they  remain  widespread  in  the  public  sector 
despite some improvement  

linked 

to  persistent 

Despite  progress  since  2021,  young 
people  still  face  barriers  to  employment. 
The  weak  labour  market  outcomes  for  young 
people  are 
skills 
mismatches, 
school-to-work 
difficult 
transitions and a skills offer that falls short of 
labour  market  (and  specifically  SMEs’)  needs 
(see  Annex  10).  Further  efforts  to  strengthen 
the  legal  framework  could  support  better 
labour market integration. 

Third-country  nationals  have  contributed 
significantly  to  employment  growth  but 
struggle  to  access  quality  jobs.  They  are 
often  over-represented  in  precarious  and  low 
productivity  sectors  and  experience  high 
unemployment  rates  (see  Annex  10).  The 
Spanish  government  has  adopted  reforms  to 
improve  migration  policies  and  working 
conditions  for  migrants,  as  reflected  in  the 
Spanish  medium–term  fiscal-structural  plan. 
However,  their  effectiveness  will  need  to  be 
assessed  over  time.  Stronger  social  dialogue 
and  greater  involvement  by  SMEs  could  also 
help  address  these  challenges,  particularly  by 
promoting fair wages and job stability. 

and 

pressures,  Spain’s 

Demographic changes present a challenge 
in terms of labour market resilience. Older 
workers face significant obstacles to accessing 
employment,  with  relatively  high  overall  and 
long-term unemployment rates, indicating that 
their  re-entry  into  the  workforce  is  limited. 
Despite  reforms  carried  out  in  the  last  years, 
women are particularly affected, due to career 
breaks 
responsibilities. 
care-giving 
Although younger foreign workers have eased 
demographic 
old-age 
dependency  ratio  is  expected  to  increase 
significantly  by  2050,  with  the  working-age 
population  projected  to  fall  by  11.8%.  Lower 
employment  rates  among  older  workers,  rural 
depopulation  and  workforce  ageing  in  the 
public  sector  and  among  the  self-employed 
further  undermine  labour  market  resilience. 
Spain  adopted  measures  to  promote  longer 
working  lives,  but  improving  support  for  older 
workers,  especially  through  upskilling  and 
reskilling,  remains  crucial.  Public  employment 
services  (PES)  can  help  to  facilitate 
job 
transitions,  including  early  intervention  during 
prior  notice  periods  in  objective  and  collective 
dismissals. 

Ensuring high-quality and inclusive 
education and training 

Low  basic  skills  and  high  early  school 
leaving  remain  a  challenge.  A  significant 
share of 15-year-olds, although below the EU 
in  mathematics, 
average,  underperform 
reading and science(13), while few achieve top 
performance, 
future 
productivity  and  competitiveness.  Regional 
differences  in  the  acquisition  of  basic  skills 
persist. Although the early school  leaving rate 

jeopardising 

thus 

(13)  Programme for International Student Assessment 

(PISA), 2022. 

15 

 
 
 
fell  by  almost  10 pp.  over  the  past  decade,  it 
remains  high,  with  persistent  gender  and 
regional disparities, although these have been 
reduced  significantly  in  the  last  decade.  This 
hinders  skills  development  and  employment 
prospects later in life. Efforts are underway, in 
part  supported  by  the  RRP,  to  improve  basic 
skills through support to schools and teachers, 
updated curricula, and programmes to prevent 
early school leaving. 

Persistent obstacles affect the transition 
from  education  to  work  in  both  VET  and 
higher  education.  Despite 
rising  VET 
enrolment,  participation  in  upper-secondary 
and  dual  programmes  remains  limited.  The 
low  employment  rates  of  medium-skilled  VET 
graduates and the limited share of adults with 
intermediate qualifications point to underlying 
skills  mismatches.  Mismatches  are  also 
prominent among tertiary graduates, with one 
in three workers being over-qualified and with 
higher  rates  among  young  men  and  third-
country  nationals.  Recent  reforms  supported 
by the RRP, such as the  national  catalogue of 
professional  qualifications,  are  addressing 
these mismatches by adapting curricula to the 
needs  of  the  economy,  particularly  in  the 
growing  green  and  digital  sectors  in  the  field 
of  VET.  However,  structural  barriers,  such  as 
shortages  of  qualified  teachers  and  limited 
SME  participation  due  to  administrative  and 
capacity  constraints,  hinder  the  expansion  of 
dual  VET  programmes  and  might  also 
between 
contribute 
to  misalignments 
labour  market 
educational  outcomes  and 
needs. Skills forecasting and greater employer 
involvement in curriculum design could help to 
improve  the 
labour  market  relevance  of 
training  and  make  the  fields  of  science, 
technology,  engineering  and  mathematics 
(STEM)  and  information  and  communications 
technology  (ICT)  more  attractive  to  students. 
Students’  engagement  could  be  facilitated  by 
individual  career 
simplified  processes  and 
guidance. 
could 
contribute  by  hosting  VET  students  and 
attaching representatives from VET centres to 
groups  of  SMEs.  This  would  facilitate  the 
inclusion  of  VET  students  in  smaller  company 
structures. 

administrations 

Public 

16 

low-skilled 

to  adapt 

productivity 

individuals.  Active 

Limited  participation  in  adult  learning 
reduces  opportunities 
to 
changing  labour  market  needs,  thereby 
undermining 
and 
competitiveness.  Although  participation  has 
increased in recent years, Spain is not on track 
to  reach  the  national  2030  target  of  60%  of 
adults  participating  in  training  each  year. 
Participation  declines  with  higher  age  and 
lower  educational  attainment,  exacerbating 
inequalities,  particularly  for  older  adults,  men 
and 
labour 
market  policies  have  limited  coverage  and 
impact,  with 
in  training 
low  participation 
among  low-skilled  and  older  workers,  and  in 
key sectors such as hospitality and commerce 
(see  Annex  12).  Public  employment  services 
only help to fill a few vacancies, and credit for 
training  remains  under-used.  Under  the  RRP, 
Spain  has  introduced  reforms  to  modernise 
active  labour  market  policies,  and  measures 
that  aim  to  upskill  and  reskill  adults  by 
improving 
through 
universities,  VET  and  active  labour  market 
policies.  To  address  remaining  gaps,  it  will  be 
essential  to  strengthen  the  capacity  of  public 
employment  services  to  effectively  identify 
and support those most in need, enhance skills 
anticipation  and  support  for  job  transitions, 
expand  flexible  training  opportunities,  and 
further  promote  a  culture  of  evaluation  to 
identify  which  services  have  the  greatest 
impact  on  improving  employability.  Further 
efforts  to  improve  outreach  and  implement 
targeted  measures  –  such  as  the  planned 
individual  learning  accounts  –  could  improve 
outcomes. 

learning 

lifelong 

Fostering social fairness 

Poverty  and  social  exclusion  remain 
significant  concerns.  Although  poverty  and 
social  exclusion  decreased 
in  2024,  the 
number  of  people  at  risk  remains  above  pre-
pandemic  levels  and  the  at-risk  of  poverty  or 
social  exclusion  (AROPE)  rate  was  among  the 
highest  in  the  EU,  with  significant  differences 
between  regions.  Vulnerable  groups  such  as 
single-parent  and  large  families,  persons  with 
disabilities, 
third-country 
nationals  and  the  Roma  population,  are 

people, 

young 

 
third-country 

disproportionately  affected.  At  the  current 
pace,  Spain  is  falling  behind  in  its  2030 
poverty  reduction  target  of  reducing  the 
number  of  people  at  risk  of  poverty  or  social 
exclusion  by  2.8  million.  In-work  poverty  has 
decreased in recent years, however it remains 
high  (3 pp.  above  the  EU  average,  at  11.3%) 
despite  recent  minimum  wage 
increases, 
particularly among temporary workers (14.3%) 
and 
(30.2%). 
Meanwhile,  energy  poverty  is  still  high,  and 
many  households  struggle  with  material 
deprivation.  Spain  has  introduced  energy-cost 
support, 
subsidies  and  public 
vulnerable 
providing 
for  many 
relief 
households,  but  gaps  remain 
in  ensuring 
living  standards  for  vulnerable 
adequate 
households. Furthermore, under the RRP, Spain 
is  strengthening  family  support  schemes, 
enhancing  minimum  income  provisions  and 
modernising social services infrastructure. 

transport 

nationals 

those 

regional  disparities 

Child  poverty  is  a  significant  structural 
challenge  that  undermines  upward  social 
convergence  and  future  competitiveness. 
More  than  one  in  three  children  are  at  risk  of 
poverty  or  social  exclusion  (see  Graph  4.1), 
from  migrant  and  Roma 
with 
backgrounds,  as  well  as  children  in  single-
parent  households,  being  the  most  affected. 
Low  work  intensity,  limited  access  to  quality 
further 
services  and 
contribute  to  persistent  poverty  risks.  Spain 
adopted  a  national  poverty  strategy  (2024-
2030) and is implementing the European Child 
Guarantee  with  support  from  the  ESF+,  with 
some  progress  visible  on  inclusive  education. 
There  is  potential  to  improve  child  welfare 
through  more  targeted  social  support  and 
income  protection  measures.  Moreover,  the 
current 
tax  deduction  system  does  not 
adequately  support  the  most  vulnerable  (see 
Annex 11). Strengthening and accelerating the 
implementation  of  the  Child  Guarantee,  as 
well as ensuring access to basic services such 
as  school  meals  and  housing,  could  help 
the 
reduce 
of 
intergenerational 
disadvantages. 

child  poverty  and  prevent 

transmission 

the  EU  average,  and 

The  impact  of  social  transfers  (excluding 
pensions)  is  among  the  lowest  in  the  EU, 
especially for children (see Graph 4.1). Despite 
improvements, income inequality remains high 
the 
and  above 
redistributive  effect  of  taxes  and  benefits  is 
limited.  Although  Spain  allocates  a  quarter  of 
its GDP to social protection, the share directed 
inclusion 
to  families,  children  and  social 
remains  relatively  low.  Spain  has  taken  steps 
to  address  some  of  these  gaps,  including 
through 
de-
institutionalisation  strategy,  which  expands 
community-based  services 
for  vulnerable 
groups.  Strengthening  targeted  support  for 
families and children, and decreasing regional 
social 
differences, 
outcomes. 

the  2024-2030 

could  help 

national 

improve 

the 

child 

(IMV)  and 

implementation 

(CAPI)  due 
complex 

The  minimum  income  and  child  support 
face  persistent  adequacy, 
schemes 
coverage  and 
issues. 
Despite  ongoing  efforts  to  ensure  efficient 
implementation,  many  eligible  households 
income 
struggle  to  access  the  minimum 
scheme 
support 
to  administrative 
supplement 
The 
procedures. 
barriers  and 
adequacy  of  minimum income  support  is  also 
low, with benefit levels well below the poverty 
threshold.  Differences  in  the  alignment  of 
regional  schemes  with  national  benefits 
further  exacerbate  disparities  (see  Annex  11). 
Spain 
these 
shortcomings through targeted support and by 
proposing  an  accessibility  plan  to  simplify 
take-up.  Recent 
processes  and 
improve 
reforms 
from  non-
contributory  unemployment  benefits  to  the 
IMV  and  enable  regional  management,  which 
may  improve  coordination,  but  risks  uneven 
implementation  across  the  territory.  Further 
efforts could focus on simplifying applications, 
addressing 
increasing 
administrative  inefficiencies,  such  as  delays 
and  repayment  requests.  Better  coordination 
between  national  and 
regional  minimum 
income  schemes  could  also  help  minimise 
overlaps and ensure comprehensive coverage. 

addressing 

transition 

facilitate 

visibility 

some 

and 

of 

is 

The  effectiveness  of  social  protection 
policies  remains  limited,  particularly  in 
reducing  poverty  and  income  inequality. 

Limited  access  to  affordable  housing  is 
hampering  social  inclusion  and  mobility. 
In addition to its impact on sustainable growth 

17 

 
their  own  home 

(see  Section  1),  access  to  affordable  and 
social  housing  remains  a  growing  social 
challenge, particularly for the most vulnerable 
and  young  people.  29.9% of  people  at  risk  of 
poverty  struggle  with  housing  costs,  and  only 
14.8% of young people aged 16 to 34 moved 
into 
in  2024,  further 
deepening  social  challenges.  Homelessness  is 
also  a  growing  challenge, with 71.3  homeless 
people per 100 000 inhabitants. Spain’s social 
housing  stock  is  among  the  lowest  in  Europe 
(3.3%  compared  to  the  EU  average  of  8%), 
leaving  an  estimated  4.5  million  people  in 
housing  exclusion  (see  Annex  11).  There  are 
significant  disparities  between  regions  and 
urban  and  rural  areas,  with  cities  such  as 
Madrid  and  Barcelona  particularly  affected. 
Further  support  to  housing  supply  in  stressed 
areas  and  for  vulnerable  people  seems 
warranted, 
the 
regulatory environment. 

including  by  simplifying 

Labour shortages and inefficiencies put a 
strain on primary care and hinder access 
to  medical  care.  Persistent  staff  shortages, 
particularly  in  primary  care  and  rural  areas, 
restrict  service  availability.  The  number  of 
nurses  per  capita  remains  below  the  EU 
average,  and  although  the  number  of  doctors 
is  slightly  above  it,  territorial  disparities  are 
significant (see Annex 14). Uneven distribution 
of  healthcare  resources  between  regions,  and 
growing waiting times in primary care, further 
hinder access. Spain has taken steps to reform 
primary  care,  but  plans  to  address  regional 
disparities  remain  less  detailed.  Improving 
cost-effectiveness  could  free  up  resources  to 
modernise  primary  care  and  reduce  access 
gaps,  while  addressing  staff  shortages  and 
uneven  rises  in  pharmaceutical  and  medical 
costs  across  regions  would  foster  more 
equitable  and  efficient  care.  The  significant 
projected increase in healthcare costs over the 
coming  decades,  as  demographic  changes 
place  increasing  pressure  on  public  finances, 
(see  Annex  1) may  have an  impact  on  access 
to  medical  care.  Benefits  from  existing 
through 
can 
resources 
efficiency gains. 

be  maximised 

These  findings  are  consistent  with  the 
second-stage  analysis  in  line  with  the 
The 
social 

convergence 

framework. 

analysis  points  to  challenges  related  to  the 
high  share  of  people  at  risk  of  poverty  or 
social  exclusion,  particularly  children,  and  the 
low  impact  of  social  transfers  on  poverty 
reduction,  as  well  as  a  high  share  of  early 
leavers  from  education  and  training, but  does 
not  point 
to  overall  social  convergence 
challenges  for  Spain,  including  in  light  of  the 
measures implemented or planned(14). 

Graph 4.1: Children AROPE and the impact of 
social transfers on child poverty reduction 

(1) The reduction in percentage of the at-risk-of poverty 
rate due to social transfers is calculated by comparing 
the at-risk-of poverty rates before social transfers with 
those after transfers. Pensions are not considered as 
social transfers in these calculations. 
Source: Eurostat, own calculations 

(14)  European Commission, SWD(2025)95. The analysis is 
based on all the available quantitative and qualitative 
evidence and the policy response undertaken and 
planned. 

18 

15.020.025.030.035.040.045.02018201920202021202220232024Impact of social transfers on poverty reduction, EU, less than 18yearsImpact of social transfers on poverty reduction, Spain, less than18 yearsChildren (aged less than 18) at risk of poverty or socialexclusion, EUChildren (aged less than 18) at risk of poverty or socialexclusion, Spain 
   
 
KEY FINDINGS 

To  boost  competitiveness,  sustainability  and 
social fairness, Spain would benefit from: 

including 

accelerating  the  implementation  of  the 
RRP, 
the  REPowerEU  chapter; 
implementing  cohesion  policy, 
swiftly 
taking  advantage  of  the  opportunities  under 
the  mid-term  review;  and  making  optimal 
use  of  EU  instruments,  including  InvestEU 
and STEP, to improve competitiveness; 

improving  fiscal  sustainability,  by  curbing 
the  expected  age-related  increase  in  pension 
and  healthcare  costs  and  by  enhancing  the 
quality  and  efficiency  of  public  spending 
through spending reviews;  

the 

institutional  and 
strengthening 
regulatory  framework,  by 
the 
volume  and  complexity  of  regulations  and 
among 
further 
different levels of administration; 

collaboration 

fostering 

tackling 

reducing  administrative  burden  and 
regulatory  restrictions  on  businesses,  by 
aligning  permitting  with  best  practices  and 
standardising  and  simplifying  administrative 
procedures across regions; 

increasing  judicial  efficiency,  including  by 
streamlining  judicial  proceedings,  reinforcing 
human  and  material  resources,  and  ensuring 
uniform 
justice 
levels  of  digitalisation 
matters across all regions; 

in 

construction,  by 
facilitating  housing 
land 
law, 
completing  the  reform  of  the 
reducing 
eliminating 
processing 
administrative  bottlenecks,  and  addressing 
labour shortages in the construction sector; 

times, 

increasing  the  availability  of  affordable 
housing,  by  expanding  the  social  rental 
housing stock and providing greater incentives 
for  affordable  housing,  particularly  for  young 
people and low-income households; 

19 

increasing  R&D  intensity,  both  private  and 
public, including by targeting public support at 
investments  in  key  competitive  areas  and 
promoting 
science-business 
collaboration;   

stronger 

keeping  on 
the  green 
track  with 
transition,  while  fostering  sustainable 
competitiveness,  by  providing  continued 
support  for  the  electrification  of  industry  and 
transport,  speeding  up  the  energy  renovation 
of  buildings,  promoting  the  circular  economy, 
further  expanding  cross-border  electricity 
interconnection 
capacity  and  decreasing 
electricity taxation compared to fossil fuels; 

continuing  efforts  on  climate  adaptation 
and  preparedness,  by 
improving  water 
management  and  resilience  and  improving 
preparedness  for  heatwaves,  droughts,  floods 
and wildfires;    

supporting  upward  social  convergence, 
reducing  poverty  and  social  exclusion,  in 
particular  for  children,  by  improving  the 
efficiency,  coverage  and  adequacy  of  social 
transfers and social assistance; 

improving  labour  market  outcomes  and  
further reducing segmentation, by tackling 
high  youth  unemployment,  mitigating  the 
underrepresentation  of  older  workers  in  the 
labour  market  and  further  reducing  the  high 
share  of  fixed-term  contracts  in  the  public 
sector; 

the 

skills 

shortages 

addressing 
and 
mismatches,  by  incentivising  adult  learning 
for 
full 
low-skilled,  ensuring 
implementation  of  dual  VET  and  addressing 
the low provision of basic skills and high early 
school leaving. 

the 

 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Fiscal 

A1.  Fiscal surveillance and debt sustainability 

A2.  Taxation 

Productivity 

A3. 

Innovation to business 

A4.  Making business easier 

A5.  Capital markets, financial stability and access to finance 

A6.  Effective institutional framework 

Sustainability 

A7.  Clean industry and climate mitigation 

A8.  Affordable energy transition 

A9.  Climate adaptation, preparedness and environment 

Fairness 

A10.  Labour market 

A11.  Social policies 

A12.  Education and skills 

A13.  Social Scoreboard 

A14.  Health and health systems 

Horizontal 

A15.  Sustainable development goals 

A16.  CSR progress and EU funds implementation 

A17.  Competitive regions 

LIST OF TABLES 

General government balance and debt 
Net expenditure growth 
Net expenditure (outturn and forecast), annual and cumulated deviations vis-à-vis the recommendation 
Defence expenditure 

A1.1. 
A1.2. 
A1.3. 
A1.4. 
A1.5.  Macroeconomic developments and forecasts 
A1.6. 
A1.7. 
A1.8. 
A1.9. 

General government budgetary position 
Debt developments 
RRF – Grants 
RRF - Loans 

23 

26 

26 

35 

38 

38 

43 

48 

56 

62 

62 

69 

75 

82 

82 

87 

92 

96 

97 

100 

100 

102 

109 

27 
28 
28 
28 
29 
29 
30 
30 
31 

 
 
 
Implementation of reforms and investment underpinning the extension 

A1.10. 
A1.11.  Projected change in age-related expenditure in 2024-2040 and 2024-2070 
A1.12.  Fiscal Governance Database Indicators 
A2.1. 
Taxation indicators 
A3.1. 
Key innovation indicators 
A4.1.  Making Business Easier: indicators. 
A5.1. 
A6.1. 
A6.2. 
A7.1. 
A8.1. 
A9.1. 
A13.1.  Social Scoreboard for Spain 
A14.1.  Key health indicators 
A16.1.  Selected EU funds with adopted allocations - summary data (million EUR) 
A16.2.  Summary table on 2019-2024 CSRs 
A17.1.  Selection of indicators at regional level in Spain 

Financial indicators 
Selected indicators on administrative burden reduction and simplification 
Key Digital Decade targets monitored through the Digital Economy and Society Index 
Key clean industry and climate mitigation indicators: Spain 
Key Energy Indicators 
Key indicators tracking progress on climate adaptation, preparedness and environment 

LIST OF GRAPHS 

Greenhouse gas emissions in the effort sharing sectors, 2005 and 2023 
Retail energy price components for household and non-household consumers, 2024 

Tax revenue shares in 2023 
Tax wedge for single and second earners, % of total labour costs, 2024 
Public expenditure on R&D as % of GDP 
Innovation outputs 

A2.1. 
A2.2. 
A3.1. 
A3.2. 
A4.1.  Making Business Easier: selected indicators.* 
A5.1. 
Net savings-investment balance 
A5.2. 
International investment position 
A5.3. 
Capital markets and financial intermediaries 
A5.4. 
Composition of NFC funding as a % of GDP 
A5.5. 
Composition of HH financial assets per capita and as a % of GDP 
A6.1. 
Trust in justice, regional / local authorities and in government 
A6.2. 
Indicators of Regulatory Policy and Governance (iREG) 
A7.1. 
GHG emission intensity of manu-facturing and energy-intensive sectors, 2022 
A7.2.  Manufacturing industry production: total and selected sectors, index (2021 = 100), 2017-2023 
A7.3. 
A8.1. 
A8.2.  Monthly average day-ahead wholesale electricity prices and European benchmark natural gas prices (Dutch TTF) 
A8.3. 
A9.1. 
A9.2. 
A10.1.  Key rates: activity, unemployment, long-term unemployment, youth unemployment, NEET 
A10.2.  Employment growth by contract type 
A11.1.  At-risk-of-poverty or social exclusion rate and its components 
A11.2.  Children at risk of poverty or social exclusion 
A11.3. 
Impact of social benefits on poverty reduction 
A12.1.  Employment rate of recent graduates not in education and training by educational attainment 
A14.1.  Life expectancy at birth, years 
A14.2.  Treatable mortality 
A15.1.  Progress towards the SDGs in Spain 
A16.1.  Distribution of RRF funding in Spain by policy field 
A16.2.  Distribution of cohesion policy funding across policy objectives in Spain 
A17.1.  Labour productivity per hour 

Spain's installed renewable capacity (left) and electricity generation mix (right) 
Direct dependency (1) on ecosystem services(2) of the gross value added generated by economic sector in 2022 
Investment needs and gaps in EUR million, in 2022 constant prices 

LIST OF MAPS 

A9.1. 

Number of flood events 

24 

32 
33 
34 
36 
42 
47 
54 
57 
58 
68 
74 
81 
96 
98 
105 
106 
111 

35 
37 
38 
39 
44 
48 
49 
49 
51 
52 
56 
58 
64 
65 
66 
69 
69 
72 
78 
79 
82 
85 
87 
88 
89 
93 
97 
97 
100 
103 
103 
110 

75 

 
 
 
A17.1.  GDP per head compared to the EU average (in purchasing power standard), 2023 
A17.2.  Energy-intensive industries 2021: Country Study Spain 
A17.3.  Human exposure to harmful climate impacts 

109 
112 
113 

25 

 
 
 
 
FISCAL 
ANNEX 1: FISCAL SURVEILLANCE AND DEBT SUSTAINABILITY 

This  Annex  contains  a  series  of  tables  relevant  for  the  assessment  of  the  fiscal  situation  in  Spain, 
including  how  Spain  is  responding  to  Council  recommendations  issued  under  the  reformed  Economic 
Governance Framework.  

The  reformed  framework,  which  entered  into  force  on  30  April  2024(15),  aims  to  strengthen  debt 
sustainability  and  promote  sustainable  and  inclusive  growth  through  growth-enhancing  reforms  and 
priority investments. The medium-term fiscal-structural plans (hereinafter, MTPs or plans) constitute the 
cornerstone  of  the  framework,  setting  the  budgetary  commitment  of  Member  States  over  the  medium 
term. The latter is defined in terms of net expenditure growth, which is the single operational indicator for 
fiscal surveillance.  

Spain  submitted  its  plan  on  15  October  2024.  The  plan  covers  the  period  until  2028,  and  presents  an 
extended fiscal adjustment over seven years, which is underpinned by a set of reforms and investments 
to  which  Spain  committed  with  the  aim  of  improving  potential  growth  and  fiscal  sustainability.  On  21 
January 2025, the Council adopted the Recommendation endorsing Spain’s plan.(16) 

The  assessment  of  the  implementation  of  the  Council  Recommendation  endorsing  the  Spain’s  plan  is 
carried out on the basis of outturn data from Eurostat and the Commission’s Spring 2025 Forecast and 
taking into account the Annual Progress Report (APR), that Spain submitted on 30 April 2025. Furthermore, 
in  the  context  of  the  Commission  Communication  of  19  March  2025(17),  on  accommodating  defence 
expenditure  within  the  Stability  and  Growth  Pact,  the  annex  reports  the  projected  increase  in  defence 
expenditure based on the Commission Spring 2025 Forecast. 

The Annex is organised as follows. First, developments in government deficit and debt are presented 
based  on  the  figures  reported  in  Table  A1.1.  Then,  the  assessment  of  the  implementation  of  the 
Council  Recommendation  endorsing  the  plan  follows,  based  on  the  relevant  figures  presented  in 
Tables  A1.2  to  A1.9,  including  data  on  defence  expenditure.  Further  on,  the  progress  made  in  the 
implementation  of  the  set  of  reforms  and  investments  underpinning  the  extension  of  the  fiscal 
adjustment period(18) is assessed, taking into account the information presented in Table A1.10. 

The Annex also provides information on the cost of ageing and the national fiscal framework. Fiscal 
sustainability risks are discussed in the Debt Sustainability Monitor 2024.(19) 

(15)  Regulation (EU) 2024/1263 of the European Parliament and of the Council (EU) on the effective  coordination of economic policies 
and on multilateral budgetary surveillance, together with the amended Regulation (EC) No 1467/97 on the implementation of the 
excessive deficit procedure, and the amended Council Directive 2011/85/EU on the budgetary frameworks of Member States are the 
core elements of the reformed EU economic governance framework. 

(16)  OJ C, C/2025/643, 10.2.2025, ELI, https://eur-lex.europa.eu/eli/C/2025/643/oj 

(17)  Communication  from  the  Commission  accommodating  increased  defence  expenditure  within  the  Stability  and  Growth  Pact of  19 

March 2025, C(2025) 2000 final. 

(18)  According to the Regulation., the required fiscal adjustment (in particular to put or keep the government debt ratio on a plausible 
downward path by the end of the adjustment period or keep it at prudent levels below 60% of GDP; and to bring or maintain the 
deficit below 3% of GDP over the medium term) should be completed in four years but may be extended over a period to up seven 
years  if  the  Member  State  commits  to  a  relevant  set  of  reforms  and  investments.  The  adjustment  period  of  Spain  has  been 
extended to seven years based on the set of reforms and investments laid out in detail in Annex II of the Council recommendation 
endorsing the plan of Spain. 

(19)  European Commission (2025) ‘Debt Sustainability Monitor 2024,’ European Economy-Institutional Papers 306. 

26 

 
 
 
 
Developments in government deficit and debt  

Spain’s  government  deficit  amounted  to  3.2%  of  GDP  in  2024,  affected  by  sizeable  one-off  spending 
(0.35% of GDP) related to the floods in Valencia. Based on the Commission’s Spring 2025 Forecast, it is 
projected to decrease to 2.8% of GDP in 2025 and 2.5%  of GDP in 2026. The government debt-to-GDP 
ratio amounted to 101.8% at the end of 2024 and, according to the Commission, is projected to decrease 
to 100.9% at end-2025.  

Table A1.1:  General government balance and debt 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR). 

Developments in net expenditure  

The  net  expenditure(20)  growth  of  Spain  in  2025  is  forecast  by  the  Commission(21)  to  be  above  the 
recommended  maximum,  corresponding  to  a  deviation  of  0.2%  of  GDP.  Considering  2024  and  2025 
together, the cumulative growth rate of net expenditure is projected  below the recommended maximum 
cumulative growth rate. The 2025 net expenditure growth forecast by the Commission (4.2%) is broadly in 
line  with  the  net  expenditure  growth  forecast  by  Spain  (4.1%).  In  2024,  however,  the  net  expenditure 
growth  estimated  by  the  Commission  (3.5%)  differs  from  that  estimated  by  Spain  (4.1%)  because  the 
Commission uses the change (from 2023) in national co-financing of EU programmes reported by IGAE to, 
and validated by, Eurostat whereas Spain uses the Ministry of Finance’s own estimates.  

The annual deviation in 2025 is below the 0.3% threshold. 

(20)  Net expenditure is defined in Article 2(2) of Regulation (EU) 2024/1263 as government expenditure net of (i) interest expenditure, 
(ii) discretionary revenue measures, (iii) expenditure on programmes of the Union fully matched by revenue from Union funds,  (iv) 
national  expenditure  on  co-financing  of  programmes  funded  by  the  Union,  (v)  cyclical  elements  of  unemployment  benefit 
expenditure, and (vi) one-off and other temporary measures.  

(21)  Commission Spring 2025 Forecast, European Economy-Institutional paper 318, May 2025. 

27 

2024OutturnAPRCOMAPRCOM1General government balance% GDP-3.2-2.8-2.8n.a.-2.52General government gross debt% GDP101.8101.7100.9n.a.100.8Variables20252026 
 
   
 
 
 
Table A1.2:  Net expenditure growth 

* The cumulative growth rates are calculated by reference to the base year of 2023. 

Source: Council Recommendation endorsing the national medium-term fiscal-structural plan of Spain (Rec), Annual Progress 
Report (APR) and Commission's calculation based on Commission Spring 2025 Forecast (COM). 

General  government  defence  expenditure  in  Spain  amounted  to  1.0%  of  GDP  in  2021,  1.1%  of  GDP  in 
2022 and 0.9% of GDP in 2023(22). According to the Commission 2025 Spring Forecast,  expenditure on 
defence is projected at 1.0% of GDP in 2024 and 1.3% of GDP in 2025. 

Table A1.3:  Net expenditure (outturn and forecast), annual and cumulated deviations vis-à-vis the 
recommendation 

* The growth rate for 2024 is not a recommendation but serves to anchor the base, as the latest year with outturn data when 
setting the net expenditure path is year 2023.  

Source: Commission Spring 2025 Forecast and Commission's calculation.  

Table A1.4:  Defence expenditure 

Source: Eurostat (COFOG), Commission Spring 2025 Forecast and Commission's calculation. 

(22) Eurostat, government expenditure by classification of functions of government (COFOG).  

28 

RECAPRCOMRECAPRCOM2024n.a.4.1%3.5%n.a.n.a.n.a.20253.7%4.1%4.2%9.2%8.4%7.9%20263.5%n.a.3.9%13.0%n.a.12.1%AnnualCumulative*Growth rates2023202420252026OutturnOutturnCOMCOM1Total expenditurebn NAC681.0722.8761.8793.52Interest expenditurebn NAC35.739.042.945.93Cyclical unemployment expenditurebn NAC0.1-0.8-2.1-2.64Expenditure funded by transfers from the EUbn NAC20.221.325.930.05National co-financing of EU programmesbn NAC1.22.33.23.56One-off expenditure (levels, excl. EU funded)bn NAC1.313.99.44.07=1-2-3-4-5-6Net nationally financed primary expenditure (before discretionary revenue measures, DRM)bn NAC622.5647.1682.4712.78Change in net nationally financed primary expenditure (before DRM)bn NAC24.635.430.39DRM (excl. one-off revenue, incremental impact)bn NAC2.78.13.510=8-9Change in net nationally financed primary expenditure (after DRM) bn NAC21.927.326.811Outturn / forecast net expenditure growth% change3.52%4.2%3.9%12Recommended net expenditure growth*% change5.3%3.7%3.5%13=(11-12) x 7Annual deviationbn NAC-11.13.42.914 (cumulated from 13)Cumulated deviationbn NAC-11.1-7.7-4.815=13/17Annual balance% GDP-0.70.20.216=14/17Cumulated balance% GDP-0.7-0.5-0.317p.m. Nominal GDP  bn NAC1498.31591.61670.41739.5Variables2021202220232024202520261Total defence expenditure% GDP0.91.10.90.91.31.42of which: gross fixed capital formation% GDP0.20.40.20.20.40.5 
 
       
 
 
 
 
 
       
 
 
 
 
       
 
 
 
Table A1.5:  Macroeconomic developments and forecasts 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR). 

Table A1.6:  General government budgetary position 

Source: Commission Spring 2025 Forecast (COM), Annual Progress Report (APR). 

29 

2024OutturnAPRCOMAPRCOM1=7+8+9Real GDP% change3.22.62.62.22.02Private consumption% change2.93.22.92.42.13Government consumption expenditure% change4.12.32.32.01.64Gross fixed capital formation% change3.04.33.45.13.15Exports of goods and services% change3.11.22.41.82.36Imports of goods and services% change2.42.73.23.72.8Contributions to real GDP growth 7- Final domestic demandpps3.03.12.82.82.18- Change in inventoriespps-0.20.00.00.00.09- Net exportspps0.3-0.4-0.2-0.6-0.110Output gap% pot GDP1.51.31.71.21.611Employment % change2.22.52.12.31.612Unemployment rate%11.410.310.49.69.913Labour productivity% change0.90.20.40.00.414HICP % change2.9n.a.2.3n.a.1.915GDP deflator% change3.02.62.32.32.016Compensation of employees per head% change5.03.73.42.92.617Net lending/borrowing vis-à-vis the rest of the world% GDP4.2n.a.3.9n.a.4.020252026Variables2024OutturnAPRCOMAPRCOM1=2+3+4+5Revenue42.341.842.8n.a.43.1of which:2- Taxes on production and imports11.111.311.2n.a.11.33- Current taxes on income, wealth, etc.12.512.812.7n.a.12.84- Social contributions13.213.413.4n.a.13.55- Other (residual)5.44.35.5n.a.5.68=9+16Expenditure 45.444.645.6n.a.45.6of which:9- Primary expenditure43.041.943.0n.a.43.0of which:10- Compensation of employees 10.810.710.7n.a.10.711- Intermediate consumption5.65.55.6n.a.5.612- Social payments19.619.519.5n.a.19.513- Subsidies1.21.11.1n.a.1.114- Gross fixed capital formation2.72.63.0n.a.3.015- Other3.22.53.1n.a.3.116- Interest expenditure2.42.72.6n.a.2.618=1-8General government balance-3.2-2.8-2.8n.a.-2.519=1-9Primary balance-0.7-0.1-0.2n.a.0.120Cyclically adjusted balance-4.0n.a.-3.8n.a.-3.421One-offs-0.9-0.5-0.6n.a.-0.222=20-21Structural balance-3.2-2.8-3.2n.a.-3.223=22+16Structural primary balance-0.7-0.2-0.7n.a.-0.6Variables (% GDP)20252026 
 
       
 
 
 
       
 
 
 
Table A1.7:  Debt developments 

* End of period..  
** The 'snow-ball' effect captures the impact of interest expenditure on accumulated general government debt, as well as the 
impact of real GDP growth and inflation on the general government debt-to-GDP ratio (through the denominator). The stock-flow 
adjustment includes differences in cash and accrual accounting (including leads and lags in Recovery and Resilience Facility grant 
disbursements), accumulation of financial assets, and valuation and other residual effects.. 
Source: Commission Spring 2025 Forecast and Commission's calculation (COM), Annual Progress Report (APR). 

Table A1.8:  RRF – Grants 

Source: Annual Progress Report 

30 

2024OutturnAPRCOMAPRCOM1Gross debt ratio* (% of GDP)101.8101.7100.9n.a.100.82=3+4+8Change in the ratio (pps. of GDP)-3.3-0.1-0.9n.a.-0.1Contributions**3Primary balance0.70.10.2n.a.-0.14≈5+6+7'Snow-ball' effect-3.7-2.4-2.2n.a.-1.4of which:5- Interest expenditure2.42.72.6n.a.2.66- Real growth effect-3.1-2.6-2.5n.a.-2.07- Inflation effect-3.0-2.5-2.3n.a.-2.08'Stock-flow' adjustment-0.32.21.1n.a.1.420252026VariablesRevenue from RRF grants (% of GDP)20202021202220232024202520261RRF grants as included in the revenue projectionsn.a.1.71.91.30.10.0n.a.2Cash disbursements of RRF grants from EUn.a.1.51.31.10.50.2n.a.20202021202220232024202520263Total current expendituren.a.0.30.20.20.00.0n.a.4Gross fixed capital formationn.a.0.10.10.10.00.0n.a.5Capital transfersn.a.1.31.51.00.10.0n.a.6=4+5Total capital expendituren.a.1.51.61.10.10.0n.a.20202021202220232024202520267Reduction in tax revenuen.a.n.a.n.a.n.a.n.a.n.a.n.a.8Other costs with impact on revenuen.a.n.a.n.a.n.a.n.a.n.a.n.a.9Financial transactionsn.a.n.a.n.a.n.a.n.a.n.a.n.a.Expenditure financed by RRF grants (% of GDP)Other costs financed by RRF grants (% of GDP) 
 
       
 
 
 
       
 
 
Table A1.9:  RRF - Loans 

Source: Annual Progress Report 

Implementation of the set of reforms and investments underpinning the 
extension of the adjustment period  

Table  A1.10  includes  information  on  progress  towards  implementation  of  the  set  of  reforms  and 
investments  underpinning the extension  of the  adjustment  period  that  Spain  committed  to  deliver in its 
medium-term fiscal-structural plan as endorsed by the Council. 

Taking into account the information provided by Spain in its Annual Progress Report, the Commission finds 
that  the  reforms  and  investments  underpinning  an  extension  that  were  due  by  the  30  April  2025  have 
been  implemented  with  the  exception  of  certain  elements  of  Spain’s  Recovery  and  Resilience  Plan’s 
measure C28.R3 and the related milestone on the entry into force of tax reforms derived from the expert 
group recommendations or other analyses by the Ministry of Finance (for details, see Table A1.10).  

The reforms and investments underpinning an extension of the adjustment period include reforms in the 
area of taxation, which in turn included tax reform measures and tax benefits reform measures. They also 
include and reforms in the area of public expenditure (measures establishing a permanent public spending 
review and evaluation process and increasing the efficiency of public spending).  

Additionally,  the  plan  contains  reforms  in  the  areas  of  digital  transformation,  green  transition,  human 
capital, physical capital and productivity and fight against tax fraud. 

Reforms in the area of taxation have progressed well but two requirements out of 6 of the first key step 
corresponding to milestone 388 of Spain’s RRP, whose assessment is ongoing, had not been completed by 
30  April  2025.  The  first  key  step  of  the  reform  in  the  area  of  public  expenditure  has  been  completed 
whereas  the  remaining  steps  along  with  most  reforms  in  the  areas  of  digital  transformation,  human 
capital  and  physical  capital  and  productivity  will  be  assessed  by  the  Commission  in  the  future.  Finally, 
reforms in the area of green transition and to fight against tax fraud have been completed.  

31 

Cash flow from RRF loans projected in the Plan (% of GDP)20202021202220232024202520261Disbursements of RRF loans from EUn.a.n.a.n.a.n.a.0.01.0n.a.2Repayments of RRF loans to EUn.a.n.a.n.a.n.a.n.a.n.a.n.a.20202021202220232024202520263Total current expendituren.a.n.a.n.a.n.a.n.a.n.a.n.a.4Gross fixed capital formationn.a.n.a.n.a.n.a.n.a.n.a.n.a.5Capital transfersn.a.n.a.n.a.n.a.n.a.n.a.n.a.6=4+5Total capital expendituren.a.n.a.n.a.n.a.n.a.n.a.n.a.20202021202220232024202520267Reduction in tax revenuen.a.n.a.n.a.n.a.n.a.n.a.n.a.8Other costs with impact on revenuen.a.n.a.n.a.n.a.n.a.n.a.n.a.9Financial transactionsn.a.n.a.n.a.n.a.n.a.n.a.n.a.Expenditure financed by RRF loans (% of GDP)Other costs financed by RRF loans (% of GDP) 
 
       
 
 
 
 
 
Table A1.10:Implementation of reforms and investment underpinning the extension 

The progress of each backward-looking key step (i.e., those scheduled for completion by 30 April 2025) is classified as either 
‘completed’ or ‘not completed’. The status of forward-looking key steps not yet completed remains blank, as these will be 
assessed by the Commission in future APRs. 
* These key steps correspond to milestones and targets 400, 376, 190, 191, 102, 103, 104, 105, 289 and 254 of Spain’s RRP, 
which have been assessed as fulfilled as part of a payment request under the RRF. 
** These key steps correspond to milestones and targets 388, 106, 107 and 291 of Spain’s RRP, whose assessment is still 
pending in the context of a payment request under the RRF and the table does not prejudge its assessment.        

Source: Spain's Annual Progress Report and the Commission's assessment 

32 

Delivery of milestones 388 of Spain’s RRP, permanently increasing government revenues by 0.3 % of GDP. Q3 2023Not Completed **Delivery of an additional permanent increase of 0.1% of GDP of revenues by Q4 2028, totalling a cumulative 0.4% of GDP by Q4 2028.Q4 2025Delivery of a report showing the permanent increase in revenues between 2024 and 2028.Q4 2028Tax Benefits Reform Delivery of milestone 386, permanently increasing government revenues by at least 0.1 % of GDP. Q4 2025Approval by the Council of Ministers of the new cycle of spending reviews (2022- 2026) to be commissioned to AIReF. Q4 2021Completed * Adoption of a new cycle by the Ministry of Finance which envisages an intervention for each spending area over the time frame of the Plan.Q4 2026Adoption of reforms resulting from completed and ongoing spending reviews and reducing yearly expenditure by 2028 by at least 0.1% of GDP on a permanent basis, contributing to the sustainability of public finance.Q2 2027Publication of the annual monitoring report by the Ministry of Finance on the implementation of public expenditure reviews will include the assessment of actual yearly expenditure savings since 2025 from the implementation of adopted measures following spending reviews. It shall show the achievement by 2028 of permanent yearly savings of at least 0.1% of GDP against unchanged policies.Q1 2028Law against Tax Evasion and FraudEntry into force of a law against tax evasion and fraud (‘Ley de medidas de prevención y lucha contra el fraude fiscal’ which:                                                                   - Enlarges the perimeter of transactions where e-payments are compulsory (firms & professionals) and set legal thresholds for cash payments - Updates the list of tax havens according to transparency, no taxation and harmful tax regimes criteria. - Implements changes to the rules for listing people with tax arrears. - Implements a ban on “double-use software”. - Introduces a reference value for the tax base in property taxation.Q2 2022Completed * Entry into force of the reform of the ‘Insolvency Law’. Q2 2022Completed * Entry into force of the new ‘Law on Business Creation and Growth’ to simplify procedures for setting up a business and to promote a diversified sources of finance for business growth. Q4 2022Completed * • Entry into force of Royal Decree Law 23/2020 (energy measures) • Entry into force of Royal Decree 960/2020 (economic regime for renewable energy) • Entry into force of Royal Decree 1183/2020 (connection of renewables to the electricity grid)  Q4 2020Completed * Entry into force of Law on Climate Change and Energy Transition. Q2 2021Completed * Additional production capacity for renewable energy (at least 6000 MW) cumulative additional renewable energy capacity installed in Spain (at least 6000 MW). Q4 2023Completed **Approval of a programme to equip public and publicly subsidised schools with digital tools. Q4 2021Completed *Completion of actions for the digital transformation of education, including the preparation or revisions of digital strategies in at least 22 000 school and the digital training of  70 000 teachers Q4 2025Provision of connected digital devices in public and publicly subsidised schools to bridge the digital divide, and equip a minimum of 240 000 classroom Q4 2025Complete an awareness campaign reaching at least 60% of all students that intend to start vocational training or have started in the past 6 months a non dual vocational training; and capacity building in providing vocational training to any company interested in providing dual vocational training.Q4 2027Provide a monitoring report showing that at least 80% of all vocational training students in the first half of 2028 have been enrolled in dual vocational trainingQ4 2028Approval in (multi)sectoral conference(s) of a sectoral impact assessment (in cooperation with Autonomous Communities and City Councils), which defines priority areas needing standardization and simplification of procedures across regions and local authorities.Q4 2025Publication of a Strategic plan for the sectoral conferences approved by (multi)sectoral conference(s). specifying annual measures, responsible actors and monitoring indicators, to be fully implemented by 2027Q2 2026Publication of a report which monitors the implementation of the Strategic plan and proposes corrective measures in case of deviations. The report should also assess the impact of the measures already implemented in previous years.Q4 2027Entry into force of a royal decree establishing the technical and information requirements of the system.Q4 2026Establishment of an electronic invoice platform, managed by the Tax Agency, which will provide a basic, free service to all companies and professionals who wish to use it.Q1 2027Measures to improve the management of temporary disabilitySignature and entry into force of partnership agreements between the Ministries of Health of the Autonomous Communities, mutual societies and Social Security.Q4 2025Entry into force of legislation detailing streamlined processes for the recognition of qualifications of foreign-born population.Q4 2025Assessment monitoring the implementation of the reform. The report should include key indicators as the total number of applications processed under the simplified system and average processing time for homologation requests.Q4 2028Reform of the work and job search visa systemEntry into force of a royal decree regulating work and job seeking visas for migrants.Q4 2024CompletedLaunch of tenders to provide public land to private promoters for the construction of affordable housing units.Q4 2025Assessment monitoring the implementation of the reform. The report should describe the evolution and impact of the project and include key indicators as planned houses to be developed, and total units of public land transferred to private promoters.Q2 2026Entry into force of the amendment of Law 14/2011 on Science, Technology and InnovationEntry into force of the modification of the Law on Science, Technology and Innovation improving the coordination among different levels of government of science, research and innovation policies, enhancing the governance and coordination of the Spanish Science Technology and Innovation system, introducing a new scientific career and improving knowledge transfer. Q2 2022Completed *MeasureKey stepsRecommended implementation dateStatus(COM's assessment)Tax ReformSpending ReviewsBetter regulation and business climateRegulatory Framework for the promotion of renewable genrationDigital Transformation of EducationDual Vocational TrainingDeployment of Scheme 20Electronic InvoiceSimplification of the system for the homologation of diplomasProject Vienna 
 
       
 
 
Cost of ageing  

Total age-related spending in Spain is projected to rise from about 24.5% of GDP in 2024 to 
around 27.5% in 2040 and 29% in 2070 (see Table A1.11). This increase results from the projected 
rise in pension spending and, to a more limited extent, healthcare and long-term care spending.  

The  rise  in  public  pension  spending  is  concentrated  in  the  medium  term,  with  a  projected 
increase of 2.5 pps of GDP by 2040. After peaking around 2050 at 3.6 pps of GDP above the 2024, a 
limited decline in spending is expected. In 2070, Spain would be the country with the second highest gross 
spending on pensions in the EU. 

Public healthcare (23) expenditure is projected at 5.9% of GDP in 2024 (below the EU average 
of 6.6%) and is expected to increase by 0.8 pps by 2040 and by a further 0.4 pps by 2070. This 
increase  in  expenditure  contributes  significantly  to  fiscal  risk.  There  is  however  scope  for  improving 
efficiency by increasing the role of economic evaluation in funding and pharmaceutical pricing decisions 
as well as reducing unwarranted variations in the cost-effectiveness health care.  

Public  expenditure on  long-term  care (24)  is  projected at 0.8% of  GDP  in  2024  (below  the  EU 
average  of  1.7%)  and  is  expected  to  increase  by  0.2 pps  of  GDP  by  2040  and  by  a  further 
0.7 pps of GDP by 2070.  

Table A1.11:Projected change in age-related expenditure in 2024-2040 and 2024-2070 

Source: 2024 Ageing Report (EC/EPC). 

National fiscal framework 

The  Independent  Authority  for  Fiscal  Responsibility  (AIReF)  is  a well-established  independent 
fiscal  institution  with  a  broad  mandate  but  could  benefit  from  enhanced  independence 
safeguards. It is relatively well staffed, reflecting its resource-intensive tasks stemming partly from the 
decentralised structure of Spain. It has experienced some problems with access to information and would 
therefore  benefit  from  having  Memoranda  of  Understanding  with  the  Ministry  of  Economy  and  the 
Ministry  of  Finance.  The  dialogue  with  the  government  could  be  improved  and  expanding  access  to 
positions to non-civil servants would broaden the institution’s recruitment pool. 

There  are  areas  of  improvement  in  the  management  of  public  investments  across  the  full 
investment  cycle.  Strategic  planning  of  investments  takes  place  mostly  at  sectoral  and  sub-sectoral 
level.  In  transportation,  detailed  investment  planning  is  carried  out  by  each  means  of  transportation 

(23)  Key performance characteristics, recent reforms and investments are discussed in Annex 11 ‘Health and health systems’. 

(24)  The quality and the accessibility of the long-term care system are covered in Annex 9 ‘Social policies’. 

33 

ES24.42.50.80.2-0.72.927.3ESEU24.30.50.30.4-0.30.925.2EUES24.43.01.20.9-0.64.629.0ESEU24.30.20.60.8-0.41.325.6EUage-related expenditure 2024 (% GDP)change in 2024-2040 (pps GDP) due to:age-related expenditure 2040 (%GDP)pensionshealthcarelong-term careeducationtotalage-related expenditure 2024 (% GDP)change in 2024-2070 (pps GDP) due to:age-related expenditure 2070 (%GDP)pensionshealthcarelong-term careeducationtotal 
 
   
 
 
(roads,  railways,  etc.),  while  an  integrated  planning  across  at  least  several  means  of  transportation  is 
more efficient. Neither standardised procedures for appraisal, nor external quality assurances are in place 
to ensure similar assessment and selection criteria across sectors, while pre-appraisal is in place only in 
selected sectors (25).  Capital budgeting is done on an annual  basis and there are no longer-term capital 
expenditure  ceilings  to  ensure  capital  availability  beyond  the  budget  year.  The  new  Sustainable  Mobility 
and Transport Financing Act, also milestone C.1.[R.2] in the recovery and resilience plan, aims at improving 
planning, appraisal, prioritisation and budgeting of public investments (26). 

Spain  is  quickly  advancing  towards  deepening  green  budgeting  practices.  For  the  2023  budget, 
Spain has for the first time published a report on alignment with climate and environmental  goals. The 
country follows the classification into six dimensions of the EU Taxonomy and identifies both “green” and 
“brown”  expenditures  through  a  systematic  tagging  methodology.  To  this  end,  Spain  has  intensified  the 
collaboration  between  the  Ministry  of  Finance  and  the  Ministry  for  Ecological  Transition  and  the 
Demographic Challenge as joint  responsible of green budgeting and has built capacity across ministries 
during budget preparation. 

Table A1.12:Fiscal Governance Database Indicators 

The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at the country level based 
on i) the legal base, ii) how binding the rule is, iii) monitoring bodies, iv) correction mechanisms, and v) resilience to shocks. The 
Medium-Term Budgetary Framework Index (MTBFI) shows the strength of the national MTBF based on i) coverage of the 
targets/ceilings included in the national medium-term fiscal plans; ii) connectedness between these targets/ceilings and the 
annual budgets; iii) involvement of the national parliament in the preparation of the plans; iv) involvement of independent fiscal 
institutions in their preparation; and v) their level of detail. A higher score is associated with higher rule and MTBF strength. 
Source: Fiscal Governance Database 

(25)  OECD (2020), Supporting Better Decision-Making in Transport Infrastructure in Spain: Infrastructure Governance Review, OECD 

Publishing, Paris, https://doi.org/10.1787/310e365e-en 

(26)  Many of the new features of the new law address AIReF’s recommendations in the context of their Spending Review of Transport 

Infrastructure of 2019/2020.  

34 

2023SpainEU AverageCountry Fiscal Rule Strength Index (C-FRSI)17.2714.52Medium-Term Budgetary Framework Index (MTBFI)0.920.73 
 
       
 
 
 
 
 
ANNEX 2: TAXATION 

This  annex  provides  an 
indicator-based 
overview  of  Spain’s  tax  system.  It  includes 
information on: (i) the tax mix; (ii) competitiveness 
and  fairness  aspects  of  the  tax  system;  and  (iii) 
tax collection and compliance.  

Spain’s  tax  revenues  are  relatively  low  in 
relation to GDP, with increasing contributions 
from  labour  taxation.  Table  A13.1  shows  that 
Spain’s tax revenues as a percentage of GDP were 
below  the  EU  average  in  2023,  even  though  the 
gap  with  the  EU  average  has  been  reduced  since 
2017. It is now only 2.5 percentage points, as tax 
revenues were equivalent to 36.5% of Spain’s GDP 
in  2023  against  an  EU  average  of  39.0%.  The 
share  of  labour  taxes  as  a  proportion  of  Spanish 
GDP  was  slightly  below  the  EU  average  in  2023, 
although  these  labour  taxes  represented  a  higher 
percentage of total taxation than the EU (51.7% vs 
51.2%)  (Graph  A13.1).  The  average  share  of 
in  total  Spanish  tax  revenues 
labour  taxes 
increased from 48.5% in the period 2014-2018 to 
51.5%  in  the  2019-2023  period,  backed  by  the 
growth  in  household  income,  rises  in  social-
security  contributions  and  the  non-indexation  of 
personal-income-tax  brackets.  The  level  of  capital 
taxes  in  Spain  was  slightly  greater  than  the  EU 
average in 2023 (8.6% of GDP vs 8.5% in the EU), 
resulting  in  capital  taxes  accounting  for  a  higher 
percentage of total taxation (23.6% in Spain while 
only 21.9% on average in the EU).  

Revenues  from  consumption  taxes  remain 
very  low  in  Spain.  Taxation  of  consumption  in 
Spain  is  below  EU  levels,  both  in  terms  of  GDP 
(9.0%  in  Spain  in  2023  vs  10.5%  in  the  EU  on 
average)  and in terms of total  taxation (24.7% in 
Spain  and  26.9%  in  the  EU  on  average).  In 
response  to  rising  inflation  and  increases  in  the 
cost  of  living,  Spain  temporarily  reduced  in  2023 
the VAT rate on food and maintained reduced VAT 
rates  on  electricity  and  gas,  which  resulted  in  a 
decline  in  VAT  revenue.  Spain  has  one  of  the 
highest actionable VAT gaps in the EU, resulting in 
the  lowest implicit tax  rate  on  consumption  of  all 
the  27  Member  States.  Revenues 
from 
environmental  taxes increased  slightly  in  2023  to 
reach 1.6% of GDP, although this is still below the 
EU-27  average  of  2.0%.  Revenues  from  property 
taxes in Spain are relatively high as a percentage 
of  both  GDP  and  total  tax  revenues,  but  the 
structure  of  these  property  taxes  was  not  as 
efficient  as  that  of  the  EU,  where  recurrent  taxes 
on  property  play  a  greater  role.  The  performance 
of  Spain’s  tax  system  should  be  viewed  in  the 

context  of  a  persistent  public  deficit  and  high 
levels  of  debt  to  GDP.  To  increase  tax  revenues, 
Spain  could  make  more  use  of  tax  bases  other 
than labour income. For example, there is room to 
streamline  the  use  of  tax  benefits,  and  the 
‘polluter  pays’  principle  can  be  applied  more 
extensively (see also Annex 5).  

The  Spanish  recovery  and  resilience  plan 
(RRP) and the Council’s 2024 country-specific 
recommendations to Spain draw attention to 
the  need  to  ensure  fiscal  sustainability.  In 
2024,  Spain  adopted  a  number  of  measures  to 
increase  its  tax-revenue-raising  capacity:  (i)  it 
maintained  the  tax  on  large  fortunes;  (ii)  it 
increased  taxation  on  tobacco  and  introduced 
taxation on e-cigarettes; and (iii) it introduced the 
OECD-proposed ‘global minimum tax’ rate of 15% 
on  corporations  by  transposing  the  relevant  EU 
directive.  The  savings  tax  rate  for  the  higher 
income  decile  in  personal-income  tax  was  also 
increased by 2 percentage points, from 28 to 30%. 
Plans  to  align  the  taxation  of  diesel  with  that  of 
gasoline  have  not  materialised  yet.  Spain  expects 
the  equivalent  of  more  than  0.3%  of  GDP  in 
permanent  additional  revenue  from  all  these 
reforms.  

Graph A2.1: Tax revenue shares in 2023 

Source: Taxation Trends Data, DG TAXUD 

Business regulation, including taxation, could 
be hindering investment in Spain. According to 
the  2022  EIB  Group  Survey  on  Investment,  most 
Spanish  SMEs  said  they  considered  business 
regulation  and  taxation  as  a  major  obstacle  for 
investment activities (53.0% said this, the highest 
percentage  in  the  EU).  Some  features  of  Spain’s 
could  be  dissuading 
corporate-tax 
businesses  from  scaling  up,  as  larger  businesses 
can 
larger 
lose  certain  tax  advantages  (e.g. 
businesses  can  no  longer  benefit  from  the  lower 

system 

35 

51.226.921.951.724.723.6Tax revenue shares in 2023, Spain (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital 
 
      
 
Table A2.1:  Taxation indicators 

(1) Forward-looking effective tax rate (KPMG).       
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) For more details on the VAT gap, see European Commission, Directorate-General for Taxation and Customs Union, VAT gap in 
the EU - 2024 report,  https://data.europa.eu/doi/10.2778/2476549  
For more data on tax revenues as well as the methodology applied, see the Data on Taxation webpage, 
https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en.  
Source: European Commission, OECD 

statutory  corporate-tax  rate)  and  be  hit  with 
increased  compliance  burdens.  The  general 
corporate-income-tax  rate  is  25%,  above  the  EU-
27  average  (21%)  although  this  has  decreased 
from  35%  in  1995.  In  addition,  Spain  had  the 
second  highest  forward-looking  effective  average 
corporate-tax  rate  in  the  EU  in  2023  at  25.7%, 
considerably  above  the  EU-27  average  of  around 
18.9%.  R&D  spending  in  Spain  (1.4%  of  GDP  in 
2023) remains well below the EU average (2.2%), 
with  related  tax  incentives  not  deployed  in  a  way 
that would maximise their potential. 

tax-benefit  system  shows 

Income inequality in Spain remains high, and 
the 
limited 
redistributive  capacity.  Spain’s  Gini  coefficient 
was 31.5% in 2023 (0,3 p.p. lower than in 2024), 
worse than the EU-27 average of 29.6%. The tax-
and-benefit system reduced the Gini coefficient by 
6.9  points  in  2023,  a  reduction  similar  to  the  EU 
average  of  7.7  points.  At  the  same  time,    Spain 
has  the  16th-lowest  Gini  in  the  EU  for  market 
incomes before taxes and social transfers, but only 
the 20th-lowest when it comes to  total disposable 
income., showing that the redistribution of income 
in  Spain  via  the  tax-benefit  system  is  not  as 
efficient  as  in  other  Member  States  of  the  EU. 
Spain’s  top  income-tax-rate  threshold  has  fallen 

tax  system 

since  2013  from  11.7  times  average  income  to 
10.8 times average income in 2022. This threshold 
is still one of the highest in the EU, indicating that 
the top rate in Spain only applies to relatively high 
incomes.  On  the  overall  distribution  of  the  direct 
is 
tax  burden,  Spain’s  direct 
progressive in the sense  that households in higher 
income quintiles contribute a larger share of their 
gross  income.  Nevertheless,  Spain’s  direct  tax 
system  is  less  progressive  than  the  one  of  other 
Member  States,  where  higher  income  quintiles 
contribute a larger share of their income via direct 
taxation than in Spain. The overall burden of direct 
taxation – at 11.7% of households’ gross income – 
is comparatively low in Spain.(27) 

Spain’s  labour  tax  burden  is  relatively  more 
progressive  than  the  EU  average.  Graph  A2.2 
shows  that  the  labour-tax  wedge(28)  for  Spain  in 

(27)  See:  Eurostat  –  “Distribution  of  direct  taxes  paid  by 
households as a percentage of their gross income by income 
quintile - experimental statistics“ for 2020 

(28)  The  tax  wedge  is  defined  as  the  sum  of  personal  income 
social-security 
taxes  and  employee  and  employer 
contributions  net  of  family  allowances,  expressed  as  a 
percentage of total labour costs (the sum of the gross wage 
and social-security contributions paid by the employer). 

36 

ESMedian (EU-27)2010202120222023202420102021202220232024Tax structureTotal taxes (including compulsory actual social contributions) (% of GDP)31.237.536.936.537.840.239.739.0Taxes on labour (% of GDP)16.619.118.718.919.820.520.120.0of which, social security contributions (SSC, % of GDP)11.813.312.512.612.913.012.712.7Taxes on consumption (% of GDP)8.19.69.59.010.911.210.910.5of which, value added taxes (VAT, % of GDP)5.16.86.96.46.87.37.47.1Taxes on capital (% of GDP)6.68.98.78.67.18.58.78.5Personal income taxes (PIT, % of GDP)6.98.69.09.08.69.69.49.3Corporate income taxes (CIT, % of GDP)1.82.62.72.92.22.93.23.2Total property taxes (% of GDP)2.12.92.72.51.92.22.11.9Recurrent taxes on immovable property (% of GDP)1.01.21.11.01.11.11.00.9Environmental taxes (% of GDP)1.61.71.51.62.52.42.12.0Effective carbon rate in EUR per tonne of CO2 equivalentsNA69.1NA71.1NA86.0NA84.8Tax wedge at 50% of average wage (single person) (*)30.527.928.828.528.333.931.831.531.531.8Tax wedge at 100% of average wage (single person) (*)39.739.539.640.240.640.939.939.940.240.3Corporate income tax - effective average tax rates (1) (*)29.025.725.725.721.319.319.118.9Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)7.38.57.66.88.68.27.97.7Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)8.77.535.532.6VAT gap (% of VAT total tax liability, VTTL) (**)4.14.66.67.0SpainEU-27Progressivity & fairnessTax administration & complianceBy tax baseSome tax types 
 
 
  
 
2024  was  lower  than  the  EU  average  for  single 
people  at  50%  of the  average  wage  and  close  to 
the  EU  average  at  higher  wage  levels.  Second 
earners,  at  a  wage  level  of  67%  of  the  average 
wage and whose spouses earn the average wage, 
face  a  higher  tax  wedge  in  Spain  than  single 
earners at the same wage level. At the same time, 
the tax wedge of second earners is close to the EU 
average of the second earner tax wedge. Also, the 
difference  between  the  second  earner  tax  wedge 
and the tax wedge of single persons at 67% of the 
average  wage  in  Spain  is  comparable  to  the  EU 
average  of  the  same  difference.  Spain’s  RRP 
includes  a  reform  to  make  the  tax  system  more 
progressive.  Spain  has  already  adopted  several 
measures  in  this  regard,  such  as  the  increases  in 
the  top  personal  income  tax  rates,  both  for  the 
general  and  savings  tax  bases,  approved  as  of 
2021. 

Graph A2.2: Tax wedge for single and second 
earners, % of total labour costs, 2024 

The tax wedge for second earners assumes a first earner at 
100% of the average wage and no children. For the full 
methodology, see OECD, 2016, Taxing Wages 2014-2015. 
Source: European Commission 

Recently,  some  reforms  have  tried  to 
increase  the  distributional  capacity  of  the 
Spanish  tax  system.  It  is  estimated  that  a 
‘solidarity’  charge  on  large  fortunes  (over  EUR  3 
million)  introduced  in  2023  will  produce  EUR 622 
million (0.04% of GDP) per year, and the increase 
in the tax rate for the top income decile from 28% 
to  30%  introduced  for  2025  in  the  savings 
schedule of the personal-income tax is expected to 
produce  EUR 222  million.  In  addition,  the  non-
indexation  of  personal  income  tax  brackets  at 
national  level,  along  with  the  increase  of  the 
labour-income-tax allowance for low income in the 
personal-income tax, is estimated to have led to a 
net aggregate budgetary gain of EUR 2.9 bn (0.2% 
of  GDP)  in  2022  and  EUR  2.2  bn  in  2023,  and 

prompted  a  marginal  reduction 
index (29).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

in  the  Gini 

compliance  gap 

Spain’s  VAT 
remains 
comparatively  low.  At  4.6%  of  VAT  total  tax 
liability, the VAT compliance gap in Spain  in 2022 
was  below  the  EU-27  average  (7.0%).  However, 
this  gap  increased  slightly  compared  with  2021 
(4.1%  in  2021  in  Spain),  a  trend  replicated  at  EU 
level (an EU average of 6.6% in 2021). This slight 
increase  between  2021  and  2022  is  probably 
related to the rapid recovery of the tourism sector 
(42.5% growth between 2021 and 2022) after the 
pandemic  and 
in  bankruptcy 
declarations  (these  increased  by  36.2%  in  Spain 
between 2021 and 2022) amid large increases in 
household  final  consumption  (these  rose  by  4.7% 
in  2022  in  Spain  compared  with  2021)  and 
investment 
household 
investment  in  Spain  increased  by  11.0%  and 
12.0% respectively in 2022 compared with 2021). 

(government 

increase 

and 

the 

to 

requires 

taxpayers 

Spain 
provide 
extensive amounts of information to the tax 
administration,  and  this  facilitates  the 
smooth management of taxes. Spain has put in 
place  a  powerful  IT  system  to  make  the  most  of 
its  tax  information,  including  through  the  use  of 
intelligence.  According  to  the  most 
artificial 
recently  available  data,  the  percentage  of  tax 
arrears that is considered collectable at the end of 
the year is one of the highest in the EU (equivalent 
to 84.7% of GDP in 2022). 

(29)  JRC simulations using EUROMOD 

37 

28.337.240.645.140.62025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - ESSingle earner - EU averageSecond earner -  ESSecond earner -  EU average 
      
 
PRODUCTIVITY 
ANNEX 3: INNOVATION TO BUSINESS  

to 

Scoreboard (30) 

Spain  has  a  good  science  base,  but  its 
scientific excellence has not yet succeeded in 
boosting  its  innovation  performance.  Spain 
performs  well  in  scientific  production,  and  public 
investment  is  making  gradual  progress. 
R&D 
the  2024  European 
However,  according 
innovation 
Innovation 
performance  reached  89.9%  of  the  EU  average, 
regional  disparities (31).  The 
with  significant 
innovation  potential  is  hindered  by  stagnating 
business  R&D  investments  and  inefficiencies  in 
public support for business innovation. As a result, 
Spain is still classified as a ‘moderate innovator’ in 
the scoreboard, highlighting the need for targeted 
its  productivity  and 
improvement 
competitiveness.  

to  boost 

its 

Science and innovative ecosystems 

(2.24%)  and 

The  Spanish  science  system  performs  well 
and  public  R&D  has  been  increasing,  but 
further efforts are needed to reach national 
targets.  Over  the past  decade,  R&D  intensity  (32) 
has  steadily  increased,  reaching  1.49%  of  GDP  in 
2023.  However,  this  remains  well  below  the  EU 
average 
its  national  target  of 
2.12% (33).  Public  R&D  expenditure  also  slowly 
improved  to  0.65%  of  GDP  in  2023,  but  lags 
behind the EU average (0.72%) and is far from its 
national  target  of  1.25% (34),  requiring  significant 
additional  efforts  (see  Graph  A3.1).  Moreover, 
regional  disparities  persist,  affecting  Spain’s 
overall 
like 
Madrid,  Catalonia,  Navarra  and  Basque  Country 
are classified as ‘strong innovators’ (35) with higher 

innovation  performance.  Regions 

and 

good 

rates 

levels  of  investment  in  R&D  than  the  Spanish 
average. Other regions continue to exhibit low R&D 
investment,  highlighting  an  innovation  divide (36). 
Despite  relatively  low  public  R&D  investment, 
Spain  has  a  good  science  base,  with  scientific 
publications  within  the  top  10%  most  cited 
scientific  publications  worldwide  stable  at  9%  in 
recent  years  and  close  to  the  EU  average. 
Moreover,  the  scientific  system  is  attractive  for 
researchers 
of 
exhibits 
international  collaboration,  with  co-publications 
reaching 51% of total publications, nearing the EU 
average  of  55.9%  (see  Table  A3.1).  Moreover, 
Spanish  participation  in  EU-funded  research  and 
innovation  (R&I)  projects  has  shown  very  good 
performance (37).  The  recovery  and  resilience  plan 
(RRP)  has  provided  a  major  boost  for  R&I,  with 
Spain’s  RRP  investing  the  most  in  terms  of 
absolute  investment  among  all  Member  States, 
with  EUR  17.6  billion  allocated  to  R&I  measures. 
Similarly,  the  European  Regional  Development 
Fund  invests  EUR  4.7  billion  in  improving  R&I 
advanced 
the  uptake 
capacities 
technologies across regions. Despite these efforts, 
Spain  still  needs  a 
long-term  strategy  that 
mobilises, coordinates and steers increased public 
investment for R&D, especially as RRP funding will 
end in mid-2026.  

and 

of 

Graph A3.1: Public expenditure on R&D as % of 
GDP 

(30)  2024 European Innovation Scoreboard, country profile: Spain. 

The scoreboard provides a comparative analysis of 
innovation performance in EU countries, including the relative 
strengths and weaknesses of their national innovation 
systems. 

(31)  Regional Innovation Scoreboard 2023.  

(32)  Eurostat. R&D intensity is defined as gross domestic 
expenditure on R&D as a percentage of GDP.  

(33)  Spanish science, technology and innovation strategy (EECTI 

2021-27) sets target for 2027. 

(34)  Spain sets a target for R&D public expenditure to reach 
1.25% of GDP in 2030 (Law Science, Technology and 
Innovation (Reform Act 17/2022 sept 2022). 

(35)  See Regional Innovation Scoreboard 2023, which has 
regional profiles of innovation performance for Spain.  

Source: Eurostat 

(36)  Regional Innovation Scoreboard 2023 and Cotec 2024 

analysis evolution I+D. 

(37)  Spain ranks third among Members States, just behind 

Germany and France, obtaining 11% of Horizon Europe 
funds. Spain ranked first in terms of leadership with the 
highest percentage as coordinators in collaborative R&I 
projects (16% Horizon Europe dashboard, report by the 
Centre for Development, Technology and Innovation (CDTI) 
on analysis of participation). 

38 

0.000.200.400.600.801.001.201.4020162017201820192020202120222023202520272030SpainEUDenmarkAustria1.25% 
 
   
 
 
 
in  fewer  companies. 

R&D,  which  is  relatively  concentrated  in  a 
small  number  of  businesses  in  traditional 
sectors.  Private  R&D 
investment,  although 
making  progress,  remains  well  below  the  EU 
average of 1.49% of GDP, reaching a modest level 
of  0.84%.  The  number  of  firms  carrying  out  R&D 
activities  has  been  decreasing  in  recent  years, 
pointing  to  a  stronger  concentration  of  R&I 
In  2023,  the 
activities 
business  sector  invested  57%  more  in  R&D  than 
before  the  financial  crisis  of  2008.  However,  this 
increase involved 21% fewer firms in 2023, which 
means  fewer  firms  are  innovating  compared  to 
before (42).  Innovation  outputs  are  weak  in  Spain, 
with  patent  applications  filed  under  the  Patent 
Cooperation  Treaty  per  billion  of  GDP 
(in 
purchasing  power  standards/PPS  €)  at  1.1%  well 
below  the  EU  average  of  2.8%  (see  Graph  A3.2). 
Moreover,  Spain  would  benefit  from  participating 
in  the  unitary  patent  system  as  it  offers  key 
advantages  in  promoting  innovation  and  boosting 
competitiveness (43). 

Graph A3.2: Innovation outputs 

a 

in 

requires 

information 

fragmented 

The  governance  of  R&I  policies  continues  to 
better 
and 
be 
coordination.  The  Spanish  R&I  system  has 
historically  been 
characterised  by  a  dual 
governance  structure,  with  shared  responsibility 
regional 
between 
central  government  and 
authorities.  Unfortunately,  coordination 
in  R&I 
policy  design  and 
implementation  has  not 
time,  while  monitoring  and 
improved  over 
evaluation  of  R&I  policies,  as  well  as  measuring 
the efficiency and effectiveness of public policies, 
remains  insufficient (38).  The  fragmentation  and 
overlap  of  R&I  initiatives has  persisted  over time, 
resulting 
and 
heavy 
administrative  burden  for  R&I  stakeholders (39), 
especially  innovative  firms  seeking  public  support 
for  R&I (40).  While  the  RRP  reform  of  the  Science, 
Technology  and  Innovation  Act  established  the 
Council  for  Science,  Technology  and  Innovation 
Policy 
the 
General  State  Administration  and  the  regions, 
these  measures 
continue  previous 
largely 
frameworks  that  have  not  fully  tackled  the 
ongoing  fragmentation.  Moreover,  Spain  would 
benefit  from  a  targeted  innovation  strategy  that 
acts  as  a  ‘country  strategy’.  This  would  permeate 
all public innovation administrations (41) through a 
‘whole  of  government’  approach  involving  all 
and 
relevant  ministries, 
innovation, 
transport, 
environment, health, agriculture or the economy. 

to  address  coordination  between 

including 

industry, 

science 

digital, 

Business innovation   

Source: Patent applications filed under PCT per billion GDP (in 
PPS€). EPO PATSTAT data and Eurostat GDP data 

Business  innovation  remains  weak  and  is 
characterised  by  low  private  investment  in 

(38)  Europeanisation of Public Policies in Spain (2022) and 
Informe Fundación CYD (2021/2022 and 2024). 

(39)  OECD STI Policy Papers. Improving knowledge transfer and 
collaboration between science and business in Spain 
(December 2021) as part of the project Roadmap to foster 
cooperation between universities, research, and business in 
Spain co-funded by the EU via the Structural Reform Support 
Programme (REFORM/IM2020/004). 

(40)  FEI and IND+I (April 2023). Propuestas para políticas de 

innovación en España 2023-2027. Madrid. Foro de Empresas 
Innovadoras (FEI) and Industria e Innovación (IND+I). 

(41)  Such as the Centre for Development, Technology and 

Innovation (CDTI) under the Ministry of Science, Innovation 
and Universities or ENISA (Empresa Nacional de Innovación) 
under the Ministry of Industry and Tourism.   

Spain’s  business  structure  is  highly  fragmented, 
consisting  mainly  of  small  and  medium-sized 
enterprises (SMEs) in low technology sectors such 
as  services  (tourism,  retail,  financial)  and  agri-
food. The country has experienced low productivity 
growth  for  several  decades (44).  According  to  the 
2024 EU Industrial R&D  Scoreboard (45), there are 
only  11  Spanish  companies  in  the  world  ranking 
(2 000  companies).  Their  total  R&D  investment 

(42)  Cotec 2024. Informe Cotec. 
(43)  It is still expected that Spain will sign the Unified Patent 
Court Agreement or, as a first step, enter the enhanced 
cooperation framework. 

(44)  OECD 2024. Reviving Broadly Shared Productivity Growth in 

Spain. 

(45)  European Commission: Joint Research Centre, The 2024 EU 

Industrial R&D Investment Scoreboard.  

39 

7.66.15.44.84.43.93.32.71.81.71.61.11.11.01.01.00.90.70.70.60.50.50.50.40.40.30.01.02.03.04.05.06.07.08.0SEFIDKDENLATFRBESIITLUIEESHUMTLVPTCZCYEEELHRSKPLLTBGEU average 2.8 
 
   
 
amounted  to  EUR  5.67  billion,  which  represents 
0.45% of the total R&D of all the companies in the 
scoreboard.  In  the  EU-800  ranking,  there  are  22 
Spanish  companies 
investing  EUR  5.9  billion 
altogether, which is 2.4% of the total EU-800. The 
largest  investors  carry  out  their  activities  in 
banking (EUR 2.2 billion), software (EUR 1.1 billion) 
and  telecommunications  (EUR  785  million),  which 
shows that Spain is more geared towards services. 
To address the low private R&D investment, Spain 
has  put  in  place  public  initiatives  through  direct 
and 
indirect  support  mechanisms  that  have 
witnessed  some  growth  since  2017  (See  Table 
A3.1). However, studies show a lack of use due to 
difficulties  caused  by  heavy  bureaucracy  for 
firms (46).  These 
therefore  be 
assessed to ensure simplification and better take-
up of these schemes.  

issues  should 

Spain  has  made  significant  progress  in  the 
adoption of digital technologies by SMEs and 
the  uptake  of  advanced  technologies  by 
firms  contributing  to 
its  Digital  Decade 
targets.  However,  further  efforts  are  still 
to  ensure  a  stronger  digital 
needed 
uptake (47).  The  adoption  of  digital  technologies 
by firms in Spain is progressing steadily, with the 
country performing slightly  above the EU average 
in  basic  digital  intensity  for  SMEs  (74.2%  vs 
73.9%).  The  size  of  the  ICT  sector  was  3.4%  in 
gross  value  added  and 
its  R&D  business 
expenditure amounted to 16.81% of the total R&D 
in  2021 (48).  On  the  uptake  of 
expenditure 
advanced  digital  technologies  by  all  firms,  the 
country  is  also  progressing,  although  it  performs 
below  the  EU  average  in  artificial  intelligence 
(11.3%  vs  13.5%).  According  to  data  from  2023, 
cloud uptake in Spain was 27.5% (vs 38.9% in the 
EU),  while  data  analytics  was  38%  (vs  33.2%  in 
the  EU).  To  support  the  further  adoption  and 
development  of  digital  technologies,  Spain  has 
developed reforms and investments under its RRP, 
including  the  Digital  Spain  Agenda.  Furthermore, 
the  European  Regional  Development  Fund 
accounts for EUR 1.9 billion worth of added-value 

(46)  FEI and IND+I (April 2023) and Informe Cotec, October 2024.  

(47)  The Digital Decade policy programme sets out a pathway for 

the EU’s digital transformation, including concrete 
commitments from Member States to commonly achieve 
objectives (e.g. competitiveness, resilience, sovereignty) and 
digital targets by 2030.  

(48)  ICT sector size (2018 latest data); Eurostat and R&D in ICT 

in 

for 

reaping 

benefits 

the 
companies, 

investments 
of 
research 
digitalisation 
organisations  and  public  authorities.  However, 
Spain  should  continue  its  efforts  to  support  the 
digitalisation  of  firms,  in  particular  to  encourage 
the adoption of advanced technologies in order to 
further boost innovation.   

indicating 

challenges, 

Science-business  linkages  are  weak  despite 
some  recent  progress.  Public  and  private 
scientific joint publications as a percentage of the 
total  number  of  publications  –  a  measure  of 
public-private  collaboration  in  science  –  is  only 
6.8%  of  the  total  number  of  publications  (below 
the EU average of 7.7%). An in-depth study by the 
OECD (49)  provided  a  clear  diagnosis  of  the  main 
structural, 
persistent 
regulatory  and  framework  weaknesses  that  are 
unfavourable  for  stimulating  business-academic 
collaboration. Some of the main recommendations 
included  (i)  improving  the  governance  of  public 
research  organisations  to  make  them  more 
performance-based;  (ii)  increasing  the  level  of 
professionalisation  of  knowledge  intermediation 
services;  and  (iii)  introducing  measures  to  better 
support  private  R&D  investment,  also  backed  by 
later  studies (50).  The  Spanish  RRP,  through  the 
strategic  projects  for  economic  recovery  and 
these 
transformation,  addresses 
challenges  in  areas  of  health,  space,  automotive, 
energy, agriculture or chips (51). These projects are 
public-private collaboration instruments that bring 
together  public  administrations,  companies  and 
science  &  technology  centres  to  promote  large 
projects  in  strategic  areas,  with  the  capability  to 
industrial 
boost  economic  growth, 
development, employment and competitiveness. In 
addition,  the  2022  Start-Up Law,  which  is part  of 
the  RRP,  aims  to  improve  the  conditions  for 
innovative  entrepreneurship  with  a  special  focus 
on  business  and  science  cooperation (52).  One  of 
the primary goals is to ensure legal  certainty and 
transparency for all stakeholders involved, thereby 

innovation, 

some 

of 

(49)  OECD STI Policy Papers. Improving knowledge Transfer and 
collaboration between science and business in Spain. 
(December 2021) as part of the project Roadmap to foster 
cooperation between universities, research and business in 
Spain co-funded by the European Union via the Structural 
Reform Support Programme (REFORM/IM2020/004).  

(50)  Informe Fundacion CYD 2024. Chapter 3.  

(51)  Strategic projects for economic recovery and transformation, 

PERTE.  

sector (data from 2021).  

(52)  Spanish Start-Up Law. (Law 28/2022).  

40 

 
 
 
start-ups. 

In  addition, 

creating  a  conducive  environment  for  research-
the  Spanish 
based 
government  has  announced  that  it  will  update  its 
knowledge  transfer  and  collaboration  plan (53). 
Despite  these  promising  measures,  Spain  still 
needs  to  develop  a  more  comprehensive  set  of 
in  boosting 
measures  to  be  more  effective 
science-business 
improve 
technology transfer and knowledge valorisation.   

collaboration 

that 

Financing innovation 

The  administrative  burden  for  accessing 
financial support for innovation, in particular 
the  overall 
coupled  with 
for  SMEs, 
complexity  due  to  fragmentation,  continues 
to hamper innovation in Spain. Venture capital 
as  a  percentage  of  GDP  reached  0.075  in  2023 
(very close to the EU average of 0.078). However, 
recent  studies  show  that  excessive  administrative 
barriers (54)  hamper  better  access  to  R&I  finance 
for SMEs. There are schemes for access to venture 
capital  as  well  as  direct  and  indirect  support  for 
business  R&D  through  grants  and  tax  incentives, 
but their complexity makes it difficult for SMEs to 
access  them  (see  Annex  5).  However,  the  current 
support  measures  need  to  improve  and  include 
in  tools  and 
other  actions  such  as  training 
methodology 
and 
advice 
together  with 
management of R&D projects to help develop R&D 
capabilities  beyond 
the  execution  of  R&D 
projects (55).  In  addition,  firms  demand  better 
coordination  of 
the  European,  national  and 
regional  support  frameworks  in  order  to  increase 
the 
public-private 
collaboration (56). In 2023, a significant percentage 
of  Spanish  firms  also  continued  to  highlight 
business  regulations  as  a  major  obstacle  to 
investment  compared  to  the  EU  average (48%  vs 
22.2%) (57).  

effectiveness 

of 

Innovative talent 

A  suitable  talent  pool  and  skills  for 
innovation remain a challenge for Spain. New 
graduates  in  science  and  engineering  reached 
16.3%  (per  thousand  of  the  population)  in  2022, 
below  the  EU  average  of  17.5%.  However, 
graduates  in  the  field  of  computing  are  at  5.3%, 
(per  thousand  of  the  population),  which  is  above 
the  EU  average  of  3.6% (See  Table  A3.1)  Overall, 
the  number  of  university  graduates  in  STEM 
disciplines  has  decreased  by  more  than  six 
percentage points (pps) in the last decade (2013-
2022).  By  contrast,  in  the  EU  it  has  increased  by 
1.2 pps (58). In addition, the number of researchers 
employed  by  the  business  sector  remains  low  at 
2.7% (per thousand of the active population), less 
than  half  of  the  EU  average  of  5.6%  (see  Table 
A3.1).  This  points  to  clear  deficits  in  innovative 
talent.  In  response,  through  the  RRP  Spain  has 
adopted  measures  to  tackle  skills  shortages, 
especially  digital  and  ICT  (see  Annex  12).  The 
success  of  these  measures  will  need  to  be 
assessed over time. 

is 

education 

Entrepreneurship 
well 
integrated into the Spanish education system 
across  all  education  levels.  Entrepreneurship 
competences  are  embedded 
into  the  school 
curricula  in  a  comprehensive  way,  from  primary 
school  to  upper  secondary  education  (to  both 
general  and  VET 
tracks).  Entrepreneurship 
education  is  also  offered  in  higher  education,  for 
instance 
training  or 
mentorship  programs.  Nevertheless,  to  further 
strengthen  entrepreneurship  education,  it  could 
have more focus on green and equitable growth.  

courses  and 

through 

(53)  The knowledge transfer and collaboration plan was approved 
December 2022 and Minister Morant announced in 2024 
that this plan will be updated.  

(54)  Cotec (October 2024). Plan de Recuperación, Transformación 

y Resiliencia: Balance y propuestas de mejora. 

(55)  FEI and IND+I (April 2023). and Cotec (September 2024). 

(56)  EY Insights. 2024.  

(57)  According to the European Investment Bank Group Survey on 

Investment and Investment Finance.  

(58)  Informe CYD 2024 (Chapter 2).  

41 

 
 
 
Table A3.1:  Key innovation indicators 

(1) EU average for the last available year or the year with the highest number of country data. 
Source:  Eurostat, DG JRC, OECD, Science-Metrix (Scopus database), Invest Europe, European Innovation Scoreboard 

42 

R&D intensity (gross domestic expenditure on R&D as % of GDP)1.291.201.401.401.411.49:2.243.45Public expenditure on R&D as % of GDP0.610.540.610.610.610.65:0.720.64Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 9.48.79.08.8:::9.612.3Researchers (FTE) employed by public sector (Gov+HEI) per thousand active population3.53.74.04.14.14.3:4.2:International co-publications as % of total number of publications41.848.949.449.249.651.0:55.939.3Business enterprise expenditure on R&D (BERD) as % of GDP0.680.660.780.780.790.84:1.492.70Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP0.320.300.360.350.33::0.400.30Researchers employed by business per thousand active population2.02.22.52.62.73.0:5.7:Patent applications filed under the Patent Cooperation Treaty per billion of GDP (in PPS €)1.61.31.61.41.1::2.8:Employment share of high-growth enterprises measured in employment (%)10.0522.2615.42::::12.51:SMEs with at least a basic level of digital intensity% SMEs (EU Digital Decade target by 2030: 90%)::::67.52:74.1572.91:Data analytics adoption% enterprises (EU Digital Decade target by 2030: 75%):::::38.0140.9433.17:Cloud adoption% enterprises (EU Digital Decade target by 2030: 75%):::27.02:27.2533.138.86:Artificial intelligence adoption% enterprises (EU Digital Decade target by 2030: 75%):::7.67:9.1811.3113.48:Public-private scientific co-publications as % of total number of publications5.56.36.36.66.96.8:7.78.9Public expenditure on R&D financed by business enterprises (national) as % of GDP0.0390.0300.0390.0390.039::0.0500.020Total public sector support for BERD as % of GDP:0.1830.2310.2440.249::0.2040.251R&D tax incentives: foregone revenues as % of GDP0.1010.1280.1450.1390.138:0.1020.141BERD financed by the public sector (national and abroad) as % of GDP 0.1100.0830.1020.1000.110::0.1000.110Venture capital (market statistics) as % of GDP, total (calculated as a 3-year moving average)0.0240.0420.0500.0750.0820.075:0.078:Seed capital (market statistics) as % of GDP 7.43.56.95.35.44.0:7.3:Start-up stage funding share (% of total venture capital)47.451.854.338.939.741.2:44.0:Later stage funding share (% of total venture capital)45.244.638.855.855.054.8:48.7:New graduates in science and engineering per thousand population aged 25-3412.615.715.516.816.3::17.5:Graduates in the field of computing per thousand population aged 25-341.93.23.64.85.3::3.6:2023EU average (1)USAPublic support for business innovationFinancing innovationSpain201220172020202120222024Innovative talentHeadline indicatorScience and innovative ecosystemsR&D investment & researchers employed in businessesInnovation outputsDigitalisation of businessesAcademia-business collaboration 
 
      
 
ANNEX 4: MAKING BUSINESS EASIER 

The  Spanish  economy  continued  to  grow  in 
2024  and  the  outlook  is  favourable  for  the 
business environment, despite a context of global 
uncertainty (59).  Productivity  per  hour  worked  in 
Spain nevertheless remains below the EU average. 
The  main  challenges (60)  in  order  to  increase 
productivity  and  improve  business  environment 
are:  reducing  administrative  burden;  making  it 
easier for firms to scale up; reinforcing innovation; 
fostering  market  unity  (including  standardisation 
at  regional  level);  increasing  integration  with  the 
rest  of  the  single  market;  access  to  non-bank 
in 
financing; 
professional  services  and  retail;  making  skilled 
staff  available;  adopting  adequate  information 
and communication technologies (ICT); and making 
the  institutional  framework  more  efficient.  Spain 
established the Spanish Productivity Council on 30 
July  2024 
and 
analyse 
competitiveness developments in Spain. 

productivity 

restrictions 

regulatory 

reducing 

to 

The  Spanish  economy  was  very  dynamic  in 
2024,  but  more  private  and  public 
investment  is  needed  in  order  to  sustain 
growth.  Growth  was  mainly  driven  by  the  strong 
performance of tourism and services exports, and 
by  an  increase  in  public  consumption (61).  Spain’s 
public  investment (62)  (supported  by  the  Recovery 
and  Resilience  Fund 
(RRF))  has  significantly 
increased  over the  last  five  years  (2020: 0.0%  to 
2024:  0.74%)  but  is  still  below  the  EU  average 
(1.3%). Private investment (63) has also been lower 
than the EU average over the last five years (3.5% 
vs the EU average of 4.0%). This downward trend 
in private investment has negative implications for 
the  business  climate.  To  increase  investment, 
Spain needs more coordination and to simplify the 
regulatory environment.  

Uncertainty,  non-availability  of  skilled  staff 
and  business regulations  remain firms’ main 
investment  obstacles (64).  According  to  the  EIB 
Investment  Survey  2024,  there  is  uncertainty 
about the future (82% vs the EU average of 79%), 
availability of skilled staff (78% vs the EU average 
of 77%) and business regulations (78% vs the EU 
average  of  66%).  According  to  ECFIN  BCS,  the 

share of businesses facing labour shortages (65) is 
increasing  (7.8%  in  2024  vs  6.6%  in  2023)  but 
remains  much  lower  than  the  EU  average  20.2% 
(see  the  Annex  on  Labour  Market)).  The  share  of 
Spanish  businesses 
supply 
constraints is decreasing (8.1% in 2024 compared 
with 13.6% in 2023) and is lower than EU average 
(10%). 

facing  material 

Fewer  firms  in  Spain  than  in  the  rest  of  the 
EU  think  that  energy  prices,  and  transport 
and  digital  infrastructures  are  obstacles  to 
investment.  According  to  the  EIB  Investment 
Survey (66), 68% of Spanish firms think that energy 
prices are an obstacle (vs the EU average of 77%). 
50%  of  Spanish  businesses  think  that  transport 
infrastructure is an obstacle to investment (vs the 
EU  average  of  45%).  39%  of  Spanish  businesses 
think  that  digital  infrastructure  is  an  obstacle  to 
investment (vs the EU average of 41%). Spain has 
made  considerable  efforts  to  make  progress  on 
digital  and  transport  infrastructure  and  Spain’s 
recovery  and  resilience  plan  (RRP)  has  relevant 
investments in these areas. 

Spain’s  active  deployment  of  connectivity 
infrastructures allowed it to nearly meet the 
EU  targets  for  VHCN,  FTTP  and  5G  coverage 
in  2024.  In  2023,  Spain’s  VHCN,  FTTP  and  5G 
coverages  were  96.3%,  95.2%  and  92.3% 
respectively  (all  three  were  higher  than  the  EU 
averages of 78.8%, 64.0% and 89.3%). 

in 

Cybersecurity 
Spanish 
awareness 
enterprises is rising. ICT security incidents were 
3.6%  in  2022  and  remain  the  same  in  2024, 
standing above the EU average of 3.4%. 89.9% of 
enterprises  implemented  security  measures,  but 
only  57.1%  of  enterprises  made  their  employees 
aware of their obligations on ICT security (slightly 
below the EU average of 59.9%) (67).  

The  share  of  Spanish  SMEs  affected  by  late 
payments  remains  a  concern.  The  percentage 
of  Spanish  SMEs  experiencing  late  payments  was 
lower  in  2023  than  the  EU  average.  Specifically, 
late 
41.2%  of  Spanish  SMEs  experienced 
payments  versus  the  EU  average  of  48.6%.  This 
was nevertheless a slight increase on 2022, when 

(59) Challenges Spanish economy. Banco de España. 
(60) OECD Investment Survey Spain 2023. 
(61) IMF 2024 Article IV Consultation. Spain. 
(62) AMECO. 
(63) AMECO. 
(64) EIB Investment Survey 2024. 

(65) Business Consumer Survey 2024. ECFIN. 
(66) EIB Investment Survey 2024. 
(67) ICT security in enterprises - Statistics Explained 

43 

 
 
 
 
 
36.5%  of  Spanish  SMEs  experienced 
payments.  

late 

The  business-to-business  payment  gap  in 
2024 increased slightly in 2023. It is now 17.6 
days (above the EU average of 15.5 days) (68). The 
average  payment  term  in  the  private  sector  in 
2023  was  70  days  (3  days  longer  than  the 
estimate made for 2022 and far from the 60 days 
permitted by Law 15/2010). Large companies are 
more likely to be the slowest in paying (59%) and 
only 26% of them pay within the legal deadline of 
60 days (69). 

Graph A4.1: Making Business Easier: selected 
indicators.* 

Share of (1) enterprises, (2) average intra-EU exports and 
imports in GDP, (3) firms, (4) SMEs. 
* Q4 data on trade integration is not yet available. 
Sources: (1) EIB IS, (2) Eurostat, (3) ECFIN BCS, (4) SAFE 
survey. 

The public sector’s payment gap has slightly 
decreased but remains above the EU average 
(15.7 days vs. 15.2 days). On 30 April 2024, the 
Council 
Royal 
Decree 439/2024  (in  accordance  with  the  ‘Create 
and  Grow’  Law  that  is  part  of  the  recovery  and 
resilience  plan  (RRP)).  This  royal  decree  created  a 

approved 

Ministers 

of 

(68) Intrum Payment Report. 
(69) Plataforma Multisectorial de la Morosidad. 

44 

State  Observatory 

new 
Late 
Payments (70). It is estimated that this will benefit 
a  significant  number  of  companies,  particularly 
SMEs (71). 

Private 

of 

The  Spanish  labour  market  has  a  high  level 
of  skills  polarisation,  with  persistent  skills 
mismatches.  Spain  has  one  of  the  highest 
overqualification rates in the EU, which indicates a 
mismatch  between  labour  market  needs  and 
educational  supply.  The  high  share  of  students 
underachieving  in  mathematics,  although  below 
the  EU  average,  and  the  low  share  of  top 
performers  in  the  2022  PISA  survey (72)  may 
jeopardise future productivity and competitiveness. 
Tertiary  educational  attainment  (TEA)  is  steadily 
increasing (73). 

Regulatory and administrative 
barriers 

A  significant  majority  of  firms  in  Spain 
believe  that  regulation  has  been  a  major 
obstacle to  investment (74).  Spain  is  one  of  the 
Member  States  with  the  highest  share  of  firms 
identifying  regulation  as  a  major  obstacle  to 
investment (60.4 % in 2024 vs the EU average of 
24.5%(75)).  Spain  has  adopted  several  laws (76)  to 
reduce financial and administrative barriers to the 
development  of  firms.  The  ‘Create  and  Grow’ 
Law (77) and the Law on Start-ups (under the RRP) 
introduced  incentives  for  the  creation  and  growth 
of  companies,  including  innovative  ones  (see  the 
Annex on Innovation to Business) (78). 

Spain’s  business  registration  rate  declined 
slightly  in  2022,  rebounded  in  2023  and 
outperformed  in  2024.  When  compared  with 
2021  (with  a  base  index of  100),  the  registration 
it 
rate  dropped  to  98.7 

in  2022.  However, 

(70) Observatorio Estatal de la Morosidad Privada. 
(71) Ministerio  de  Industria  y  Turismo  –  El  Gobierno  crea  el 

Observatorio Estatal de Morosidad Privada. 

(72) PISA  2022  Results  -  The  State  of  Learning  and  Equity  in 

Education en.pdf, page 28. 

(73) ETM 2024_key findings from the country reports.docx 
(74) EIB Investment Survey 2024. 
(75) Commission calculation based on EIB Investment Survey 

2024. 

(76) Spain OECD Economic Survey 2023 5b50cc51-en.pdf 
(77) BOE Law Create and Grow. 
(78) BOE Law on Start Ups. 

41.514.48.119.660.447.916.61041.624.5010203040506070from private entitiesfrom public entitiesMaterial shortages as afactor limiting productionEU Trade IntegrationRegulation as a majorobstacle to investment(4) Late payments(3) Shortages(2) SingleMarket(1) RegulatoryburdenShare (%)EU27ES 
      
 
 
increased to 107.4 in 2023 and further  increased 
in  2024.  This  growth  significantly 
to  117.6 
outpaced  the  EU  average,  which  stood  at  103  in 
2024 (79). 

Spain  has  a  relatively  efficient  insolvency 
Insolvency  Law (80) 
framework.  The  2022 
reformed the framework for insolvency procedures 
and  restructuring  plans  to  favour  out-of-court 
settlements and swift reaction to financial distress 
situations (81).  According  to  ASPAC (82),  the  reform, 
which brought key changes in the restructuring of 
firms  and  the  administration  of  microenterprises, 
has  achieved  significant  progress,  although 
important  challenges  persist.  (see  the  Annex  on 
Capital  markets,  financial  stability  and  access  to 
finance). 

The single market  

EU  integration  offers  Spanish  businesses 
(particularly  SMEs)  opportunities  for  growth 
by enabling them to better exploit the single 
market. Spanish firms benefit from lower barriers 
to  entry  and  expansion  trade  than  the  OECD 
trade  and 
average, 
economic exchange (83). 

international 

facilitating 

indicates  an  opportunity 

Spain can deepen its participation in the EU’s 
significant  difference 
single  market.  The 
between  Spain’s  intra-EU  trade (84)  of  15%  (ratio 
of  trade  volumes  to  GDP)  and  the  EU  average  of 
for  Spanish 
43% 
businesses  to  increase  their  participation  in  the 
EU’s  single  market  and  boost  economic  growth, 
competitiveness  and  prosperity.  Several  factors 
low 
can  explain 
productivity  growth;  the  small  size  of  companies; 
education  skills;  the  minor  role  of  innovation  and 
technological  capital;  trust  in  institutions;  and  the 
large size of the Spanish market (85). 

integration 

rate: 

this 

low 

Spanish exports have boomed since 2008 (86). 
Between 2008 and 2023, Spanish exports grew as 

(79) Eurostat Business Registration. 
(80) Disposición 14580 del BOE núm. 214 de 2022. 
(81) Spain OECD Economic Survey 2023 5b50cc51-en.pdf. 
(82) ASPAC. Ley concursal. Retos pendientes. 
(83) Spain_PMR country note.pdf. 
(84) Eurostat. 
(85) Bank of Spain. 
(86) Bank of Spain. 

45 

a share of GDP from 26% to 39%. In 2023, goods 
exports  made  up  68%  of  total  sales  abroad  and 
accounted  for  26.4%  of  GDP.  Services  exports 
grew even more sharply. Between 2008 and 2023, 
they increased by 66% and their ratio to GDP rose 
from  8.2%  to  12.5%.  This  surge  was  driven  by 
strong  growth  in  the  export  of  both  travel  and 
non-travel  services.  In  2024,  the  total  number  of 
international  tourists  reached  a  record  level  of 
almost  93.8  million  (87),  generating  around  126 
billion  euros  expenditure,  confirming  Spain  as  a 
leading tourist destination. 

Spain  can  do  better  in  transposing  single 
market  rules  into  national  legislation (88). 
Spain’s  transposition  of  single  market  directives 
into  national  legislation  is  well  below  the  EU 
average.  The  percentage  of  all  directives  not 
transposed in 2024 in Spain was 1.8% (vs 0.8% in 
the  EU)  and  the  average  delay  in  transposing 
those directives in Spain was 18.7 months (vs 11.9 
months  in  the  EU) (89).  The  conformity  deficit  (the 
percentage  of  wrongly  transposed  directives)  is 
also  high  in  Spain  at  1.2%  (the  EU  average  is 
0.9%).  Both  the  number  and  duration  of  pending 
single  market  infringement  proceedings  in  Spain 
were  much  higher  than  the  EU  average  in  2024. 
Spain ranks 27th out of the 27 Member States for 
both indicators. 

centre 

Spain’s  SOLVIT (90) 
is  a  well-
functioning  active  centre  within  the  SOLVIT 
network.  In  2024,  SOLVIT  Spain  resolved  86.4% 
of  the  problems  that  EU  nationals  faced  in  Spain 
(vs the EU average of 85%). 

Spain  has  a  rather  competition-friendly 
regulatory  framework  that  performs  better 
than  the  OECD  average (91).  However,  the 
notarial  profession  could  benefit  from  reduced 
barriers to competition, because it ranks 25 out of 
the  43  countries  permitting  in  the  OECD  survey. 
According 
Commission’s 
restrictiveness  indicator (92),  civil  engineers  and 

European 

the 

to 

(87)  Instituto Nacional Estadística España. INE. 
(88) Country data: Spain | The Single Market and Competitiveness 

Scoreboard. 

(89) Country  data:  Spain  |  Single  Market  and  Competitiveness 

Scoreboard. 

(90)  Country data: Spain | Single Market and Competitiveness 

Scoreboard. 

(91) Spain_PMR country note.pdf. 
(92) COM(2021) 385 final, 

reform 
recommendations  for  regulation  in  professional  services  of 
2017. 

Communication 

on 

 
 
 
tourist  guides  have  to  overcome  higher  barriers 
than  the  EU  average.  Barriers  for  civil  engineers 
concern requirements to obtain authorisation from 
the  professional  association  for  certain  projects. 
Barriers  for  tourist  guides  result  from  differences 
in regional regulations. 

Spain  has  one  of  the  most  restrictive  retail 
regulatory frameworks in  the  EU.  In  2022,  its 
RRI  score (93)  of  2.92  exceeded  the  EU  median  of 
1.70.  This  restrictive  environment  was  particularly 
pronounced  in  the  operational  pillar,  where  Spain 
scored  2.60  (significantly  higher  than  the  EU 
median of 1.20), partially due to limited flexibility 
in  shops’  opening  hours  and  the  existence  of 
retail-specific  taxes.  This  is  confirmed  by  the 
indicator 
OECD’s  Product  Market  Regulation 
(PMR) (94) which highlights Spain’s retail market as 
highly  restrictive;  Spain’s  regulatory  barriers  to 
competition  could  be  reduced  in  retail  distribution 
and retail sales in the medicines sector in order to 
increase  competition  and  benefit  consumers.  The 
national government, regions and local authorities 
have  approved  a  2025  action  plan  (in  the 
framework  of  ‘Regime  20’)  for  the  elimination  of 
bureaucratic  barriers  for  businesses.  The  plan 
includes measures to reduce barriers in areas such 
as authorisation to establish retail outlets. 

Public procurement  

steps 

taken 

for  Ecological  Transition  and 

Spain  has 
to  promote 
sustainable procurement, but further efforts 
are required in order to fully integrate green 
procurement  practices.  MITECO  (the  Spanish 
Ministry 
the 
Demographic  Challenge)  has  issued  a  manual  to 
promote  the  inclusion  of  sustainability  criteria  in 
public 
public 
procurement  is  crucial  to  transforming  public 
purchasing  in  Spain.  Implementing  sustainable 
public  procurement  will  enable 
the  Spanish 
government  to  reduce  its  environmental  impact, 
and to foster innovation and competitiveness. 

procurement (95). 

Sustainable 

(93) Spain RRI 2022Microsoft Power BI. 
(94) Spain_PMR country note.pdf. 
(95) 
to  promote 
sustainability criteria in public procurement.. 

MITECO  manual 

the 

inclusion  of 

46 

 
 
Table A4.1:  Making Business Easier: indicators. 

*Change in methodology in 2024: reporting late payments from public and private entities separately. 
**Data on single bids for 2024 is provisional and subject to revision. Please note that approximately 18% of the total data is 
currently missing, which may impact the accuracy and completeness of the information. Due to missing data, the EU average of 
direct awards data is calculated without Romania. 
Sources: (1) ECFIN BCS, (2) Eurostat, (3) EIB IS, (4) Digital Decade Country reports, (5) Intrum Payment Report, (6) SAFE survey, 
(7) OECD, (8) up to 2023: Single Market and Competitiveness Scoreboard, 2024: Public procurement data space (PPDS). 

47 

POLICY AREA20202021202220232024EU-27 average7.117.226.413.68.110.04.44.57.76.67.820.20.40.60.70.70.72.335.141.832.623.527.513.4-93.893.396.3-78.8-88.991.095.2-64.0-58.982.392.3-89.3Regulatory environment63.664.153.047.860.424.521.312.516.315.217.615.623.911.222.016.915.715.1from public or private entities in the last 6 months40.633.936.441.2--from private entities in the previous or current quarter----41.547.9from public entities in the previous or current quarter----14.416.616.818.821.220.219.641.60.0360.0360.0360.0360.0420.0501.92.22.51.31.80.81.31.01.31.31.20.987.179.585.488.086.484.958.049.046.044.042.024.42827283333-151210987.0SpainINDICATOR NAMEInvestment climateShortagesMaterial shortage, firms facing constraints, %1Labour shortage, firms facing constraints, %1Vacancy rate, vacant posts as a % of all available ones (vacant + occupied)2InfrastructureTransport infrastructure as an obstacle to investment, % of firms reporting it as a major obstacle3VHCN coverage, %4FTTP coverage, %45G coverage, %4Reduction of regulatory and administrative barriersImpact of regulation on long-term investment, % firms reporting business regulation as a major obstacle3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment5Payment gap - public sector, difference in days between offered and actual payment5Share of SMEs experiencing late payments, %*6Single MarketIntegrationEU trade integration, % (Average intra-EU imports + average intra EU exports)/GDP2EEA Services Trade Restrictiveness Index7ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, % resolution rate per country8Number of pending infringement proceedings8Competition and transparency in public procurementSingle bids, % of total contractors**8Direct awards, %**8Public procurement 
 
 
      
 
ANNEX 5: CAPITAL MARKETS, FINANCIAL STABILITY AND ACCESS TO FINANCE 

Amidst  sustained  and  elevated  domestic 
savings,  the  Spanish  economy  benefits  from 
a  good  potential 
for  capital  market 
development,  as  well  as  well-developed  and 
stable  banking  and  non-banking  financial 
sectors.  Spain’s  economy 
is  heavily  bank-
dependent,  with  limited  development  of  capital 
markets,  particularly  compared  with  other  EU 
countries.  Most  Spanish  companies  rely  on  bank 
financing  rather  than  capital  markets.  Household 
savings  are  also  lower  than  the  EU  average  and 
are  held  mainly  in  deposits  and  real  estate.  The 
capital  markets  remain  comparatively  small  in 
terms  of  capitalisation  and  volumes  traded. 
Spanish  households’ 
invested 
conservatively,  as  financial  instruments  form  only 
a  small  part  of  their  wealth.  The  investment 
portfolio  of  domestic  institutional  investors  is 
focused  on  debt  securities  and  investment-fund 
shares. In recent years, private equity and venture 
capital  have  been  more  active,  with  many  new 
entities  setting  up  in  Spain.  However,  the  local 
venture  and  growth  capital  markets  are  not  yet 
sufficiently  developed  to  meet  all  the  financing 
needs  of  innovative  firms.  Spain’s  recovery  and 
resilience plan (RRP) includes measures to support 
the financing of start-ups and the development of 
capital markets. 

savings  are 

Availability and use of domestic 
savings 

The  Spanish  economy  invests  the  bulk  of  its 
net  savings  domestically.  From  2014  until 
2023, the private savings ratio, net of fixed capital 
consumption,  stood  on  average  at  11.6%  of  GDP, 
reaching a maximum of 14% in 2020 (see Graph 
A3.1).  The  net  private  investment  ratio,  which 
denotes  the  net  contribution  of  the  private  sector 
to  capital  accumulation  in  the  economy,  recorded 
an  average  of  4.3%  of  GDP  during  the  reference 
ten-year period and reached 5.8% in 2019. At the 
same 
the 
government  has  been  running  recurrent  and 
sizable  budgetary  deficits,  which  during  2014-
2023 on average amounted to a budgetary deficit 
of  4.9%.  Regardless  of  these  general  government 
budgetary  deficits,  the  sustained  and  positive 
difference  between  net  domestic  savings  and  net 
investment,  resulted  in  structural  net  lending  by 
Spain to foreign economies that averaged 2.4% of 
GDP  during  2014-2023,  with  a  peak  of  3.7%  in 

the  same  period 

time,  during 

2023. Thus, most of the net savings in Spain have 
been  invested  domestically  (to  finance  private 
investment or borrowing by the government), while 
a comparatively smaller share was used to finance 
projects abroad.  

Graph A5.1: Net savings-investment balance 

Source: AMECO. 

While the Spanish economy has accumulated 
significant  foreign  assets,  the  even  more 
sizable 
investments  from  abroad  have 
resulted  in  a  negative  net  international 
investment position. As of Q3 2024, total assets 
on  foreigners  reached  189%  of  GDP,  while 
liabilities  to  foreigners  stood  at  almost  238%  of 
GDP,  resulting  in  a  net  international  investment 
position  (NIIP)  equivalent  to  -48.4%  of  GDP  (see 
Graph  A5.2).  The  stock  of  official  foreign  reserve 
assets, which amounted to 6.2% of GDP, was the 
only  factor  that  contributed  positively to  the NIIP. 
All  investment  categories  contributed  to  a  similar 
extent  to  the  negative  NIIP.  The  net  portfolio 
investments,  which  are  directly  affected  by  the 
price volatility of equity valuations, stood at -18% 
of  GDP  as  of  Q3  2024,  while  net  foreign  direct 
investment  was  at  16%.  The  net  stock  of  other 
investments amounted to almost -21% of GDP at 
the same time. While the Spanish economy seems 
well  integrated  in  international  capital  flows  as  a 
source  of  foreign  capital,  it  remains  a  net  capital 
importer across all investment categories. 

48 

-10-5051015202530352017201820192020202120222023% of GDPPrivate investment, netLending to the governmentPrivate saving, netPrivate saving, grossBorrowing from the rest of the world 
 
   
 
 
Graph A5.2: International investment position 

Source: ECB. 

Structure of the capital markets and 
size of the financial sector 

The Spanish economy stands out with one of 
the  domestic  capital  markets  with  potential 
for  further  growth  in  the  EU.  The  market 
capitalisation of listed equity reached 47% of GDP 
at the end of 2023 (see Graph A5.3), which is well 
below the EU average of 67% of GDP. At the same 
time,  non-financial  corporations  accounted  for 
73% of that capitalisation, which implies that the 
stock  market  in  Spain  is  to  a  large  extent  geared 
towards funding the non-financial segment of the 
real  economy.  The  outstanding  volume  of  debt 
securities  reached  almost  141%  of  GDP  at  end-
2023, which is in line with the EU average. Bonds 
issued by the government and monetary financial 
institutions  (MFIs)  accounted  for  almost  66%  and 
22% of the total, respectively.  

Graph A5.3: Capital markets and financial 
intermediaries 

While  the  financial  sector  in  Spain  remains 
dominated  by  banks,  non-bank  financial 
intermediaries  also  play  an  important  role. 
Starting  from  256%  of  GDP  in  2020,  the  size  of 
the  banking  sector  steadily  declined  to  201%  of 
GDP in 2023, which remains below the EU average 
of 257%. Several large Spanish banking groups (in 
particular  Santander  and  Banco  Bilbao  Vizcaya 
international 
have 
Argentaria) 
substantial 
operations,  notably 
in  Latin  America,  United 
Kingdom  and  Türkiye.  The  Spanish  banking  sector 
is predominantly domestically owned (almost 95% 
in 2023), with the top five lenders owning almost 
70% of total banking sector assets.  

The  insurance  and  pension  funds  sectors,  with 
total  assets  of  almost  21%  of  GDP  and  11%  of 
GDP  at  end-2023,  play  a  lesser  role  in  the  non-
bank intermediation. Investment funds also play a 
role,  even  though  their  total  assets  dropped  by 
around 4 percentage points to almost 26% of GDP 
between  2021  and  2023 
(see  section  on 
institutional investors). 

Resilience of the banking sector 

The  Spanish  banking  sector 
is  well-
capitalised  and  exhibits  good  resilience  to 
risks.  Banking  sector  capitalisation  only  slightly 
improved  in  2024,  despite  very  strong  profits.  On 
the back of favourable profitability developments, 
banks  in  Spain  opted  for  dividend  pay-outs  and 
share  buy-backs.  The  system-wide  capital  ratio 
stood at 17.4% in Q3 2024, below the EU average 
(at  20.1%).  In  the  same  period,  the  Spanish 
banking  sector  reported  a  consolidated  common 
equity  tier  1  (CET1)  ratio  of  13.3%,  the  lowest  in 
the EU. Less significant credit institutions in Spain 
continued  to  have  higher  capital  ratios  than 
significant 
the 
capitalisation  of  Spanish  banks  is  aligned  with 
their business model and stands above the capital 
requirements  and  supervisory  guidance.  According 
to  the  2023  EBA  stress  test  (96),  the  participating 
Spanish  institutions  fared  better  than  the  EU 
aggregate,  as  they  experienced  a  comparatively 
smaller  negative 
the  adverse 
scenario  and  showed  a  greater  capacity  to 
generate  capital  revenue  under  the  baseline 

institutions.  Overall, 

impact  under 

credit 

Source: ECB, EIOPA, AMECO. 

(96)  See 2023 EU-wide stress test, July 2023. 

49 

-400-300-200-100010020030020172018201920202021202220232024-Q3% of GDPForeign Direct Investment, AssetsPortfolio Investment, AssetsOther investment, AssetsOfficial reserve assetsForeign Direct Investment, LiabilitiesPortfolio Investment, LiabilitiesOther investment, LiabilitiesNIIPNon-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIsPension fundsInsurance corporationsInvestment funds050100150200250 Listed equity               Bonds                      Assets by sector% of GDP 
  
     
 
scenario.  Banking  groups  in  Spain  have  issued 
securities  eligible  for  the  Minimum  Requirement 
for  own  funds  and  Eligible  Liabilities  (MREL). 
Against an average MREL binding target (including 
the  combined  buffer  requirements  CBR)  as  of  1 
January  2024  of  27.4%  TREA,  all  the  banks  in 
Spain meet their final MREL targets (97). 

loan 

(NPL) 

Despite  some  deterioration,  banks’  balance 
sheets  show  robust  asset  quality.  Supported 
by the decrease in the share of impaired assets in 
the loan book, due to the regular sales of NPLs by 
banks  and  the  rebound  in  new  lending,  the 
aggregate  non-performing 
ratio 
declined  to  2.6%  in  Q3  2024  (slightly  above  the 
EU average of 1.9%). Despite the overall increase 
in  bankruptcies  over  the  past  three  years,  the 
corporate NPL ratio has been on a downward path 
and reached 3.6% in Q3 2024, broadly in line with 
the  EU  average.  The  share  of  loans  that  have 
deteriorated significantly in credit quality (Stage 2) 
under 
International  Financial  Reporting 
Standard (IFRS) 9 has remained broadly stable and 
was  the  second  lowest  in  the  EU  at  the  end  of 
2024.  At  the  same  time,  banks’  aggregate 
coverage  ratio  of  NPLs  by  existing  provisions  has 
gradually  increased  to  43.8%  in  Q3  2024,  above 
the EU average (at 42.1%).  

the 

Spanish banks maintain very strong liquidity 
positions,  with  sustained  issuances  of  debt 
securities.  Banks  are  exposed  to  a  very  low 
liquidity  funding  risk  and  show  an  excellent  term 
adequacy  between  assets  and  liabilities.  All  credit 
institutions in Spain have liquidity  coverage ratios 
well  above  the  regulatory  minima.  Banks  have 
benefitted from the increase in term deposits, and 
from  the  issuance  of  debt  securities,  while  the 
monetary tightening by the ECB led to falling cash 
balances at central banks.  

Resilience of the non-bank financial 
intermediaries 

The  Spanish  insurance  sector  has  remained 
resilient and profitable. Gross earned premiums 
saw  significant  annual  growth  in  2023,  driven  by 
Spain's dynamic economy and a more normalised 

(97)  For additional information, see the European Banking 

Authority’s MREL Dashboard - Q4 2023. 

50 

interest  rate  environment.  The  strong  recent 
performance of the life insurance sector has been 
driven  by  the  official  interest  rate  policies  that 
have  particularly  benefited  savings-linked 
life 
insurance  business.  The  Spanish  life  market  is 
dominated  by  annuities  and  traditional  savings 
products  with  investment  guarantees,  which  are 
more  attractive  to  customers  when  interest  rates 
are  high.  Spanish  insurance  companies  maintain 
an  overall  adequate  level  of  capitalisation,  with 
average  solvency  capital  requirement  (SCR)  of 
almost  242%,  somewhat  below  the  EU  average, 
with  relatively  lower  ratios  in  the  life  segment. 
However,  downside  risks  remain,  given  the  high 
uncertainty in the macro-financial environment. On 
a  positive  note,  Spain  is  among  the  EU  Member 
States  with  relatively  limited  insurance  protection 
gaps for natural hazards (98). 

Sources of business funding and the 
role of banks 

limited 

Overall,  firms  in  Spain  rely  more  heavily  on 
funding  by  banks  and  less  on  the  capital 
markets  than  their  European  peers.  This  is  in 
part due to the predominant structure of small and 
medium-sized  enterprises  (SMEs)  in  Spain,  many 
of  which  are  organised  as 
liability 
companies.  According  to  the  Spanish  National 
Statistics  Institute  (INE),  99%  of  all  firms  in  the 
country  are  classified  as  SMEs,  employing  more 
than  two  thirds  of  the  Spanish  workforce  and 
generating nearly three fifths of total value added 
in the economy. However, the productivity levels of 
these  SME  firms  are  comparatively  low,  and  a 
significant  share  face  financing  constraints  that 
hold them back from making the investments they 
need  to  grow (99).  More  specifically,  at  the end  of 
2023  bank  finance  through  loans  constituted 
28.6%  of  all  funding  sources  for  non-financial 
corporations  (NFCs)  in  Spain,  while  listed  shares 
and  bonds  accounted  for  only  15%  of  funding 
sources. This compares with EU averages of 27.2% 
from  bank  finance  through  loans  and  23.8%  for 
listed  shares  and  bonds.  The  overall  level  of  NFC 
funding was 202% of GDP in Spain and 230.3% of 
GDP on average in the EU (see Graph A5.4).  

(98)  See EIOPA’s Dashboard on the insurance-protection gap for 

natural catastrophes. 

(99)  OECD Capital Market Review of Spain 2024 | OECD. 

 
 
 
a 

plays 

funding 

External 
relatively 
significant role and Spanish firms overall can 
meet their investment needs.  According to the 
2024 EIB Investment Survey (100), 62% of Spanish 
firms’  investments  needs  are  covered  by  internal 
funding,  below  the  EU  average  of  66%.  At  the 
same  time,  only  13%  of  firms  that  responded  to 
this  survey  said 
their 
investment  activities  over  the  last  three  years 
were less than needed. This is slightly better than 
the  average  perceived  underinvestment  in  the  EU 
(14%),  suggesting  that  there  is  only  a  limited 
financing  gap  relative  to  investment  demand  in 
Spain. However, this may not be the case for firms 
with limited capacity  for internal  funding, such as 
innovative start-ups. 

they  believed 

that 

Graph A5.4: Composition of NFC funding as a % of 
GDP 

The sum of NFC liabilities only reflects the total for the NFC 
liabilities considered. Reference period 2023. 
Source: Eurostat. 

The  banking  sector  plays  a  major  role  in 
financing  Spain’s  economy.  The  banking  sector 
in  Spain  is  mainly  domestically  owned,  and  is 
characterised by significant concentration. Several 
large  Spanish  banking  groups  have  substantial 
international  operations,  notably  in  Latin  America, 
the  United  Kingdom  and  Türkiye.  The  sector 
remains  resilient,  with  good  liquidity  and  solid 
profitability, close to EU average levels (see Table 
A5.1). Overall,  Spanish NFCs are not likely to  face 
serious  challenges  in  accessing  bank  loans  in  the 
near  term.  The  capitalisation  of  Spanish  banks  is 
aligned  with  their  business  model  and  stands 
above 
and 
supervisory guidance but remains much lower than 
the EU average.  In the event of an adverse shock 
that puts a strain on the debt-repayment capacity 

requirements 

existing 

capital 

of  some  borrowers,  the  capitalisation  of  Spanish 
banks  and  their  potential  for  organic  capital 
generation might warrant close oversight.  

in  2023.  Estimated 

Supported  by  the  gradual  decline  in  interest 
rates,  bank  lending  in  Spain  has  started  to 
rebound.  For  households,  annual  growth  in  bank 
credit  for  adjusted  loans  has  started  to  recover, 
from  -2.6%  at  the  end  of  2023  to  +0.9%  at  the 
end of 2024. The rebound is due to improvements 
in  affordability  driven  by  rising  real  incomes  and 
slightly  falling  financing  costs.  For  NFCs,  annual 
credit growth reached 0.8% at the end of 2024, up 
from  -3.7% 
insolvency 
liabilities 
in  the  course  of  2024, 
although business registrations have also been on 
the  rise.  Moreover,  the  Bank  Lending  Survey  (101) 
showed  that  the  upward  trend  in  demand  for 
corporate  loans  continued  in  Q3  2024,  driven  by: 
(i) 
increased  financing  needs  for  fixed-asset 
investment,  inventories  and  working  capital;  and 
(ii)  reduced  use  of  internal  funds.  Overall,  the 
terms and conditions on new loans were reported 
to  have  eased  across  all  segments,  and  the 
rejection  rate  in  corporate  lending  has  remained 
stable.  

increased 

Retail investors in capital markets 

capital  markets 

remain 
The  Spanish 
relatively  small,  compared  with  the  size  of 
Spain’s  economy.  The  Madrid  Stock  Exchange 
ranks  fourth  in  the  EU  by  size,  with  the  IBEX  35 
index  featuring  a  number  of  large  multinational 
companies.  Nevertheless, 
the  Madrid  Stock 
Exchange has lower market liquidity, especially for 
small and mid-cap stocks, and this hampers SMEs’ 
access  to  capital.  The  Spanish  equity  market  is 
comparatively  small  in  terms  of  capitalisation 
(equivalent to 47.1% of GDP vs an EU average of 
almost 68% as of end-2023) and volumes traded. 
In  particular,  market  liquidity  is  lower  for  small 
and mid-cap stocks, and the use of the Alternative 
Stock  Market (set  up  to  target  smaller  companies 
that  wish  to  go  public)  has  been  limited.  The 
capital markets in Spain were also affected by the 
EU-wide  shift  in  equity  trading  from  primary 
exchanges  to  alternative  trading  venues  in  recent 
years,  a  significant  cause  of  reduced  revenues 

(100) See EIB Investment Survey 2024: European Union overview. 

(101) Bank of Spain, Bank Lending Survey, October 2024. 

51 

050100150200250ESEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equity 
  
 
 
from  securities  trading.  As  has  been  the  case  in 
other European stock markets, the share of order-
book  trading  taking  place  on  the  Madrid  Stock 
Exchange  has  been  on  a  downward  trend  in  the 
past years, reaching around 60% today. In parallel, 
listed 
trading  of  shares  of  Spanish 
‘dark’ 
companies  (102)  has  become  more  common.  The 
use of equity by Spanish SMEs is very low, as only 
3%  of  SMEs  indicated  in  the  2023  SAFE  survey 
that equity is relevant for them, compared with an 
EU  average  of  10.1%  (103).  No  new  companies 
joined  the  regular  market,  nor  were  there  any 
initial  public offerings (IPOs) in 2023. However, in 
Q1-2024 the largest IPO in Spain since 2015 was 
launched,  when  Spanish  beauty-products  group 
Puig went public.  

Spanish  households’  savings  are  invested 
conservatively, as financial instruments form 
only  a  small  part  of  their  wealth.  Main-
residence  ownership  is  the  most  significant  asset 
for  most  Spanish  homeowners.  On  average, 
Spanish  households  have 
financial  portfolio 
profiles with very low risk. According to the latest 
Spanish  Survey  of  Household  Finances  (EFF) 
conducted  in  2022  (104),  the  portfolio  composition 
of  Spanish  households  tends  to  be  similar  across 
all  levels  of  income  and  net  wealth,  except  for 
households in the top decile of income and of net 
wealth, which hold around 17.7% of their financial 
assets  in  unlisted  shares  and  other  equity,  while 
all other households hold less than 2.1% in these 
products.  The  pattern  is  similar  for  holdings  of 
investment funds and listed shares. The proportion 
of  assets  in  pension  schemes  and  fixed-income 
securities  also  grows  as  income  and  wealth 
increase  although  the  differences  with  the  top 
decile of the distribution are less significant. 

The degree of direct retail investment in the 
Spanish  capital  markets  is  low.  Since  2015, 
the  share  of  cash  and  deposits  in  households’ 
assets  has  been  on  an  upward  path  and  has 
remained  elevated.  In  2023,  it  stood  at  37.9%, 
above  the  EU  average  of  32.3%.  Household 
financial  assets  continued  to  increase  in  the  last 
quarters,  driven  both  by  net  acquisitions  and  by 
their  revaluation,  especially  of  shares  and  mutual 

(102) ‘Dark’ trading refers to trades executed outside national 

securities exchanges and associations. 

(103) See Data and surveys - SAFE - European Commission, 2023, 

Results by country. 

(104) Spanish Survey of Household Finances (EFF), 2022 edition. 

or 

directly 

funds.  Assets  held  in  investment  funds  gradually 
increased to 15.6% of households’ financial assets 
in  2023.  The  share  of  total  Spanish  household 
financial  assets  held  in  pension  and  investment 
funds 
financial-investment 
in 
instruments  has  slightly  increased,  rising  from 
33.7% in 2015 to 34.3% in 2023, but still stands 
well below the EU average of 45.4%. At the same 
time,  recent  policy  developments  to  promote 
Spain’s capital markets include efforts to facilitate 
employers’ use of occupational pensions. 

Graph A5.5: Composition of HH financial assets per 
capita and as a % of GDP 

The sum of HH assets only reflects the total for the HH assets 
considered. Reference period 2023. 
Source: Eurostat. 

The comparatively low savings rate and high 
cash  holdings  of  Spanish  households  may 
warrant  policy  action  to  promote  retail 
investments.  Encouraging 
the  build-up  of 
universal  funded  supplementary  pension  schemes 
would positively contribute to (i) the sustainability 
and  adequacy  of  pension  benefits;  (ii)  investment 
in equity; (iii) access to finance; (iv) growth; and (v) 
innovation.  Moreover,  an  in-depth  assessment  of 
the 
retail 
participation  in  financial  markets  could  also  be 
considered,  as  well  as  possible  steps  to  increase 
low-cost,  well-diversified 
the  availability  of 
investment products suited for retail investors. 

to  promote 

incentives 

in  place 

The role of domestic institutional 
investors  

The  growing  fund-management  industry  in 
Spain tends to invest more in bonds and less 
in equity than its European peers. Investment-

52 

0501001502002500102030405060708090ESEUESEUper capita (000 EUR) (lhs)% of GDP GDP (rhs)Currency and depositsInsurance and pension fundsInvestment fundsBondsListed sharesUnlisted sharesOther equityHH Debt (liability) 
 
  
invested 

in  domestic  and 

fund-industry  assets  grew  by  around  13%  in  the 
first nine months of 2024. In Q3 2024, out of the 
assets 
foreign 
investment  funds  offered  in  Spain,  47.1%  was 
allocated to debt securities, 22.7% to investment-
fund  units  and  20.6%  to  shares  and  other  equity 
(105).  In  2024,  Spanish  asset  managers  allocated 
almost 68% of assets to equity and bond holdings, 
which  is  in  line  with  the  euro  area  average. 
However,  the  bond  holdings  of  Spanish  asset 
managers (at 47%) were well above the euro area 
average  (at  just  below  30%),  while  shares  had  a 
comparatively smaller weight. 

to  grow,  with  many  new  vehicles  being  launched. 
However,  private  equity  overall  in  Spain  remains 
slightly  underused  as  a  source  of  finance 
compared with other Member States. The average 
value of annual private-equity investment relative 
to  nominal  GDP  remained  broadly  unchanged  at 
0.56% in the period 2021-2023, as compared with 
0.54%  in  2017-2020,  but  this  is  still  in  line  with 
the equivalent EU average for 2021-2023 (0.6%). 
For venture-capital, investments in Spain increased 
to 0.08% of GDP in 2021-2023, slightly above the 
average for EU peers (108).  

The  investment  portfolio  of  other  domestic 
institutional  investors  is  focused  on  debt 
lesser  extent,  on 
securities  and,  to  a 
investment-fund shares. The insurance sector in 
Spain,  which 
is  comparatively  small  by  EU 
standards  (20.2%  of  assets-to-GDP  compared 
with  an  EU  average  of  53.4%),  mainly  invests  in 
debt securities, at 63.7% of total assets as of Q3-
2024  (compared  with  34.6%  of  total  insurance-
sector  assets  held  in  debt  for  the  euro  area  as  a 
in 
whole) 
investment-fund  shares  and  only  7.2%  in  equity. 
The domestic pension-fund industry, the assets of 
which  were  equivalent  to  almost  11%  of  GDP  at 
end-2023 (below the EU average of 22%) invests 
predominantly 
investment 
undertakings  (notably  equity  and  debt  funds), 
which  account  for  around  57%  of  pension  funds’ 
total  assets.  Government  bonds  are  the  second 
largest investment asset of pension funds, at 23%, 
while  corporate  bonds  play  lesser  role  in  pension 
funds’ asset structure (107).  

(106),  with  another  10.7%  held 

collective 

in 

investors, 

Venture-capital  financing  could  be  further 
boosted  by  the  greater  participation  of 
institutional 
including  pension 
funds.  New  public  sector  decisions  have 
channelled  venture  capital  funding  to  innovative 
enterprises.  For  example, 
in  2024,  the  new 
strategy of the public entity CDTI deployed EUR 1.5 
billion  to  venture-capital  firms  and  vehicles,  a 
substantial  increase  from  2023.  A  2024  paper 
showed that pension funds in Spain accounted on 
average  for  only  7%  of  private-equity  and 
venture-capital  funds  raised  annually  over  the 
period  2007-2023,  substantially  below:  (i)  the  EU 
average  (of  15%);  (ii)  the  19%  seen  in  the  Baltic 
states;  or  (iii)  the  shares  above  20%  in  Sweden, 
Finland and Denmark  (109). Making the investment 
limits  of  pension  funds  more  flexible  (e.g.  by 
relaxing 
for  pension-fund 
resources to be invested in securities and financial 
instruments that can be easily traded) would give 
pension-fund  managers  more  scope  to  select 
other investment options and diversify their asset 
allocation.  

requirement 

the 

The depth of available venture and 
growth capital  

The local venture-capital and growth-capital 
markets are not yet sufficiently developed to 
meet  all  the  financing  needs  of  innovative 
Spanish  firms.  In  recent  years,  Spain’s  private-
equity  and  venture-capital  industry  has  continued 

Spain’s  RRP  also 
includes  measures  to 
support  the  financing  of  start-ups.  Reform 
measures in the plan included improving access to 
finance for SMEs by providing support in the form 
of financial, commercial and technical guarantees. 
The  Spanish  authorities  have  designed  three  new 
dedicated lines of funding allowing access to long-
term  financing  and  working  capital  for  actions 
under this investment in the areas of digitalisation, 
sustainability,  growth  and  recovery.  Any  ‘reflows’ 
(i.e.  interest  on  the  loan,  return  on  equity,  or 

(105) See Assets and liabilities of investment funds | ECB Data 

Portal. 

(106) Source: Assets and liabilities of insurances | ECB Data Portal. 

(108) Commission staff working document: Monitoring progress 
towards a capital markets union: a toolkit of indicators - 
2024. 

(109) Source: Closing the gaping hole in the capital market for EU 

(107) Source: Occupational pension statistics - EIOPA. 

start-ups – the role of pension funds – CEPS. 

53 

 
 
 
principal  repaid,  minus  associated  costs)  linked  to 
instrument  would  need  to  be 
the  financial 
reinvested for the same policy objectives, including 
beyond  2026.  The  Spanish  RRP  also  includes 
sizeable  financial  instruments  to  improve  access 
to  finance  and  develop  capital  markets,  including 
support 
loan  and 
guarantee instruments. 

to  equity,  quasi-equity, 

Financing the green transition  

financing 

instruments, 

Spanish  companies  make  significant  use  of 
sustainable 
in 
particular  green  loans.  Since  2016,  Spain  has 
maintained  a  high  aggregate  amount  of  green-
loan  borrowing  compared  with  its  EU  peers.  This 
tendency reflects the strong preference of Spanish 
corporations for bank financing over bond funding. 
Green  bond  issuance  is  broadly  in  line  with  other 
European economies. In Spain, between 2013 and 
2023  the  amount  raised  through  sustainable 
total 
bonds  accounted  for  around  10%  of 
corporate  bond  issuance.  However,  like  in  the 
broader  corporate  bond  market,  the  financial 
sector  dominates  sustainable  bond  issuance  in 
Spain,  accounting  for  69%  of  total  proceeds.  By 
contrast,  the  use  of  sustainability-linked  bonds 
remains limited in Spain  (110). In Spain, the assets 
under  management  of  sustainable  funds  have 
grown  much  faster  than  the  broader  fund 
universe, particularly during the last decade. 

Spain  has  made  significant  progress  in  its 
environmental,  social  and  governance  (ESG) 
benchmarks  in  recent  years.  At  the  end  of 
2023,  the  Madrid  Stock  Exchange  launched  the 
IBEX®  ESG,  a  new  benchmark  that  includes  47 
Spanish  listed  companies  meeting  specific  ESG 
criteria.  This  new  index  complements  the  already 
existing  FTSE  4Good  IBEX®  and  IBEX®  Gender 
Equality  indices,  both  of  which  also  promote 
sustainability and responsible investing. 

Despite  substantial  progress  in  this  area  in 
recent  years,  companies  in  Spain  still  face 
difficulties  in  using  sustainable  financing 

instruments  are  the 

instruments.  Survey  data  show  that  the  two 
most  significant  factors  hindering  the  take-up  of 
such 
lack  of  available 
information  and 
the  high  associated  costs. 
Moreover, existing contractual limitations may also 
limit  the  effectiveness  of  these  instruments  and 
reduce 
cases, 
sustainable bond prospectuses may even: (i) make 
it  possible  to  use  proceeds  to  simply  refinance 
existing projects; and (ii) lack penalties for misuse 
of  proceeds.  Thus,  attention  to  contract  design 
could help increase investor confidence. 

investor  demand. 

some 

In 

Financial literacy  

The  need  for  improved  financial  education  –
especially for young people – is a widespread 
concern  in  Spain.  Improving  financial  education 
in  Spain,  could,  among  other  benefits,  increase 
household  savings  and  promote  alternatives  to 
bank financing. Recent surveys (111) show that only 
19% of respondents in Spain have a high level of 
financial  literacy,  54%  a  medium  level,  and  the 
remaining 27% a low level, compared with the EU 
averages  of  26%  for  high  literacy,  50%  for 
medium  literacy,  and  24%  for  low  literacy.  In 
particular,  the  results  for  Spain  are  below  the  EU 
average  for  the  use  of  digital  financial  services 
and  trust 
In 
addition,  a  recent  OECD  PISA  report  (112)  (see 
Annex  10)  assessed  the  financial  knowledge  of 
15-year-olds  across  20  jurisdictions  in  2022.  The 
results indicate that financial literacy levels among 
young  people  in  Spain  are  somewhat  below  the 
OECD  average.  Over  17%  of  Spanish  students 
performed  poorly  in  the  tests  conducted  for  the 
report,  indicating  a  very  limited  understanding  of 
their 
financial  concepts,  negatively  affecting 
financial behaviours and attitudes.  

investment  advice  received. 

in 

Spain  has  taken  action  to  improve  financial 
literacy,  but  further  efforts  may  be  needed. 
In  2008,  the  Spanish  government  launched  a 
financial  education  plan  to  improve  the  financial 
knowledge  of  individuals  (113).  This  was  followed 
by  subsequent  plans,  with  the  current  financial 

(110) Sustainability-linked bonds are bonds in which the proceeds 

from the issuance are not ring-fenced to green or 
sustainable purposes (unlike ‘use of proceeds’ green bonds 
or sustainable bonds) and may be used for general corporate 
purposes or other purposes. 

(111) Monitoring the level of financial literacy in the EU - July 

2023 - - Eurobarometer survey. 

(112) PISA 2022 Results (Volume IV) - Factsheets: Spain, 2024. 

(113) See Financial Education Plan.  

54 

 
 
 
Table A5.1:  Financial indicators 

(1) Annualised data. 
Credit growth and pension funds EU data refers to the EA average. 
Source: ECB, ESTAT, EIOPA, DG FISMA CMU Dashboard, AMECO. 

education  plan  covering  measures  from  2022  to 
2025.  The  programme  is  supported  by  a  strong 
network  of  public  and  private  entities  that 
collaborate  on  initiatives  such  as  guides,  videos, 
workshops,  conferences  and  seminars  across 
Spain.  For  instance,  financial  topics  have  been 
integrated  into  various  subjects  at  both  the 
primary and secondary levels.  

55 

20172018201920202021202220232024-Q3EUBanking sectorTotal assets of MFIs (% of GDP)232.7218.2213.5256.2243.1216.5201.2193.3248.4Common Equity Tier 1 ratio12.612.212.513.213.313.013.213.316.6Total capital adequacy ratio15.415.415.716.817.316.517.017.420.1Overall NPL ratio (% of all loans)4.43.73.12.82.92.72.72.61.9NPL (% loans to NFC-Non financial corporations)7.95.94.74.64.84.03.83.63.5NPL (% loans to HH-Households)4.44.03.63.43.83.43.73.72.2NPL-Non performing loans coverage ratio42.743.743.745.641.743.343.543.842.1Return on Equity17.08.26.7-3.510.29.911.814.010.0Loans to NFCs (% of GDP)43.840.037.844.941.034.330.028.230.0Loans to HHs (% of GDP)60.358.256.261.756.650.745.342.844.5NFC credit annual % growth-0.3-2.0-0.88.40.80.3-3.70.10.8HH credit annual % growth-0.50.30.2-0.60.70.5-2.00.40.7Non-banks sectorStock market capitalisation (% of GDP)61.050.355.054.554.945.547.051.169.3Initial public offerings (% of GDP)0.220.040.060.070.120.130.00-0.05Market funding ratio41.141.843.642.543.542.541.4-49.6Private equity (% of GDP)0.420.510.680.550.600.630.44-0.41Venture capital (% of GDP)0.050.040.040.070.120.070.05-0.05Financial literacy (composite)------39.5-45.5Bonds (as % of HH financial assets)0.80.70.50.60.50.61.4-2.7Listed shares (as % of HH financial assets)5.94.74.74.14.34.04.5-4.8Investment funds (as % of HH financial assets)13.813.914.414.315.914.715.6-10.0Insurance/pension funds (as % of HH financial assets)15.615.915.915.514.712.812.8-27.8Total assets of all insurers (% of GDP)26.025.427.030.927.621.621.120.654.8Pension funds assets (% of GDP)--11.913.413.210.910.810.723.401-Mar04-OctNov-1718-2425-27Colours indicate performance ranking among 27 EU Member States. 
 
   
 
ANNEX 6: EFFECTIVE INSTITUTIONAL FRAMEWORK 

Spain’s  institutional  framework  influences 
its competitiveness. Despite advances in service 
accessibility  and  government  openness,  trust  in 
Spain’s  public  institutions  remains  below  the  EU 
average. Spain is faced with challenges in volume 
and  complexity  of  regulations,  administrative 
burdens  and  corruption  risks.  Efforts  have  been 
made  to  digitalise  public  services,  with  progress 
made  in  service  provision.  There  are  risks  to  the 
stability  and  productivity  of  the  Spanish  civil 
service  due  to  its  ageing  workforce  and  slow 
recruitment.  The  efficiency  of  the  justice  system 
also  faces  challenges,  in  particular  regarding  the 
uneven  levels  of  digitalisation  across  regions  and 
the duration of judicial proceedings. 

Public perceptions 

Graph A6.1: Trust in justice, regional / local 
authorities and in government 

(1) EU27 from 2019; EU28 before 
Source: Standard Eurobarometer surveys 

in 

trust 

institutions 

Trust  in  public  institutions  is  below  the  EU 
average.  The  widest  gap  in  trust  across  Spain’s 
in  central 
is 
national 
government 
(Graph  4.1).  When  asked  about 
improvements  that  can  increase  trust  in  Spain’s 
public  administration,  57%  of  citizens  pointed  to 
more transparency about decisions and the use of 
public money (EU: 44%), 55% to less bureaucracy 
(EU:  52%)  and  35%  to  streamlined  interaction 
between  citizens  and  administration  (EU  28%) 

cooperation 

(114).  The  perceived  quality  of  government  has 
deteriorated  in  most  regions  and  remains  below 
the EU average (115). Against this backdrop, Spain’s 
recovery  and  resilience  plan  aims  to  improve 
intergovernmental 
the 
creation  of  a  digital  platform  and  through 
improvements  to  the  governance  and  working 
methods  of  such  bodies.  It  also  prioritises  the 
digitalisation  of  the  justice  administration,  public 
administration  reform,  and  measures  to  reduce 
temporary  public  sector  employment  and  to 
increase the attractiveness of public sector jobs. 

through 

Quality of legislation and regulatory 
simplification 

Performance  in  developing  and  evaluating 
legislation  is  close  to  the  EU  average.  It  is 
stronger for stakeholder engagement and ex-ante 
impact assessments than for ex post evaluation of 
legislation, which despite progress, lags behind the 
EU  average  on  account  of  weaker  requirements 
governing  its  methodology,  systematic  adoption, 
oversight and quality controls (Graph A6.2).  

its 

Spain  has  worked  to  strengthen  policy 
assessment  by  enhancing 
institutional 
framework and defining a competency framework 
for  public  policy  assessment  under  its  recovery 
and  resilience  plan.  However,  the  anticipated 
Agency  for  Public  Policy  Evaluation  is  not  yet 
operating.  The  government  has  taken  steps  to 
strengthen  use  of  evidence,  forecasting (116)  and 
scientific  knowledge (117) 
in  policymaking.  A 
specialised  degree  was  launched  by  the  State 
Public  Employment  Service, 
regional  public 
the  University  of 
employment  services  and 
Barcelona,  dedicated  to  designing  and  analysing 

(114) Understanding Europeans’ views on reform needs - April 
2023 - - Eurobarometer survey. Counry fact sheet. 

(115) Inforegio - European Quality of Government Index 

(116) Oficina Nacional de Prospectiva y Estrategia, Brújula del país: 
https://futuros.gob.es/nuestro-trabajo/br%C3%BAjula-del-
pa%C3%ADs/desde-los-anos-80 

(117) CSIC https://digital.csic.es/simple-

search?query=%22Ciencia+para+las+Pol%C3%ADticas+P%C
3%BAblicas%22&location=publications&sort_by=bi_sort_1_
sort&order=ASC 

56 

00.10.20.30.40.50.60.7AutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSpringAutumnSummerWinterSummerWinterSpringAutumnSpringAutumn2014201520162017201820192020202220232024Justice,  legal system EU27Justice,  legal system ESRegional or local public authorities EU27Regional or local public authorities ESGovernment  EU27Government  ES 
 
       
 
 
 
Table A6.1:  Selected indicators on administrative burden reduction and simplification 

(1) This table presents a subset of iREG indicators focusing on regulatory costs. The indicators refer to primary legislation. 
Source: OECD (2025), Regulatory Policy Outlook 2025 [https://doi.org/10.1787/56b60e39-en] and Better Regulation across the 
European Union 2025 (forthcoming). 

public policies at national, regional  and local level 
(118). 

There  is  scope  to  simplify  regulation  and 
reduce administrative burdens on businesses. 
The  volume  of  regulations  in  Spain  has  increased 
in 
rise 
recent  years,  with  an  extraordinary 
observed due to the impact of COVID-19. In 2022 
only,  the  Spanish  administration  adopted  11,775 
new  norms  (119).  This  negatively  impacts  the 
businesses.  A  recent  study  suggests  that  a  1% 
increase in the volume of regulation could lead to 
an  average  decrease  of  0.05%  in  the  number  of 
businesses in Spain. The study also indicates that 
relational  complexity  of 
the 
regional 
time. 
Regulations  with  lower  readability  (i.e.,  greater 
linguistic  complexity)  and  a  higher  number  of 
(i.e.,  greater  relational  complexity) 
references 
negatively  impact  productivity  growth.  Moreover, 

laws  have  worsened  over 

readability  and 

(118) https://aeuropeocompetencias2023.sepe.es/Home-Anio-

Europeo/detalleNoticia.html?folder=/SEPE/2024/Julio/&detail
=segunda-edicion-titulo-universitario-para-evaluar-politicas-
publicas-de-empleo 

(119) Mora-Sanguinetti,  J.S.,  Quintana,  J.,  Soler, 

I. et  al. The 
heterogenous  effects  of  a  higher  volume  of  regulation: 
evidence  from  more  than  200k  Spanish  norms. J  Regul 
Econ 65,  137–153  (2024).  https://doi.org/10.1007/s11149-
023-09466-x 

poor-quality  regulations  may  lead  to  increased 
litigation,  leading  to  greater  congestion  in  the 
justice system and less legal certainty. This results 
in  numerous  economic  inefficiencies,  such  as  less 
functional 
reduced 
entrepreneurship,  and  lower  credit  availability, 
among others(120).  

estate  markets, 

real 

regulation 

 Spain’s  licensing  system  could  be  further 
aligned  with  best  practices.  According  to  the 
OECD  product  market 
indicators, 
although  the  government  keeps  an  up-to-date 
online 
licences 
inventory  of  all  permits  and 
required/issued  to  businesses  by  public  bodies, 
there  is  no  requirement  for  it  to  regularly  assess 
whether  such 
licences  and  permits  are  still 
required  or  should  be  withdrawn.  In  addition,  the 
PMR indicators also point to higher administrative 
requirements  for  limited  liability  companies  and 
personally  owned  enterprises  (see  also  Annex 4). 
Furthermore, 
affecting 
businesses  in  Spain  often  vary  across  regions. 
regions  and 
Stronger  coordination  between 
underused  tools  like  in-depth  reviews  and  public 

requirements 

legal 

(120) Mora-Sanguinetti,  Juan. 

(2022).  Las  cuatrocientas  mil 
normas de la democracia española. Cuantificación e impacto 
de  la  complejidad  normativa  de  España.  Revista  de  las 
Cortes Generales. 231-253. 10.33426/rcg/2022/114/1722. 

57 

Ex ante impact assessment of legislationEx post evaluation of legislationIdentify and assess the impacts of the baseline or ‘do nothing’ option.Is required to consider the consistency of regulations and address areas of duplication.Identify and assess the impacts of alternative non-regulatory options.Is required to contain an assessment of administrative burdens.Quantify administrative burdens of new regulations.Is required to contain an assessment of substantive compliance costs.Quantify substantial costs of compliance of new regulations.Compares the impact of the existing regulation to alternative options.Assess macroeconomic costs of new regulations. Periodic ex post evaluation of existing regulations is mandatory.Assess the level of compliance.Government uses stock-flow linkage rules when introducing new regulations (e.g., one-in one-out).Identify and assess potential enforcement mechanisms.A standing body has published an in-depth review of specific regulatory areas in the last 3 years.In the last 5 years, public stocktakes have invited businesses and citizens to assess the effectiveness, efficiency, and burdens of legislation.When developing new legislation, regulators are required to …Yes /  For all primary laws For major primary laws For some primary lawsNo / Never 
 
 
 
   
 
stocktakes (TableA6.1) would be useful to simplify 
legislation.  

Graph A6.2: Indicators of Regulatory Policy and 
Governance (iREG) 

Source: OECD (2025), Regulatory Policy Outlook 2025 and 
Better Regulation across the European Union 2025 
(forthcoming). 

 Social dialogue 

The  system  of  tripartite  social  dialogue  is 
well established, although challenges remain 
in ensuring representativeness and effective 
consultation.  In  recent  years,  social  partners 
were consulted and contributed to the design and 
implementation  of  significant  labour  market  and 
social policy reforms at both national and regional 
levels. However, participation in tripartite dialogue 
is limited to the most representative trade unions 
and  employers'  organisations.  The  absence  of  a 
formal 
employers’ 
representativeness has led to a system of mutual 
limiting  the  possibility  for  other 
recognition, 
associations  —  particularly  those  representing 
SMEs  —  to  be 
in  tripartite  social 
involved 
dialogue.(121) 

measuring 

register 

(121) For an analysis of the involvement of Spain’s social partners 
at national level in the European Semester and the Recovery 
and Resilience Facility, see Eurofound (2025), National-level 
social governance of the European Semester and the 
Recovery and Resilience Facility. 

58 

to 

social 

trends, 

affiliation 

Gaps  in  SME  representation  may  negatively 
affect the effectiveness of policies, including 
the  need  to  align  skills  supply  with  real 
labour market needs (see Annex 10). In line with 
EU 
partner 
organisations remains low. In 2022, only 23.3% of 
companies  were  associated  with  a  business 
organisation,  with  higher  rates  among  larger 
companies  (122).  Trade  union  membership  is  also 
limited, with only 12.4% of employees affiliated in 
2019,  one  of  the  lowest  rates  in  the  EU  (123). 
Meanwhile, social partners report that consultation 
is  not  always  systematic  or  timely,  and  their 
proposals  are  not  always  given  due  consideration 
(124),  which  may 
effective 
implementation of new legislative initiatives. 

hinder 

the 

Digital public services 

Spain  is  on  track  with  the  Digital  Decade 
targets (Table A6.2). In 2024, use of digital public 
services  by  citizens  scored  84  while  use  by 
businesses  scored  91,  surpassing  the  EU  average 
of 79 and 85 respectively. In terms of the rate of 
e-government  use,  Spain  reached  83.03%,  above 
the EU average of 75%. As for user support, Spain 
scored 87, slightly above the EU  average of 86.4. 
Transparency  of  service  delivery,  design,  and 
personal  data  in  Spain  scored  71.4,  compared  to 
the  EU  average  of  70.  However,  in  the  area  of 
mobile  friendliness,  Spain  scored  94.8,  just  below 
the EU average of 95.3. In terms of citizens’ online 
access to e-health records, Spain achieved a score 
of  84.6  in  2024,  significantly  higher  than  the  EU 
average of 79.1. 

Spain  operates  an  eID  scheme  based  on 
national  ID  cards  (DNIe).  54.4%  of  Spaniards 
declared  they  had  used  it  for  private  purposes  in 
the  last  12  months,  while  50.3%  had  used  it  for 
accessing  public  services.  In  both  cases  this  was 
above  the  EU  average  of  41.1%  and  35.7%, 

(122) Ministerio de Trabajo y Economía Social, Encuesta Anual 

Laboral 2022. 

(123) ILOSTAT trade union density rate. 

(124) See, e.g., Consejo Económico y Social, Dictamen sobre el 

anteproyecto de ley para la reducción de la duración máxima 
de la jornada ordinaria de trabajo, el registro de jornada y el 
derecho a la desconexión. 

0.00.51.01.52.02.53.03.54.0Primary lawsSubordinateregulationsPrimary lawsSubordinateregulationsPrimary lawsSubordinateregulationsES_StakeholderengagementES_Regulatory ImpactAssessmentES_Ex-post evaluation oflegislationMethodologySystematic adoptionTransparencyOversight and quality control2021EU-27 
     
 
 
 
Table A6.2:  Key Digital Decade targets monitored through the Digital Economy and Society Index 

Source:  State of the Digital Decade report 2024 

respectively(125). However, Spain has not yet set up 
and  notified eID  schemes for  legal  persons  under 
the eIDAS Regulation(126). This means that Spanish 
businesses  cannot  authenticate  themselves  to 
access  public  services  provided  by  other  Member 
States,  including  those  enabled  by  the  Once-Only 
Technical System (127), part of the EU Single Digital 
Gateway. 

Spain  is  making  good  progress  towards 
seamless,  automated  exchange  of  authentic 
documents  and  data  across  the  EU.  It  has 
already  successfully  tested  its  first  transactions 
through the Once-Only Technical  System. Spain is 
in the process of connecting up the first authorities 
(128). 

Civil service  

Ageing, slow recruitment, and low motivation 
pose  important  risk  on  the  stability  and 
productivity  of  the  Spanish  civil  service (129). 
With about half of civil servants over 49 years of 
age  (130),  the  Spanish  administration  will  lose  a 

(125) European Commission. Digital Decade 2024: Country reports 

(126) European Commission, eIDAS Dashboard. 

(127) European Commission, The Once Only Principle System: A 

breakthrough for the EU’s Digital Single Market 

(128) European Commission, Once-Only Technical System 

Acceleratormeter 

(129) Ministerio para la Transformación Digital y de la Función 
Pública, Comparecencia del Ministro sobre las Líneas 
Generales en la Comisión de Función Pública, 21 de marzo 
2024:  

its  employees 

significant  proportion  of 
to 
retirement  in  the  coming  years  (see  Annex  10). 
National  data  also  shows  that  statutory  civil 
servants  are,  on  average,  older  than  staff  on 
temporary  contracts (131).  In  the  last  two  years, 
Spain  has  started  to  offset  retirements  through 
recruitment.  It  is  estimated  that  positions  made 
available  through  the  annual  public  employment 
offer are filled two years after they are published 
and that, on average, only 90% of these positions 
will  be  filled.  This  recruitment  rate  indicates  that 
the  administration  is  at  risk  of  being  unable  to 
meet its human resource needs (132).. 

To  mitigate  the  risks,  Spain 
is  taking 
different measures to speed up and enhance 
civil  service  recruitment.  In  2024,  it  launched 
its  biggest  recruitment  in  the  last  ten  years, 
recruiting 31,465 new civil  servants in the central 
government  (133).  It  has  been  taking  steps  to 
reduce the high share of temporary employment in 
the  public  sector.  A  new  system  will  match  the 
needs  with  multiannual  budgetary  scenarios.  Two 
plans will aim to attract junior and senior talent. A 
‘competency  passport’  will  build  a  competency 
framework 
into  recruitment  and  professional 
development.  The  government  has  outlined  an 
initiative  for  a  ‘top  public  managers  statute’  to 
the 
incorporate  merit-based 
senior civil service (134). This initiative is in line with 

recruitment 

into 

(131) 

Boletín Estadístico del Personal al Servicio de las 

Administraciones Públicas (BEPSAP) 

(132)Ministerio para la Transformación Digital y de la Función 
Pública (2024) Estudio sobre el envejecimiento de las 
plantillas en la Administración General del Estado 2024 y 
proyección futura a 2034 

(133) Public Employment Offer for 2024 

(130) Eurostat, 2025,  European Union Labour Force Survey. 

(134) Order TDF/379/2024 

59 

Digital Decadetarget by 20302022202320242024EU-27Digitalisation of public services187868479100Score (0 to 100)20212022202320232030294919185100Score (0 to 100)202120222023202320303na838579100Score (0 to 100)20212022202320232030SpainEU-27Digital public services for citizensDigital public services for businessesAccess to e-health records 
 
 
 
  
 
the  objectives  of  the  new  competency  framework 
and  with  plans  to  create  a  school  of  senior  civil 
servants.  In  Spain,  the  share  of  civil  servants 
engaging in adult learning is among the highest in 
the EU.  

Integrity 

A  far  higher  percentage  of  companies  than 
the  EU  average  consider  corruption  to  be 
widespread  and  a  problem  when  doing 
business.  In  Spain,  91%  of  companies  consider 
that  corruption  is  widespread  (EU  average  64%), 
while  51%  consider  that  corruption  is  a  problem 
when  doing  business  (EU  average  36%) (135). 
Moreover,  only  15%  of  companies  believe  that 
people and businesses caught for bribing a senior 
official  are  appropriately  punished  (EU  average 
31%) (136).  The  investigation  and  prosecution  of 
corruption  cases  is  hampered  by  the  current  low 
number  of  judges  and  prosecutors  and  an  overall 
judges  and  tribunals 
absence  of  specialised 
working on anticorruption matters (137). In October 
2024,  two  new  Prosecutorial  Chambers  were 
established,  thereby  increasing  the  staff  of  the 
Public  Prosecutor's  Office  to  adapt  it  to  existing 
needs.  Furthermore,  a  new 
justice 
efficiency  has  been  adopted,  aiming  to  speed  up 
judicial  procedures  and  increase  the  number  of 
staff in the Anti-corruption Prosecutor’s Office. 

law  on 

three  years 

Public procurement is reported as an area at 
high  risk  for  corruption  in  Spain.  21%  of 
companies (EU average 27%) think that corruption 
has prevented them from winning a public tender 
or a public procurement contract in practice in the 
(138).  Since  January 2024, 
last 
information on the degree of participation of small 
and  medium-sized 
public 
procurement procedures has been published every 
six months on a transparency portal with the aim 
of  increasing  transparency  in  public  procurement 
risks.  Major 
and  minimising 

companies 

corruption 

in 

(135) Flash Eurobarometer 543 on businesses’ attitudes towards 

corruption in the EU (2024).   

(136) Ibid. 

infrastructures  also  appear  to  be  a  sector  at  high 
risk for corruption. (139) 

is  making  progress 

Following  in  the  steps  of  other  Member 
States,  Spain 
in 
implementing  a  public  register  for  lobbyists. 
A  draft  law  on  lobbying  has  been  tabled  in 
parliament on 30th January 2025 and is pending of 
approval  (140).  This  initiative  is  part  of  component 
11  of  the  recovery  and  resilience  plan  and  was 
included  in  the  2024  annual  regulatory  plan.  It  is 
expected to be a key tool to reinforce transparency 
in corporate lobbying.  

Justice 

Whilst  Spain  has  taken  important  steps  to 
improve  efficiency  in  the  justice  system, 
challenges  in  this  area  persist.  According  to 
the  2025  EU  Justice  Scoreboard,  the  disposition 
time  for  civil  and  commercial  cases  at  the 
Supreme Court remains very  high (691 days both 
in  2022  and  2023).  The  disposition  time  for 
administrative  cases  at  first instance increased  in 
2023  (414  days).  Judicial  bodies  in  Spain  face  a 
structural  deficit in terms of human resources, as 
reflected in the Council for the Judiciary’s Strategic 
Plan  2024-2033.(141) Organic  Law  1/2025 
is 
expected  to  contribute  to  enhance  efficiency, 
namely by the creation of new first instance courts 
and  by  anticipating  the  tabling  of  a  specific  draft 
law  addressing  longstanding  concerns  regarding 
the deficit of human resources, by reinforcing the 
number  of  judges  and  prosecutors  in  the  system, 
and  stabilising 
the  situation  of  substitute 
judges. Organic  Law  1/2025  also  regulates  the 
resolution 
resort 
mechanisms  with  the  objective  of  alleviating  the 
burden  of  courts  and  provides  for  a  series  of 
procedural steps to be conducted electronically. 

to alternative 

dispute 

(139) See the 2024 country-specific chapter for Spain of the Rule 

of Law Report, p. 22. 

(140) https://www.congreso.es/es/busqueda-de-

iniciativas?p_p_id=iniciativas&p_p_lifecycle=0&p_p_state=n
ormal&p_p_mode=view&_iniciativas_mode=mostrarDetalle
&_iniciativas_legislatura=XV&_iniciativas_id=121/000046 

(137) See the 2024 country-specific chapter for Spain of the Rule 

(141) https://www.poderjudicial.es/cgpj/es/Poder-Judicial/Consejo-

of Law Report, p. 15. 

(138) Flash Eurobarometer 543 on businesses’ attitudes towards 

corruption in the EU (2024).   

General-del-Poder-Judicial/Actividad-del-CGPJ/Estudios/Plan-
Estrategico-para-el-decenio-2024-2033-de-recursos-
humanos-en-la-Carrera-Judicial--Acuerdo-CP-CGPJ-11-07-
2024- 

60 

 
 
 
justice  system 

The  quality  of  the 
is 
considered  to  be  good  overall  and  the  level 
of  digitalisation  is  very  advanced.  There  are 
procedural  rules  in  place  enabling  digital  tools  in 
courts, and the courts and prosecution services are 
equipped with digital technology. However, there is 
further room for improvement in this area, notably 
since  the  digitalisation  levels  differ  widely  across 
regions.  As  regards  judicial  independence,  no 
systemic  deficiencies  have  been  reported  (142). 
Moreover, following the renewal of the Council for 
the  Judiciary  in  summer  2024,  it  was  possible  to 
proceed with pending appointments of top judicial 
positions. 

(142) For more detailed analysis of the performance of the justice 
system  in  Spain,  see  the  upcoming  2025  EU  Justice 
Scoreboard and the 2024 Rule of Law Report. 

61 

 
 
SUSTAINABILITY 
ANNEX 7: CLEAN INDUSTRY AND CLIMATE MITIGATION 

its 

net 

requires 

ecosystem 

fragmented 

innovation  and 

Spain  faces  significant  challenges  regarding 
its  clean  industry  transition  and  climate 
mitigation: 
zero 
better 
manufacturing 
coordination between stakeholders to decarbonise 
industry,  bolster 
investment. 
Despite  its  geological  resources,  there  is  a  heavy 
reliance on imports of critical raw materials, which 
poses  resilience  risks.  While  measures  have  been 
implemented  for  industry  decarbonisation,  more 
efforts  are  needed  to  address  high  greenhouse 
gas emissions from manufacturing production, and 
insufficient  progress  has  been  made 
in 
transitioning  to  a  circular economy,  with  recycling 
rates  below  the  EU  average.  This  annex  reviews 
the  areas  in  need  of  urgent  attention  in  Spain’s 
clean  industry  transition  and  climate  mitigation, 
looking at different dimensions. 

Strategic autonomy and technology 
for the green transition  

Net zero industry 

Spain  has  a  diversified  portfolio  of  net  zero 
manufacturing and is a leading manufacturer 
in  the  wind  power  supply  chain.  Spain  has  a 
strong manufacturing presence in wind technology 
in  Europe (143),  with  38  firms  active  in this  sector. 
Wind  power  manufacturing  capacity  amounts  to 
approximately  5–5.25  GW  for  nacelles,  around 
15.5–18.5  GW  for  towers,  and  8–8.25  GW  for 
blades.  For  electrolysers,  Spain’s  manufacturing 
capacity  amounts to  between  500  and  600 MW/y 
(9-11%  of  EU  capacity).  The  country  is  also  a 
manufacturer  of  solar  photovoltaic  components, 
with  a  capacity  of  between  500  and  650 MW/y 
(3%  of  EU  capacity)  for  solar  photovoltaics  and 
over  30GW  inverter  capacity.  Additionally,  Spain 
has at least 27 facilities producing heat pumps. 

Spain's  regulatory  framework  for  net  zero 
is  shaped  by  the  Spanish 
technologies 
recovery, transformation and resilience plan. 
Within  this  framework,  strategic  projects  for 
economic  recovery  and  transformation  (PERTE) 
have  been  established.  These  are  public-private 

a 

on 

one 

energy 

second 

technologies, 

collaborations 
involving  public  administrations, 
companies  and  research  centres.  Three  PERTE  on 
clean  energy  technologies  and  related  industrial 
focuses  on  electric  vehicle 
capacities:  one 
batteries, 
industrial 
decarbonisation  and  the  third  one  on  various 
renewable 
renewable 
hydrogen  and  storage.  With  an  additional  PERTE 
on  circular  economy  contributing  to  Spanish 
strategic  autonomy. 
just 
transition  strategy  aims  to  ensure  a  fair  and 
socially  beneficial  shift  to  a  low-carbon  economy, 
emphasising  clean  technologies. 
Its  hydrogen 
roadmap  seeks  to  drive  renewable  hydrogen 
development,  supporting  industrial  value  chains, 
technological 
sustainable 
employment. 

In  addition,  Spain’s 

innovation 

and 

Spain's clean tech sector will be underpinned 
by  the  new  Law  on  Industry  and  Strategic 
Autonomy (144).  This  law  seeks  to  accelerate  the 
decarbonisation  of 
increase  energy 
security  by  reducing  dependencies;  support  the 
digital  transition;  and  guarantee  the  country’s 
strategic autonomy. 

industry; 

Spain's net zero manufacturing ecosystem is 
lacks  collaboration (145). 
fragmented  and 
Weak  knowledge  transfer  from  academia  to  the 
innovation.  A  more 
private  sector  hinders 
integrate 
coordinated  approach 
stakeholders, 
research 
institutions  and  government;  boost  the  clean  tech 
innovation  and 
value  chain;  and 
investment. 

is  needed  to 

including 

facilitate 

startups, 

Transforming the car industry 

The  Spanish  automotive 
industry  ranks 
among  the  largest  in  the  world,  Spain  being 
the  second  largest  vehicle  manufacturer  in 
Europe  and  the  ninth  in  the  world(146).  The 
automotive  industry  represents  10%  of  Spanish 
GDP  and  is  responsible  for  18%  of  total  exports. 
The  automotive  sector 
largest 
industrial  sector  in  Spain  and  the  largest  investor 

third 

the 

is 

(144) Law on Industry and Strategic Autonomy 

(145) The net-zero manufacturing industry landscape across the 

Member States 

(146) Informe-ANFAC-SERNAUTO.-Los-nuevos-retos-del-sector-de-

(143) Bruegel. European clean tech tracker. 

la-automocion-en-Espana.pdf 

62 

 
 
 
 
 
 
 
in  research  and  development.  Between  2017  and 
2021,  the  automotive  component  manufacturers 
invested EUR 6 776 million in R&D. 

the 

Spanish 

Nevertheless, 
automotive 
industry  is  threatened  by  decreasing  demand 
and supply chain disruption problems, which could 
lead to a loss of competitiveness. 

Spain’s 

industry 

automotive 

is  facing  new 
The  automotive 
challenges. 
sector 
associations,  ANFAC(147)  and  SERNAUTO(148),  have 
identified  five  factors  that  would  strengthen  the 
competitiveness of the sector: (1) control over the 
value  chain:  (2)  emphasis  on  technology  and 
research  and  innovation  (3)  better  regulation:  (4) 
adaptation  to  the  new  electric  vehicle  model:  and 
(5)  establishment  of  a  favourable  economic  and 
political ecosystem. 

Critical raw materials 

Spain’s  geological  diversity  offers  a  varied 
and  high-volume  mining  production  (149). 
Within  the  EU,  Spain  is  the  sole  producer  of 
sepiolite and celestine. It is the largest producer of 
fluorine  spar  and  gypsum.  It  ranks  second  and 
producer  of  copper  ore  and  sixth  producer  of 
bentonite. 

Spain  relies  on 
imports  of  critical  raw 
materials, but its import dependence is lower 
than the EU average  (150). Spain  uses a limited 
number  of  sources  for  most  of  its  imports. 
Nevertheless,  Spain’s  five-year  average  import 
concentration score is 0.16(151) in comparison with 
the EU average of 0.18. 

On circular solutions, more can be done. Over 
the last decade, the circular material use rate has 

(147) ANFAC Asociación Española de Fabricantes de Automóviles y 

Camiones 

(148) SERNAUTO: Asociación Española de Proveedores de 

Automoción 

(149) Estadistica_Minera_Anual_2021.pdf 

been below the EU average, with the gap widening 
after  2020(152).  In  2023, the  circular material  use 
in  Spain  was  8.3%  (EU  average  11.8%).  The 
Spanish  recovery  and  resilience  plan 
(under 
Component 12, Investment 5) includes a strategic 
project on the circular  economy focusing on three 
key  Spanish  sectors:  plastics, 
textile,  and 
components of renewable energy technologies. Its 
aim  is  to  invest  in  R&D  for  eco-design  and 
reusability,  and  to  increase  the  recovery  and 
circularity of materials and their recyclability. 

for 

the 

roadmap 

sustainable 
The 
management  of  mineral  raw  materials  (153) 
aims  to  establish  the  bases  for 
the 
transformation  of  the  critical  raw  materials 
industry.  This  strategy  aims  to  ensure  a  more 
sustainable  and  efficient  supply  of  critical  raw 
materials 
in  Spain,  thus  contributing  to  the 
transformation  of  the  industry  and  to  Spanish 
industrial sovereignty. 

Spanish  manufacturing  depends  heavily  on 
imports  of  critical  raw  materials  needed  for 
the  green  and  digital  transitions.  Spain's 
manufacturing  industry  is  heavily  reliant  on  raw 
materials  such  as  lithium,  cobalt  and  rare  earths 
which are essential for the production of high-tech 
products,  including  electric  vehicles,  wind  turbines 
and 
significant 
challenges  for  sustainability  and  resilience,  such 
as  supply  chain  risks,  environmental  degradation 
and  social  concerns.  With  42%  of  material  inputs 
in  manufacturing  production  stemming  from 
imports  in  2023  (EU  average:  22 %),  Spain  is 
particularly vulnerable to supply chain disruptions. 

electronics. 

presents 

This 

Spain  is  implementing  policies  to  strengthen 
supply  chains  and  the  uptake  of  circular 
solutions  for  critical  raw  materials.  Spain 
published  in  2022  a  roadmap  for  the  sustainable 
management  of  mineral  raw  materials.  In  this 
sense,  Spain  has  launched  in  March  2025,  the 
Mineral  Raw  Materials  Action  Plan  2025-2029, 
which  has  been  submitted  to  public  consultation 
and is currently under elaboration. Spain has also 
adopted specific legislation for batteries; electrical 
and 
equipment; 
and 

electronic 

vehicles; 

(150) Strategic dependencies on raw materials.xlsx 

(152) RMIS - Country Profiles 

(151) A score above 0.25 indicates a high degree of import 

(153) Road Map for the Sustainable Management of Mineral Raw 

concentration, a score between 0.15 and 0.25 indicates a 
moderate degree of import concentration, and a score below 
0.15 indicates a low degree of import concentration.  

Materials 
roadmapforthesustainablemanagementofmineralrawmateria
ls_tcm30-561498.pdf 

63 

 
 
 
construction and demolition waste, with measures 
to  improve  the  circularity  of  these  products. 
Although there is no specific end-of-life regulation 
for  ashes  and  slag,  Spain  is  working  on  end-of-
waste  criteria  for  different  types  of  slag.  The 
recycling rate for e-waste, a key source of critical 
raw  materials,  was  at  70%  in  2023,  which  is 
below  the  EU  average  of  81%.  The  reuse  and 
recycling  rate  for  end-of-life  vehicles  is  slightly 
below the EU average (86 % vs 89% in 2022). This 
points to the need to avoid the leakage of critical 
raw materials, especially as the car industry shifts 
to battery-electric vehicles. 

Climate mitigation 

Industry decarbonisation 

A  high  share  of  Spain’s  manufacturing 
emissions relates to energy use; the sector is 
relatively  greenhouse  gas  intensive.  In  2023, 
22 %  of  Spain’s  total  greenhouse  gas  emissions 
came  from 
industry,  comparable  to  the  EU 
average (154). In 2022, manufacturing production in 
Spain  emitted  390 g  CO2eq  of  greenhouse  gases 
per  euro  of  gross  value  added  (GVA),  44 %  more 
than  the  EU  average.  Since  2017,  the  emissions 
intensity of Spain’s industry has declined by 19%, 
comparable to the EU overall where it declined by 
20 %. 63% of Spain’s greenhouse emissions from 
manufacturing  come  from  energy  use,  the  fifth 
highest  share  in  the  EU,  as  opposed  to  emissions 
from  industrial  processes  and  product  use. In  the 
EU as a whole, 57 % of the greenhouse emissions 
in manufacturing are related to energy. 

gas 

emissions 

Greenhouse 
intensity 
improvements in Spain’s manufacturing show 
similar  trends  for  energy  and  non-energy-
related  emissions;  the  former  seem  to  be 

(154)In  2023.  Manufacturing  includes  all  divisions  of  the  “C” 
section  of  the  NACE  Rev.  2  statistical  classification  of 
economic  activities.  In  the  remainder  of  this  section, 
unless  indicated  otherwise,  data  on  manufacturing  refer 
to  the  divisions  of  the  NACE  section  C  excluding  division 
C19 
(manufacture  of  coke  and  refined  petroleum 
products),  and  the  year  2022.  The  source  of  all  data  in 
this  section  is  Eurostat;  data  following  the  UNFCCC 
Common  Reporting  Framework 
(CRF)  are  from  the 
European  Environment  Agency  (EEA),  republished  by 
Eurostat. 

64 

driven  by  energy  efficiency (155).  Between 
2017  and  2022,  Spain  reduced  the  emissions 
intensity  of  manufacturing  production  for  both 
energy-related  and  industry  process  and  product 
use-related  emissions  by  19%.  In  the  EU  overall, 
intensity 
energy-related  greenhouse  emissions 
decreased by  less,  16  %, but those  from industry 
processes  decreased  by  23 %.  In  that  period,  in 
Spain  the  share  of  electricity  and  renewables  in 
the  final  energy  consumption  of  manufacturing 
improved by 1.5 percentage points only, to 44.7% 
in  2022.  In  contrast,  the  energy  intensity  of 
manufacturing  improved  by  14%,  from  1.6  GWh 
by euro of GVA produced to 1.4 GWh/€, still higher 
than the EU average of 1.1 GWh/€. 

Graph A7.1: GHG emission intensity of manu-
facturing and energy-intensive sectors, 2022 

Source: Eurostat. 

Spain’s  energy-intensive 
industries  have 
contracted  lately,  despite  moderate  energy 
prices.  Energy-intensive  industries (156)  accounted 
for  14 %  of  Spain’s  total  manufacturing  GVA  in 
2022.  Among  these  sectors,  the  manufacture  of 

(155) For the GHG emissions intensity of GVA related to energy use 
and  industrial  processes  and  product  use  respectively,  GHG 
emissions  are  from  inventory  data  in  line  with  the  UNFCCC 
Common  Reporting  Format  (CRF),  notably  referring  to  the 
source sectors CRF1.A.2 –  fuel combustion in manufacturing 
industries  and  construction  and  CRF2  –  industrial  processes 
and  product  use.  The  CRF1.A.2  data  broadly  correspond  to 
the NACE C and E sectors, excluding C-19. GVA data (in the 
denominator  for  both  intensities)  are  aligned  with  this 
sectoral  coverage.  Therefore,  they  are  not  fully  consistent 
with the data referred to in other part of this section. 

(156) Notably,  the  manufacture  of  paper  and  paper  products 
(NACE  division  C17),  of  chemicals  and  chemical  products 
(C20),  “other”  non-metallic  mineral  products  (C23;  this 
division  includes  manufacturing  activities  related  to  a 
single substance of mineral origin, such as glass, ceramic 
products, tiles, and cement and plaster), and basic metals 
(C24). To date, these industries are energy-intensive – i.e. 
consuming much energy both on site and/or in the form of 
purchased  electricity  –  and  greenhouse  gas  emissions 
intensive, in various combinations. 

01234567C-C19C17C20C23C24KG CO2eq / €SpainEU-27 
 
   
 
energy  storage;  carbon  capture,  utilisation  and 
storage;  and  promotion  of  renewable  hydrogen. 
However,  because  of 
the  high  greenhouse 
emissions 
intensity  of  Spain’s  manufacturing 
industry  and  the  role  of  energy-intensive  sectors, 
continued implementation of existing measures as 
well  as  further  efforts  are  needed  to  support 
decarbonisation  in  manufacturing,  particularly  in 
energy-intensive sectors. This includes support  for 
low-carbon  technologies  (e.g.,  under  the 
new 
Innovation  Fund),  the  scaling  up  of  existing 
solutions, and the promotion of sustainable supply 
chains and circular economy practices. 

Reduction  of  emissions  in  the  effort  sharing 
sectors 

Spain  is  projected  to  reach  its  2030  target 
for the effort sharing sectors if it adopts and 
implements  the  planned  additional  climate 
mitigation  measures (160).  GHG  emissions  from 
Spain’s  effort  sharing  sectors 
in  2023  are 
expected  to  have  been  20.9 %  below  those  of 
2005.  By  2030,  current  policies  are  projected  to 
reduce  them  by  29 %  relative  to  2005  levels; 
additional  policies  under  Spain’s  final  updated 
national  energy  and  climate plan  are  projected to 
achieve  further  reductions  of  15.6  percentage 
points. Hence, Spain is projected to overachieve its 
effort sharing target of a 37.7 % reduction, by 6.9 
percentage points (161), if it adopts and implements 
those measures. 

of 

the 

intensity 

emissions 

metals  recorded  a  high  emission  intensity  of 
production,  with  5.9 kg CO2eq/€  of  GVA,  well 
above  the  EU  average  of  3.5 kg.  Likewise,  with 
1.1 kg/€, 
the 
manufacture  of  paper  and  paper  products  was 
much  higher  than  the  EU  average,  0.68 kg/€. 
Energy  prices  in  Spain  remained  below  the  EU 
average from 2023 on due to several factors such 
as  a  large  rollout  of  renewables (157);  alternatives 
to  Russian  gas;  and  the  implementation  of  the 
Iberian  exception (158).  Nevertheless, 
in  Spain, 
production  in  the  energy-intensive  industries  has 
declined by up to 12 % since 2021 (159) ). 

Graph A7.2: Manufacturing industry production: 
total and selected sectors, index (2021 = 100), 
2017-2023 

Source: Eurostat. 

Spain has put in place policies to support the 
decarbonisation  of  industry,  but  more  is 
needed. These include the PERTE strategic project 
for 
Industrial 
Decarbonisation  Law;  green  bonds;  tax  incentives; 
and  the  smart  industry  strategy.  These  policies 
support  the  deployment  of  renewable  energy; 

industrial  decarbonisation; 

the 

(157)In  2023,  wind  power  overtook  gas  as  the  largest 
electricity  source  in  Spain  and  Spain’s  last  coal  power 
plant  for  electricity  generation  is  expected  to  close  in 
2025. 

(158)The  Iberian  exception,  implemented  in  2022,  was  a 
temporary mechanism allowing Spain and Portugal to cap 
natural gas prices used for electricity generation, thereby 
reducing electricity  costs  for  consumers  while  addressing 
the  energy  market  disruptions  caused  by  Russia’s  war  of 
aggression against Ukraine. 

(159) For a detailed analysis of energy prices, see Annex 8 on 

the affordable energy transition. 

(160) The national greenhouse gas emission reduction target is set 

out in Regulation (EU) 2023/857 (the Effort Sharing 
Regulation). It applies jointly to buildings (heating and 
cooling); road transport, agriculture; waste; and small industry 
(known as the effort sharing sectors). 

(161)The  emissions  reduction  from  effort  sharing  sectors  for 
2023 are based on approximated inventory data. The final 
data  will  be  established  in  2027  after  a  comprehensive 
review. Projections on the impact of current policies (‘with 
existing  measures’,  WEM)  and  additional  policies  (‘with 
additional  measures,  WAM)  as  per  Spain’s  final  updated 
national energy and climate plan. 

65 

7075808590951001051102017201820192020202120222023ManufacturingManufacture of paper and paper productsManufacture of chemicals and chemical productsManufacture of other non-metallic mineral productsManufacture of basic metals 
      
 
 
Graph A7.3: Greenhouse gas emissions in the 
effort sharing sectors, 2005 and 2023 

10 years. In 2023, Spain generated 465 kg/cap of 
municipal  waste,  which  is  slightly  below  the 
estimated EU average of 511 kg/cap. Spain is one 
of  the  countries  that  missed  the  EU  target  of 
recycling  50%  of  municipal  waste  by  2020  (the 
rate  in  Spain  was  36%)  and  it  is  at  high  risk  of 
missing  the  new  EU  waste  targets  for  2025(162). 
Therefore,  it  is  essential  to  implement  the  new 
legislation  and  the  new  plans  and  adopt  the 
pending measures, including additional efforts and 
further investments, several of which are included 
in  the  Spanish  recovery  and  resilience  plan,  for 
instance under Component 12, Investment 3. 

in 

investments 

Current 
the  circularity 
transition have been insufficient, despite the 
support  provided  by  EU  funding,  for  example 
from  the  European  Regional  Development  Fund 
and  the  Recovery  and  Resilience  Facility.  Spain  is 
estimated  to  need  total  additional  investment  of 
EUR 2.3  billion  a  year  for  the  circular  economy 
transition, including for waste management, which 
represents 0.17% of Spain’s GDP (163). 

Zero pollution industry 

Spain  has  made  considerable  progress  in 
reducing  air  pollution,  which 
is  now 
decoupled  from  GDP  growth.  However,  on  air 
pollution,  Spain  presents  a  mixed  picture.  While 
emissions  of  several  air  pollutants  have  fallen  in 
recent  decades,  air  quality  in  Spain  continues  to 
give cause for concern, mainly as regards nitrogen 
dioxide. In particular, private transport exacerbates 
seasonal  air  quality  problems  and 
traffic 
in  the  major  metropolitan  areas, 
congestion 
namely  Madrid  and  Barcelona,  leading  to  health 
and economic costs. 

Spain’s  industry  continues  to  release  large 
amounts of air and water pollutants. In Spain, 
around  7 000  industrial  installations  are  required 
to have a permit based on the Industrial Emissions 
Directive,  most  of  which  fall  in  the  intensive 
rearing  of  poultry  and  pig  sector  (56%),  followed 
by the food and drink sector. Spain has a relatively 
high 
the 
environment  (the  fifth  highest  damage in  the  EU) 
is  above  the  EU  average  of  27.5 
and 

rate  of  damage 

to  health  and 

it 

(162) European Commission, 2023 Waste early warning report,. 

(163) European  Commission,  DG  Environment,  Environmental 
investment  needs  &  gaps  assessment  programme,  2025 
update. Expressed in 2022 prices. 

Source: European Environment Agency 

Sustainable industry 

Circular economy transition 

waste 

circularity 

management 

Despite  the  progress  made  in  recent  years, 
improving 
and 
developing  the  potential  of  the  circular 
economy  remains  a  significant  challenge. 
Spain approved in 2020 a comprehensive national 
Circular  Economy  Strategy  titled  ‘España  Circular 
2030’,  which  sets  the  long-term  vision  for  the 
transition.  The  Spanish 
country’s 
strategy’s  objectives  will  be  achieved  with  the 
approval of three-year action plans. A first Circular 
Economy Action Plan 2021-2023 has already been 
implemented,  and  a  second  Circular  Economy 
Action  Plan  2024-2026 
to  be 
published  shortly.  Moreover,  many  Autonomous 
Communities 
regional 
also 
strategies  on  the  circular  economy.  A  new  Law 
7/2022  on  waste  and  contaminated  soils  for  a 
circular  economy  was  adopted  in  2022,  followed 
by various implementing regulations. The national 
waste management plan (PEMAR) and the national 
prevention  programme  for  2016-2022  are  still to 
be revised in line with the new EU requirements in 
the waste sector. The regional waste management 
plans  for  the  17  Autonomous  Communities  and 
the 2 Autonomous Cities need also to be updated, 
with part of them still pending. 

is  expected 

adopted 

have 

The  improvement  of  results  in  the  waste 
sector  is  still  limited.  Spain’s  municipal  waste 
generation  shows  a  small  decrease  over  the  last 

66 

05010015020025020052023MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
      
 
EUR/thousand  EUR  GVA  in  emissions  intensity 
(11th highest in the EU). The main emitters are the 
energy  sector  (including  refineries,  gasification, 
etc.), the mineral sector (7%) and the metal sector 
(7%). 

The costs of pollution remain far higher than 
investment 
in  pollution  prevention  and 
control. The latest available annual estimates (for 
2022)  by  the  European  Environment  Agency  (164) 
for  Spain  attribute  18  500  deaths  each  year  (or 
184 200 years of life lost (YLL)) to fine particulate 
matter (PM2.5); 5 500 deaths each year (or 54 500 
YLL)  to  nitrogen  dioxide  (NO2);  and  6  100  deaths 
each  year  (or  61  300  YLL)  to  ozone.  To  meet  its 
environmental  objectives  on  pollution  prevention 
and  control  (towards  zero  pollution),  Spain  needs 
to  provide  an  additional  EUR 1.7  billion  a  year 
(0.13% of GDP), mostly for measures on clean air 
and noise (165). The implementation of the national 
climate  and  energy  plan,  which  provides  for 
investments for sustainable energy and transport, 
would largely deliver this. 

(164)European Environment Agency, 2024, Harm to human health 

from air pollution in Europe: burden of disease 2024. 

(165) European Commission, DG Environment, Environmental 

investment needs & gaps assessment programme, 2025 
update. Expressed in 2022 prices. 

67 

 
 
Table A7.1:  Key clean industry and climate mitigation indicators: Spain 

Source:  Net zero industry: European Commission: The net-zero manufacturing industry landscape across Member States: final 
report, 2025. Automotive industry transformation: Eurostat. Critical raw materials: Eurostat. Climate mitigation: See 
footnotes in the "climate mitigation" section; reduction of effort sharing emissions: EEA greenhouse gases data viewer; European 
Commission, Climate Action Progress Report, 2024. Sustainable industry: Years of life lost due to PM2.5: Eurostat and EEA, 
Harm to human health from air pollution in Europe: burden of disease status, 2024. Air pollution damage: EEA, EU large industry 
air pollution damage costs intensity, 2024. Emissions covered: As, benzene, Cd, Cr, Hg, NH3, Ni, NMVOC, NOX, Pb, dioxins, PM10, 
PAH, SOX. Water pollution intensity: EEA, EU large industry water pollution intensity, 2024. Releases into water covered from 
cadmium, lead, mercury, nickel. Other indicators: Eurostat. 

68 

Strategic autonomy and technology for the green transitionNet zero industryOperational manufacturing capacity 2023- Solar PV (c: cell, w: wafer, m: module), MW500-650 (m)- Electrolyzer, MW500-600- Wind (b: blade, t: turbine, n: nacelle), MW8000-8250 (b), 5000-5250 (n), 15500-18500 (t)- battery, MWh-Automotive industry transformation201720182019202020212022202320182021Motorisation rate (passenger cars per 1000 inhabitants), %529539546549554553551539561New zero-emission vehicles, electricity motor, %0.300.430.761.962.663.735.631.038.96Critical raw materials201720182019202020212022202320182021Material import dependency, %42.841.837.939.442.342.024.222.6Climate mitigationTrendIndustry decarbonisation201720182019202020212022202320172022GHG emissions intensity of manufacturing production, kg/€0.490.50.480.50.480.39 0.340.27Share of energy-related emissions in industrial GHG emissions40.137.336.435.035.434.637.344.842.5Energy-related GHG emissions intensity of manufacturing215.7220.6215.6224.2224.8174.3-158.4132.9and construction, kg/€Share of electricity and renewables in final energy consumption43.142.241.541.342.044.745.643.344.2in manufacturing, %Energy intensity of manufacturing, GWh/€1.611.621.601.721.611.391.311.291.09Share of energy-intensive industries in manufacturing production13.97.3GHG emissions intensity of production in sector [...], kg/€- paper and paper products (NACE C-17)1.251.231.321.111.221.12--0.730.68- chemicals and chemical products (NACE C20)1.491.661.491.361.431.48--1.251.26- other non-metallic mineral products (NACE C23)4.123.963.403.523.162.87--2.532.24- basic metals (NACE C24)2.642.772.702.525.105.91--2.793.49Reduction of effort sharing emissions20182019202020212022202320182023GHG emission reductions relative to base year, % -19.6-19.5-20.9- domestic road transport-11.7-10.7-26.8-15.7-11.6-12.41.45.2- buildings-5.7-10.2-11.0-9.2-14.5-8.521.432.92005202120222023TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %242.0194.7194.8191.3-37.7-8.76.9Sustainable industryTrendCircular economy transition20182019202020212022202320182021Material footprint, tonnes per person11.010.210.010.39.78.214.715.0Circular material use rate, %8.9        9.0        9.3        8.8        9.4        8.5        11.611.1Resource productivity, €/kg2.7        2.9        2.6        2.8        3.2        3.7        2.12.3Zero pollution industryYears of life lost due to PM2.5, per 100,000 inhabitants340      340      338      313      578      -702571Air pollution damage cost intensity, per thousand € of GVA    32.5          27.5      Water pollution intensity, kg weighted by human factors per bn € GVA    1.0   0.9SpainEU-27SpainEU-27SpainEU-27 
 
   
 
ANNEX 8: AFFORDABLE ENERGY TRANSITION 

This  annex  outlines  the  progress  made  and 
the  ongoing  challenges  faced  in  enhancing 
energy  competitiveness  and  affordability, 
while  advancing the transition to  net zero.  It 
examines  measures  and  targets  proposed  in  the 
final  update  to  the  national  energy  and  climate 
plan (NECP) for 2030. 

Energy prices and costs 

Graph A8.1: Retail energy price components for 
household and non-household consumers, 2024 

electricity  prices  in  Spain  averaged  63.3 
EUR/MWh in 2024(166), the EU’s fourth-lowest 
wholesale  electricity  prices  (EU  average  of 
84.7  EUR/MWh).  The  Iberian  Peninsula  (PT&ES) 
experienced stronger fluctuation in prices than the 
EU average. Prices in Spain decreased to as low as 
13.7  EUR/MWh  in  April  due  to  strong  output  of 
renewables 
in  Feb-May  2024 
in  ES 
compared  to  same  period  in  2023).  Prices  picked 
up  in  the  second  half  of  the  year  amid  rising 
natural gas costs and limited non-fossil flexibility. 
In  November,  prices  spiked  further  in  the  Iberian 
Peninsula  due  to  the  Dunkelflaute  in  the  Central 
Western  European  (CWE)  region  which  negatively 
impacted  day-ahead  prices 
in  CWE  and 
neighbouring markets.(167) 

(+21% 

Graph A8.2: Monthly average day-ahead wholesale 
electricity prices and European benchmark 
natural gas prices (Dutch TTF) 

(i) For household consumers, consumption band is DC for 
electricity and D2 for gas. Taxes and levies are shown 
including VAT. 
(ii) For non-household consumers, consumption band is ID for 
electricity and I4 for gas. Taxes and levies are shown 
excluding VAT and recoverable charges, as these are typically 
recovered by businesses. 
Source: Eurostat 

is  skewed 

Spain’s  electricity  and  gas  retail  prices 
decreased  further  in  2024,  both  for  non-
household  and  household  consumers.  Below 
EU  average  energy  prices  are  largely  driven  by  a 
reduced  burden  of  taxes  and  levies  compared  to 
the  EU  average.  The  later,  for  non-household 
consumer, 
toward  electricity  and  
accounts for 9,4% of the final  price for electricity 
and  5,4%  for  gas  (against  an  EU  average  of 
15,5%  and  11,6  respectively).  Limited  network 
costs  also  contribute  to  reduce  retail  prices,  with 
the  notable  exception  of  electricity  retail  price  for 
household  consumer.  Despite  a  year-on-year 
decrease, network costs account for a higher share 
of the final price than the EU average.  

Thanks  to  a  large  share  of  renewables 
(57.2%)  in  its  electricity  mix,  wholesale 

69 

(i) the Title Transfer Facility (TTF) is a virtual trading point for 
natural gas in the Netherlands. It serves as the primary 
benchmark for European natural gas prices. 
(ii) CWE gives average prices in the central-western European 
market (Belgium, France, Germany, Luxembourg, the 
Netherlands and Austria). 
Source: S&P Platts and ENTSO-E 

(166) 
(167) 
generation data throughout the paragraph) 

Fraunhofer (ENTSO-E data) 
Yearly electricity data, Ember (consumption and 

 
 
 
 
 
 
 
 
Flexibility and electricity grids 

system 

electricity 

Spain  is  part  of  the  South-West  Europe 
capacity  calculation  region  (CCR) (168),  where 
cross-border  trade  capacities  are  relatively 
is 
high. 
The  Spanish 
‘Iberian 
interconnected  with  Portugal 
(in  the 
its 
to 
electricity  system’)  and  France.  Due 
geographic  location,  trade  flows  within  this  CCR 
are  relatively  high  compared  with  other  regions 
and  trade  levels  have  slightly  increased  since 
2022.  Limitations  are  observed  on  the  Spanish-
Portuguese  border.  To  address  these,  Spain  and 
Portugal 
new 
interconnection  in  May  2024.  Overall,  Spain  takes 
a  relatively  high  volume  of  costly  remedial 
measures in cross-border electricity trades, due to 
its need to manage congestion. 

implementing 

started 

a 

Further  expansion  of  Spain’s  cross-border 
electricity  interconnection  capacity  is  key  to 
further integrating renewable energy sources 
(RES)  production  and  improving  the  Iberian 
Peninsula’s market integration. Spain needs to 
continue  to  improve  its  interconnectivity  (the 
overall  level  in  2025  was  below  5%)  in  line  with 
the  operational  timeline  of  current  projects.  The 
interconnection  project  between  Spain  and 
Portugal  is  expected  to  be  completed  by  April 
2025, to increase current interconnection capacity 
to  3.2 GW.  The  Biscay  Bay  interconnection  project 
between  Spain  and  France  is  expected  to  be 
commissioned  by  2028  and  to  increase  exchange 
capacity  to  5 GW.  Further interconnection  projects 
are  planned  between  Pamplona 
(Spain)  and 
Cantegrit  (France),  and  between  Aragón  (Spain) 
and Marsillon (France). 

The Spanish government is in the process of 
setting  the  target  level  of  investments  for 
electricity  infrastructure  and  distribution.  A 
public consultation on limits to annual investment 
in  transport  and  distribution  (0.065%  and  0.13% 
of  GDP  respectively) (169)  was  closed  in  June. 
Infrastructure deployment is key to supporting the 
deployment of renewable energy. 

(168)The  South-West  Europe  CCR  covers  Spain,  France  and 
Portugal.  A  CCR  is  a  group  of  countries  that  calculate 
cross-border electricity flows together. 

(169)RD 1047/2013 and RD 1048/2013 respectively. 

70 

Spain  needs  to  continue  promoting  hydrogen 
infrastructure.  Under  the  REPowerEU  plan,  the 
Commission  has  identified  the  Iberian  hydrogen 
flow to Germany as one of the EU’s key renewable 
hydrogen corridors. To support this aim, the South-
Western corridor (Portugal-Spain-France-Germany) 
is  a  flagship  corridor  on  the  PCI/PMI  list,  with 
individual components granted PCI status in 2023. 
This initiative includes an interconnection between 
Spain  and  Portugal  with  0.75 million  tonnes  (Mt) 
per  year  capacity;  and  a  maritime  pipeline 
connecting Barcelona (Spain) to Marseille (France), 
BarMar, with 2 Mt/year. 

Accelerating  permitting  procedures  is  key  to 
swiftly  implementing  infrastructure  projects 
in all Spanish regions. Permitting procedures for 
energy  infrastructure  take  an  average  of  18-
is  comparable  with  other 
24 months,  which 
Member  States.  Stakeholders 
identify  public 
participation  processes  and  environmental  impact 
assessments as the main factor influencing length. 
Timelines  are  included  in  legislation  but  their 
duration is not set out for all steps. 

Spain  did  not  experience  negative  prices  in 
2023  but  curtailed  the  second  highest 
amount  of  RES  in  the  EU  in  2023.  Spain 
generated  the  second  highest  amount  of  RES  in 
the  EU  in  2023  (105.3 TWh;  Germany  generated 
236.8 TWh).  Investment  is  combined  with  the 
deployment  of  solutions  to  make  the  grid  more 
flexible,  given  the  limited  number  of  days  when 
Spain  experienced  negative  electricity  prices  in 
2024.  Further  improving  storage  solutions  and 
demand flexibility can help bring down the level of 
RES curtailment expressed as a ratio (Spain comes 
after Germany and Croatia). 

Spain  has  taken  further  steps  to  support 
non-fossil  flexibility.  Operational  electricity 
storage  capacity  is  above  7 GW.  With  the  final 
updated  NECP,  Spain  has  increased  its  target  for 
2030 from 20 GW (the 2020 forecast) to 22.5 GW. 
Implementation  of  the  energy  storage  strategy  is 
underway  and  there  are  dedicated  recovery  and 
resilience plan (RRP) funds to finance storage and 
(mainly 
flexibility 
hydropower  and  batteries)  are  underway  and  are 
envisaged  to  be  operational  within  three  to  five 
years.  Those  with  PCI  status  are  expected  to  add 
2 GW of new installed capacity. Spain’s regulatory 
framework still has barriers to flexibility regarding 
market 
response 
aggregators  and  effective  participation  of 

demand-side 

technologies. 

Projects 

access 

of 

 
 
demand-side  response  and  storage  in  balancing 
services. To address these shortcomings, Spain has 
made  a  commitment  to  take  measures  to  enable 
the  full  market  participation  of  aggregators  and 
allow  the  participation  of  demand  response  and 
storage  in  ancillary  and  congestion  management 
services. 

Legislation to carve out the energy regulator 
(CNE)  from  the  current  joint  regulatory  and 
competition  body  (CNMC)  is  pending.  The 
proposed  law  provides  for  a  ‘limitative’  budget 
that  requires  ministerial  approval  of  investment 
decisions  and  human  resources.  This  contrasts 
with  the 
‘estimative’  budget  of  the  energy 
regulator when it was previously free-standing. 

Spain  is  making  progress  with  measures  to 
empower  consumers  in  demand  response, 
energy  communities,  dynamic  pricing  and 
smart  grids.  Dynamic  price  contracts  are 
available 
for  household  and  non-household 
customers.  99%  of  all  final  household  consumers 
already  have  a  smart meter  installed.  Fewer  than 
5%  of  Spanish  household  consumers  can  be 
considered ‘prosumers’ (170). The number of energy 
communities  is  steadily  increasing  and  over  110 
of  them  are  reportedly  active  across  Spain (171). 
The RRP is supporting them and self-consumption 
via  the  strategic  national  project  for  renewable 
energy, green hydrogen and storage (PERTE ERHA) 
programme,  which  is  financed  by  the  Spanish 
recovery and resilience fund. 

In  2023,  electricity  accounted  for  24.7%  of 
(FEC) 
Spain’s  final  energy  consumption 
(slightly above the EU average of 22.9%) and 
this  share  has  remained  largely  stagnant  in 
last  decade (172),  partly  due  to  an 
the 
unfavourable  electricity-to-gas  price  ratio 
that  disincentivizes  electrification  and  cost-
effective  decarbonization.  This  was  above  the 
EU  average  of  22.9%  and  has  been  increasing  in 
the last decade. Electricity accounts for 45.4% and 
31.1%  of  households’  and 
industry’s  FEC 
respectively  (see  the  Annex  7).  The  transport 
sector’s  FEC  share  remains  negligible  (1.2%). 
to 
Further  progress 

in  order 

required 

is 

(170)ACER-CEER_2024_MMR_Retail.pdf. 
(171)ESPON TANDEM project. 
(172) 

The  CAGR  (compound  annual  growth  rate)  was  -0.5% 
between  2013  and  2023.  Source:  Final  energy  balances, 
Eurostat. 

71 

decarbonise  the  economy  and  benefit  from 
affordable  RES  for  consumers.  In  2024’s  second 
semester,  Spain  had  a  fiscal  burden  skewed 
towards  electricity.  Before  taxes  and  levies,  the 
electricity-to-gas  price  ratio  was  2.7  for  both 
households  and  energy-intensive  industries.  After 
taxes  and  levies,  this  ratio  rose  to  2.8  for  the 
industry segment. For households, taxes and levies 
made up around 24% of the final electricity price, 
compared  to  22,5  for  gas.  For  energy-intensive 
industries,  non-recoverable 
levies 
accounted for about 9% of electricity prices, while 
gas stood at approximately 5%.(173) 

taxes  and 

Deployment  of  flexibility  solutions  through 
energy storage and demand response is also 
key  for  the  efficient  integration  of  the 
renewable  energy  production  and 
the 
reduction  of  curtailment.  Funds  from  the 
Recovery and Resilience Fund have been allocated 
the 
to  storage  and  flexibility  projects  and 
regulatory  framework  is  under  revision  to  enable 
its rapid and full development. 

Renewables and long-term contracts 

2024  was  a  record  year  for  RES  generation. 
The  57%  RES  share  in  the  electricity  mix (174)  (vs 
the  EU’s  overall  RES  share  of  47%)  was  a  new 
In  the  overall 
record  (after  50% 
electricity  mix,  wind  remained  the  first  source 
(22%), followed by nuclear (20%) and solar (18%). 
Fossil  fuels  represented  less  than  a  quarter  of 
generation. 

in  2023). 

(173) Analysis based on Eurostat data for the first semester of 

2024. For household consumers, consumption band is DC for 
electricity and D2 for gas, which refer to medium-sized 
consumers and provide an insight into affordability. For non-
household consumers, consumption band is ID for electricity 
and I4 for gas, referring to large-sized consumers, providing 
an insight into international competitiveness (price used for 
the calculation excludes VAT and other recoverable 
taxes/levies/fees as non-household consumers are usually 
able to recover VAT and some other taxes). 

(174)Yearly electricity data, Ember. 

 
 
 
Graph A8.3: Spain's installed renewable capacity 
(left) and electricity generation mix (right) 

Solar PV dominates. In 2020, Spain created a fund 
to  provide  guarantees  for  electro-intensive  units 
that  signed  RES  PPAs  to  source  their  electricity 
needs. 

“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Ember 

Installed renewable energy capacity in Spain 
grew  by  9,4%  in  2024  to  reach  88  498  MW 
(see graph above). Solar energy continued to lead 
growth,  with  an  additional  6  667  MW installed  to 
reach  38  587  MW,  representing  a  20.9%  jump. 
Total installed capacity for wind increased by 943 
MW to reach 31 811 MW, a 3.1% increase(175). 

Spain is implementing permitting reforms but 
needs  to  speed  up  the  transposition  of  new 
provisions  in  the  revised  Renewable  Energy 
Directive  into  national  law.  Spain  has  taken 
important  measures  to  accelerate  permitting 
processes  for  RES.  These  include  knowledge-
sharing, publishing the grid capacity of the system 
operator and developing regulatory sandboxes for 
innovative  projects.  In  July  2024,  the  government 
finalised  28 GW  of  permitting  for  RES  capacity 
across 
further 
implementation of new EU provisions is required. 

However, 

projects. 

280 

The  Spanish  NECP  has  a  RES  energy  share 
target  of  48%  by  2030,  which  is  above  its 
expected contribution to the EU target. Spain 
aims  to  have  160 GW  of  RES  capacity  by  2030 
(including 76 GW of solar PV and 62 GW of wind). 
However,  no  new  schedule  on  the  expected 
allocation of support for RES was released in 2024 
in  the  Union  Renewables  Development  Plans 
platform. 

Spain  remains  the  EU’s  largest  and  most 
dynamic  market 
for  power  purchase 
agreements  (PPAs) (176).  Around  11 GW  of  RES 
capacity  is  contracted  through  private  contracts. 

Energy efficiency 

The residential and industrial sectors led the 
fall  in  energy  consumption  in  2023.  Primary 
energy  consumption  (PEC)  decreased  by  3.1%  on 
2022  (to  110.1 Mtoe).  Final  energy  consumption 
(FEC)  decreased  by  0.6%  to  80.6 Mtoe.  However, 
FEC  increased  in  transport  (0.9%)  and  services 
(0.6%),  while  it  decreased  in  the  industrial  and 
residential sectors by 1.7% and 2.6% respectively. 
The  recast  Energy  Efficiency  Directive 
(EED) 
requires  Spain  to  reach  82.2 Mtoe  in  PEC  and 
66.3 Mtoe in FEC by 2030. 

Spain  needs  to  significantly  step  up  its 
efforts  to  reduce  energy  consumption  in 
buildings in order to achieve its targets. Spain 
aims  to  reduce  energy  consumption 
in  the 
residential sector by 14% by 2030, but almost no 
progress  was  made  between  2020  and  2022. 
Performance  improved  in  2023,  but  this  was  still 
insufficient  to  get  back  on  track  to  achieve  the 
2030 targets. 

The  decarbonisation  of  the  heating  sector  is 
making  progress.  Spain  has  not  notified  a 
comprehensive  heating  and  cooling  assessment 
that 
identifies  the  potential  to  apply  high-
efficiency  cogeneration  and  efficient  district 
heating and cooling (177). The ratio of electricity to 
gas prices has substantially decreased (by almost 
40% between 2020 and 2024). It is still very high, 
is  a  major  barrier  to  further 
however,  and 
electrification.  Heat  pumps 
sales  markedly 
increased  in  2024  (by  13%),  but  Spain  needs  to 
assess  whether  further  measures  are  required  in 
order to achieve its objectives. 

Spain  has  a  supportive  national  financing 
framework  that  mobilises  energy  efficiency 
investment.  However,  deployment  of  financial 
instruments  and  blended  schemes  is  limited  and 
grants predominate. There is therefore potential to 

(175) Renewable energy capacity statistics 2025, IRENA 
(176)European PPA Market Outlook 2024, Pexapark. 

(177)Article 25(1). 

72 

 
 
 
 
further  deploy  non-grant-based  schemes 
achieve energy efficiency targets. 

to 

Substantial  funding  has  been  committed  to 
improving  energy  efficiency  in  buildings  and 
industry. This includes more than EUR 25.5 billion 
in resources from the RRF. However, absorption is 
lagging  behind  and  it  is  unclear  if  it  will  be 
possible  to  spend  the  allocated  funds.  The 
situation is particularly delicate for cohesion policy, 
where the level  of payments is  very  low. Analysis 
of and stocktaking for this measure should make it 
possible  to  put  measures  in  place  to  efficiently 
and effectively disburse the funds that have been 
allocated to the objectives. 

Security of supply and diversification 

Spain  aims  to  reduce  its  energy  import 
dependency  from  73%  to  50%  by  2030.  The 
government  aims  for  RES  domestic  production  to 
increase,  fossil  fuel  imports  to  decrease  and 
primary  energy  consumption  to  fall.  Over  25 
measures  have  been  taken  to  strengthen  energy 
supply  since  2021.  73  additional  measures  were 
in  2022 (178),  focusing  on  energy 
introduced 
savings,  efficiency  and  RES.  Past  investments  in 
infrastructure have made the gas sector relatively 
resilient.  The  government  is  promoting  renewable 
gases  and  minimum  safety  stocks.  Natural  gas 
traders and direct consumers are required to hold 
27.5 days’  worth  of  firm  sales  or  consumption  in 
safety  stocks.  Russian  LNG  imports  (6.9 bcm) 
remained  an  important  share  of  total  imports  in 
2024 (21%). 

Despite  progress 
in  renewables,  Spain’s 
overall  energy  mix  remained  very  reliant  on 
fossil  fuels  in  2023.  Oil  and  natural  gas 
accounted  for  44.1%  and  21.5%  of  gross  inland 
consumption respectively. Spain no longer relies on 
coal (179).  Renewables  (and  biofuels)  contributed 
19.1% (180). This continuing reliance on fossil fuels 
underscores  the  importance  of  Spain’s  ongoing 
its  energy  sources  and 
efforts  to  diversify 
strengthen energy security. 

On  28  April  2025,  Spain  and  Portugal  faced 
an  unprecedented  power  outage,  which  also 
affected  parts  of  France.  According  to  EU  law, 
ENTSO-E  will  lead  an  independent  investigation 
into  the  causes  of  the  blackout.    The  European 
Commission  will  inform  all  Member  States  of  the 
progress  of 
the 
Electricity Coordination Group. 

investigation 

through 

the 

Fossil fuel subsidies 

In  2023,  environmentally  harmful  (181)  fossil 
fuel  subsidies  without  a  planned  phase-out 
before  2030  represented  0.22%(182)  of 
Spain’s  GDP(183),  below  the  EU  weighted 
average of 0.49%. Tax measures accounted for 
79%  of  this  volume,  while  income/price  support 
represented  the  remaining  21%.  However,  Spain’s 
2023  Effective  Carbon  Rate(184)  averaged  EUR 
71.10  per  tonne  of  CO₂,  below  the  EU  weighted 
mean of EUR 84.80(185). 

(181) Direct fossil fuel subsidies that incentivise maintaining or 
increasing in the availability of fossil fuels and/or use of 
fossil fuels. 

(182) Numerator is based on volumes cross-checked with the 

Spanish authorities. For all Member States, it includes public 
R&D expenditures for fossil fuels as reported by the IEA 
(Energy Technology RD&D Budgets) and excludes, for 
methodological consistency, excise tax exemption on 
kerosene consumed in intra-EU27 air traffic. 

(183) 2023 Gross Domestic Product at market prices, Eurostat. 

(184) The Effective Carbon Rates is the sum of carbon taxes, ETS 

(178)Plan + Seguridad Energética. 
(179)Electricity and heat are excluded to avoid double-counting, 

permit prices and fuel excise taxes, representing the 
aggregate effective carbon rate paid on emissions. 

focusing on primary energy sources. 
(180)Gross inland consumption (Eurostat). 

(185) OECD (2024), Pricing Greenhouse Gas Emissions 2024 

73 

 
 
 
Table A8.1:  Key Energy Indicators 

Source: Eurostat, ENTSO-E, S&P Platts 

74 

20212022202320242021202220232024Household consumer - Electricity retail price (EUR/KWh)0.2823          0.3082              0.2386              0.2383          0.2314              0.2649          0.2877          0.2879          Energy & supply [%]46.2%56.4%54.3%46.5%36.6%54.3%55.6%47.8%Network costs24.0%24.6%33.7%29.4%26.7%25.3%24.8%27.2%Taxes and levies including VAT29.8%19.0%12.0%24.1%36.7%20.3%19.6%25.0%VAT10.6%6.7%5.3%11.5%14.5%13.4%13.8%14.6%Household consumer - Gas retail price0.0787          0.1032              0.1062              0.0872          0.0684              0.0948          0.1121          0.1128          Energy & supply38.8%56.7%74.7%61.7%43.7%61.0%64.5%53.9%Network costs38.1%13.6%16.6%15.8%22.5%17.3%17.1%18.3%Taxes and levies including VAT23.1%29.7%8.8%22.5%33.8%21.7%18.4%27.8%VAT17.4%17.3%4.8%17.3%15.5%11.6%10.2%13.6%Non-household consumer - Electricity retail price0.1166          0.2000              0.1403              0.1239          0.1242              0.1895          0.1971          0.1661          Energy & supply49.9%68.7%66.8%62.9%43.0%66.5%63.0%55.8%Network costs11.3%9.1%13.2%12.6%15.8%10.7%11.9%15.5%Taxes and levies excluding VAT28.6%6.9%4.1%9.4%30.4%9.9%11.2%15.4%Non-household consumer - Gas retail price0.0293          0.0887              0.0583              0.0425          0.0328              0.0722          0.0672          0.0517          Energy & supply62.3%77.6%89.5%75.1%66.2%77.3%77.3%68.7%Network costs16.1%2.5%2.6%3.1%7.7%3.8%5.3%7.1%Taxes and levies excluding VAT5.1%3.0%3.3%5.4%12.5%6.1%7.3%11.6%Wholesale electrity price (EUR/MWh)111.4167.787.463.1111.0233.299.184.7Dutch TTF (EUR/MWh)n/an/an/an/a46.9123.140.534.420172018201920202021202220232024Gross Electricity Production (GWh)275,726        274,452            273,257            263,373        274,312           292,454        285,881        -Combustible Fuels133,002     118,149        117,125        93,778       95,443          112,950     84,756       -Nuclear58,039       55,766           58,349           58,299       56,564          58,590       56,873       -Hydro21,070       36,803           26,874           33,998       32,847          22,102       31,105       -Wind49,127       50,896           55,647           56,444       62,061          62,784       64,275       -Solar14,397       12,744           15,103           20,667       27,098          35,723       48,586       -Geothermal-              -                 -                 -              -                 -              -              -Other Sources91               94                  159                187             299                305             286             Gross Electricity Production [%]Combustible Fuels48.2%43.0%42.9%35.6%34.8%38.6%29.6%-Nuclear21.0%20.3%21.4%22.1%20.6%20.0%19.9%-Hydro7.6%13.4%9.8%12.9%12.0%7.6%10.9%-Wind17.8%18.5%20.4%21.4%22.6%21.5%22.5%-Solar5.2%4.6%5.5%7.8%9.9%12.2%17.0%-Geothermal0.0%0.0%0.0%0.0%0.0%0.0%0.0%-Other Sources0.0%0.0%0.1%0.1%0.1%0.1%0.1%-Net Imports of Electricity (GWh)9,16911,1026,8623,280852-19,802-13,957-As a % of electricity available for final consumption 3.7%4.5%2.8%1.4%0.4%-8.5%-6.1%-Electricity Interconnection [%]5.8%6.7%6.5%6.5%5.0%5.4%4.4%4.2%Share of renewable energy consumption - by sector [%]Electricity36.5%35.2%37.1%42.9%46.0%50.9%56.9%-Heating and cooling16.2%16.1%17.2%18.0%17.0%19.5%21.4%-Transport5.8%6.9%7.6%9.5%9.2%9.7%12.0%-Overall17.1%17.0%17.9%21.2%20.6%21.9%24.9%-20202021202220232020202120222023Import Dependency [%] 67.9%69.4%74.4%68.4%57.5%55.5%62.5%58.3%of Solid fossil fuels 54.8%102.0%144.3%71.8%35.8%37.2%45.9%40.8%of Oil and petroleum products 99.4%95.6%101.0%99.1%96.8%91.7%97.8%94.5%of Natural Gas 97.5%100.1%103.2%98.5%83.6%83.6%97.6%90.0%Dependency from Russian Fossil Fuels [%]of Natural Gas 10.4%8.7%12.6%18.3%41.0%40.9%20.7%9.3%of Crude Oil1.8%4.6%1.1%0.0%25.7%25.2%18.4%3.0%of Hard Coal55.0%29.6%16.1%0.0%49.1%47.4%21.5%1.0%2017201820192020202120222023Gas Consumption (in bcm)31.1               31.0                  35.4                  31.9               33.8                  32.6               29.0               Gas Consumption year-on-year change [%]8.2%-0.6%14.4%-9.9%5.8%-3.4%-11.2%Gas Imports - by type (in bcm)34.6               34.8                  37.2                  32.5               37.0                  39.7               35.3               Gas imports - pipeline18.3               20.0                  15.8                  12.1               16.8                  11.3               10.6               Gas imports - LNG16.414.921.420.420.228.424.6Gas Imports - by main source supplier [%]Algeria48.3%51.3%33.1%29.1%42.8%23.6%29.3%United States2.2%0.9%11.0%15.6%14.6%28.9%20.9%Russia0.0%2.5%8.5%10.4%8.7%12.6%18.3%Nigeria12.7%11.7%11.5%12.1%11.5%14.3%13.6%SpainEU 
 
     
 
ANNEX 9: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

EU-level estimates show that if no adaptation and 
mitigation measures  are  taken,  Spain  could  see  a 
40-fold increase in mortality from heatwaves (189). 
Rising  temperatures  due  to  climate  change  also 
increase  the  spread  of  infectious  diseases  like 
malaria, dengue fever or West Nile fever (190).  

Map A9.1:  Number of flood events 

lag  behind, 

Spain  is  a  frontrunner  in  terms  of  the 
maturity  of  adaptation  governance  and 
climate risk assessment work, but additional 
action  is  required  to  clarify  responsibilities 
externally,  increase  its  preparedness  and 
water resilience, and decrease its economy’s 
impact  on  nature.  Spain  is  among  the  Member 
States that are most exposed to climate risks. It is 
taking action to build resilience, but some sectoral 
policies 
in  particular  agriculture. 
Sustainable  water  management  also  remains  a 
major  environmental  issue,  notably  in  terms  of 
water  governance,  water  body  rehabilitation  and 
restoration,  and  water  efficiency.  The  state  of 
nature  and  ecosystems  continues  to  degrade, 
and 
presenting 
competitiveness 
its 
transition  towards  more  sustainable  agriculture 
practices,  but  its  agri-food  system  continues  to 
have  significant  climate  and  environmental 
impacts,  warranting  additional  action  to  support 
the uptake of sustainable agriculture practices. 

risks.  Spain  has  started 

significant 

economic 

Climate adaptation and preparedness 

Source: D. Paprotny et al., 2024, Hanze v2.1: an improved 
database of flood impacts in Europe from 1870 to 2020, Link. 

Spain  is  particularly  exposed  to  heatwaves, 
droughts,  floods  and  wildfires.  Climate  risks 
directly  affect  Spain’s  economy  and  society. 
Between 1980 and 2023, Spain recorded EUR 95.9 
billion  in  economic  losses caused  by  weather  and 
climate-related extreme events. However, only 5% 
of  the  economic  damages  over  the  same  period 
were  insured,  compared  to  62%  in  Denmark  (186). 
These  impacts  will  particularly  affect  vulnerable 
groups and regions in Spain with lower capacity to 
adapt, 
lower 
populations 
socioeconomic  status.  Climate 
change  also 
aggravates pre-existing vulnerabilities (187)(188). 

including 

of 

impacts  of  extreme  heat 
The  health 
exacerbated 
are 
by 
significant. Spain recorded 32 053 fatalities due 
to extreme events between 1980 and 2023, while 

climate 

change 

Floods  are  the  extreme  events  causing  the 
largest  damages  in  Spain.  Between  1870  and 
2020,  Spain  had  the  second  highest  number  of 
floods  in  the  EU  (304  floods),  and  the  highest 
number  of  reported  fatalities  (4 395  people)  (191). 
In  Spain,  flood  events  are  primarily  concentrated 
along the coast (see Map A9.1), exemplified by the 
October 2024 floods in the Valencia region which 
led to the death of at least 220 people and caused 
over EUR 10 billion of damages (192). As part of its 
work  under  the  EU  Flood  Directive,  Spain  has 
adopted 
risk 
management  plans  for  2021-2027.  Spain  further 
adopted  three  Royal  Decree  laws  containing  aids 

cycle  of 

second 

flood 

the 

(189) EEA, 2024, European Climate Risk Assessment, pp. 215 and 

343. 

(190) EEA, 2022, Heatwaves, spread of infectious diseases due to 

(186) EEA, 2024, Economic losses from weather- and climate-

climate change growing health threats to Europeans. 

related extremes in Europe. 

(191) D. Paprotny et al., 2024, Hanze v2.1: an improved database 

(187) EEA, 2024, European Climate Risk Assessment, p. 345. 

of flood impacts in Europe from 1870 to 2020. 

(188) Navas-Martín et. al., 2022, Effects of local factors on 

(192) McElroy and Hayes, 2024, Valencia floods highlight climate 

adaptation to heat in Spain (1983–2018). 

vulnerabilities of Spanish banks. 

75 

 
 
 
 
 
 
 
 
 
and  measures  amounting  to  EUR  16  billion  to 
tackle the damages caused by the 2024 floods in 
the Valencia region.  

over 

years, 

recent 

related 

challenges 

policy  measures 

National 
to 
adaptation  and  preparedness  have  further 
strengthened 
but 
additional efforts are still required. Spain has 
a  national  governance  structure  for  adaptation  in 
place,  including  a  climate  law,  climate  adaptation 
strategy,  a  climate  risk  assessment  and  national 
climate change adaptation plan. The plan includes 
nature-based  solutions  and  adaptation  strategies, 
such as switching to crop varieties that can better 
withstand  changing  conditions (193).  However, 
substantial 
including 
desertification,  heatwaves  and  water  resilience. 
Issues 
to  water  management  and 
adaptation  to  climate  change  were  also  raised  in 
CSR-3  of  the  2024  European  Semester  (see  next 
section),  and  incidents  like  the  ecological  crisis  in 
Mar Menor and the depletion of water resources in 
Doñana  National  Park  highlight  the  need  for 
further action to address these challenges (194)(195). 
Spain is no exception to the need across the EU to 
better  clarify  risk  ownership,  i.e.  the  responsibility 
the  different 
and 
administrative 
the  private 
sector (196). 

to  act  at 
levels  and  by 

the  means 

related 

exist 

still 

include 

Spain  uses  several  EU  funds  to  improve  its 
the  European 
preparedness.  These 
Regional  Development  Fund,  the  Social  Climate 
Fund  and  the  Recovery  and  Resilience  Facility. 
Spain’s  recovery  and  resilience  plan 
includes 
adaptation  measures  such  as  adaptation  of 
buildings, local action plans, sustainable irrigation, 
green  infrastructure,  water  reuse,  restoration  of 
riverbanks,  protection  against  flood  risks  and  the 
purchase of firefighting assets. 

Climate adaptation is also addressed at sub-
national 
local 
authorities are among the most active in the EU in 
developing local climate action plans. Some 3 005 

level.  Spanish 

regions  and 

(193) Institute for European Environmental Policy, 2023, 

Environment and climate assessment of Spain’s CAP 
Strategic Plan.  

(194) Elorza Saralegui and Rodrigues, 2023, Mar Menor: cleaning 

Europe’s largest saltwater lagoon. 

(195) Euronews, 2023, Drought and heatwaves: Spain’s Donana 
wetland is shrinking putting wildlife and crops at risk. 

(196) EEA, 2024, European Climate Risk Assessment. 

regions  mandate 

Spanish  municipalities  are  signatories  to  the  EU 
Covenant of Mayors, covering 88% of the Spanish 
population. 32% of the signatories have developed 
sustainability energy and climate action plans that 
cover  both 
local  mitigation  and  adaptation 
planning (197).  Nine 
the 
development  of  such  local  action  plans  in  their 
regional  climate laws. Of the 294 EU  regions and 
local authorities participating in the EU Mission on 
Adaptation  to  improve  their  work  on  climate 
adaptation, 24 are in Spain. In addition to broader 
climate  adaptation  efforts,  Spain  tackles  climate-
related  risks  through  the  Spanish  Agricultural 
Insurance  System  (Agroseguro)  and  the  Insurance 
de 
Compensation 
Compensación 
Spanish 
Agricultural Insurance System supports farmers in 
managing climate-related losses such as droughts, 
floods,  and  hail  through  public-private  insurance 
the  government. 
schemes 
Compensation 
Meanwhile, 
providing 
Consortium 
compensation 
by 
extraordinary  risks  which  are  typically  excluded 
from standard insurance policies. 

Insurance 
public 
damages 

Consortium 
de 

(Consorcio 
The 

co-financed  by 

the 
is 

Seguros). 

a 
for 

caused 

entity 

Water resilience 

the  past 

Large  areas  of  Spain  are  subject  to  water 
stress,  in  particular  due  to  demand  from 
agriculture, tourism and energy. These sectors 
are  heavily  dependent  on  water  supply,  and 
irrigation  is  crucial  in  many  rural  areas.  Spain’s 
water  productivity  is  considerably  lower than  that 
of  other  Member  States  at  EUR 38  per  m3  of 
abstracted  water  in  2022,  on  a  downward  trend 
five  years (198).  The  water 
over 
exploitation  index  plus  (WEI+),  a  measure  of  how 
much water is being used compared with the total 
renewable  freshwater  resources  available  for  a 
given territory and period, shows that, especially in 
summer  months, 
total  water 
consumption  exceeds  its  renewable  freshwater 
resources.  The  highest  WEI+  value  (46)  was 
reached  in  the  third  quarter  of  2019  and  the 
second  highest  value  (37)  in  2021.  The  main 
consumer  of  water  is  agriculture.  Between  2016 

the  country’s 

(197) Data as of 5 December 2024. 

(198) Measured as GDP in 2010 chain linked volumes over total 

fresh surface water abstracted in cubic metres. 

76 

 
 
 
and  2020,  water  abstraction  in  the  agricultural 
sector declined by 7% but the sector still accounts 
for most water consumption at 13 035 million m3, 
i.e.  77%  of  total  consumption  in  2022,  putting  a 
significant strain on the country's water resources. 
implemented 
The  Spanish  government  has 
measures to reduce the agricultural sector’s water 
consumption, 
irrigation 
efficiency,  the  use  of  non-conventional  water 
resources,  and  promoting  the  use  of  drought-
resistant  crops.  The  challenges  remain  significant, 
particularly in regions with high water stress.  

such  as 

improving 

Water  quality  in  Spain  has  only  marginally 
improved,  and  concerns  remain  for  surface 
and  groundwater  bodies.  Spain’s  third  cycle  of 
river basin management plans (2022-2027) under 
the  Water  Framework  Directive  shows  that  the 
ecological  status  and  potential  of  surface  water 
bodies has only slightly improved since the second 
cycle  (2016-2021).  Only  58%  of  surface  water 
bodies  are  classified  as  having  ‘good  ecological 
status/potential’.  Their  chemical  status  remains 
stable,  as  93%  of  surface  water  bodies  have  a 
good  chemical  status.  Regarding  groundwater 
bodies, 
the  quantitative  status  has  slightly 
deteriorated  since  the  second  cycle,  with  71% 
reported as having good quantitative status. Their 
chemical  status  has  slightly  improved,  with  at 
least 67% now reported  as having good chemical 
status.  However,  43%  are  at  risk  of  failing  to 
achieve good chemical status by 2027.  

Spain’s wastewater treatment is a particular 
cause  for  concern.  Despite  the  improvement  in 
compliance over the years, for which the use of EU 
fundamental,  Spain  has 
funding  has  been 
experienced  significant  difficulties 
in  properly 
implementing  the  Urban  Wastewater  Treatment 
Directive  (UWWTD).  This  partial  implementation 
has forced the European Commission to take legal 
actions  that  have  led  to  rulings  of  the  Court  of 
Justice of the EU. Overall, Spain’s compliance rate 
was 86% in 2020 and around 450 agglomerations 
did  not  comply  with  all  the  requirements  of  the 
Directive. Therefore, it is essential that Spain takes 
the  adequate  measures  and 
implement  the 
necessary  projects  without  delay  to  fully  comply 
with  the  requirements  of  the  UWWTD,  taking 
advantage  of  the  available  EU  funding,  i.e.,  the 
European  Regional  Development  Fund  (ERDF)  and 
the Recovery and Resilience Facility (RRF). 

The  investment  needs  for  water  protection 
and  water  management  are  substantial,  as 

77 

shown  in  Graph  A9.2,  with  a  financing  gap  of 
EUR 1.8 billion per year by 2027. Roughly 70% of 
the  gap  can  be  attributed  to  unmet  financing  for 
wastewater  management.  Increasing  investment 
will  be  even  more  important  as  the  UWWTD  was 
revised  and  strengthened  in  2024 (199).  EUR 2 
billion  from  the  2021-2027  multiannual  financial 
framework  and  EUR 9  billion  from  the  Recovery 
and  Resilience  Facility  already  contribute  to 
investment  needs  for  water 
meeting  Spain’s 
protection and management. Further infrastructure 
development  would 
improve  water 
management,  e.g.  wastewater  collection  and 
treatment,  water  reuse,  reducing  leaks  in  the 
networks and the general water supply. Additional 
investments  are  needed  to  improve  monitoring 
(quality  and  quantity)  and  support  nature-based 
solutions, flood prevention and river restoration. 

help 

Biodiversity and ecosystems 

The  state  of  nature  and  ecosystems 
continues  to  degrade  in  Spain,  reducing  the 
country’s climate resilience. Spain is one of the 
most biologically diverse countries in the EU, home 
to  117 habitat  types  and 426  species  covered  by 
the  Habitats  Directive (200).  However,  according  to 
the last available data, only 8.9% of the country's 
habitats  have  a  good  status,  lower  than  the  EU 
average  of  14.7%.  Similarly,  the  conservation 
status  of  species 
is  concerning,  with  18.9% 
reported  as  having  a  good  status,  lower  than  the 
EU  average  of  27%.  Data  show  a  deteriorating 
trend  compared  to  the  previous  reporting  period. 
This  situation  has  severe  implications  for  Spain’s 
climate  resilience,  as  the  loss  of  biodiversity 
impairs ecosystems’ ability to provide services that 
help  mitigate  the  effects  of  climate  change,  such 
as regulating water cycles, maintaining soil health 
and sequestering carbon. 

largest  terrestrial 
Spain  contributes  the 
surface  to  the  EU  Natura  2000  network, 
covering 27.3 % of its territory (although it is 
the  fifth  Member  State  in  percentage,  the  EU 
average  is  18.6  %).  Some  designations  are  still 

(199) Directive 2024/3019, of 27 November 2024. The deadline 

for transposition is 31 July 2027. 

(200) EEA, 2019, Number of habitats and species per Member 

State. 

 
 
site-specific 

legally  protects  28.1  %  of 

needed  in  the  marine  part.  The  main  challenge  is 
conservation 
the  adoption  of 
objectives  and  measures,  together  with  allocating 
sufficient  resources  to  manage  the  Natura  2000 
network.  Spain  could  also further  capitalise  on  its 
very  valuable  natural  capital  to  promote  green 
growth  and  job  creation.  Considering  both  Natura 
2000  and  other  nationally  designated  protected 
areas,  Spain 
its 
terrestrial  areas  (EU-27  coverage:  26.1  %)  and 
12.4  %  of  its  marine  areas  (EU-27  coverage: 
12.3%).  Thus,  Spain  is  on  track  to  achieve  its 
political  commitment  under  the  EU  Biodiversity 
Strategy for 2030 to protect 30% of land and sea 
in  2030,  as  outlined  in  its  Strategic  Plan  for  the 
Natural  Heritage  and  Biodiversity  for  2030 (201) 
and  the  Master  Plan  for  the  Spanish  Marine 
Protected  Areas  Network,  approved  in  December 
2022. 

Nature  degradation  presents  significant 
economic and competitiveness risks as Spain 
is one of the Member States with the highest 
degree of dependency on ecosystem services. 
Spain  has  the  highest  degree  of  supply  chain 
dependency on ecosystem services in the EU, with 
32%  of  its  gross  value  added  highly  dependent, 
against  the  EU-27  average  of  22%.  It  is  also 
in  terms  of  overall 
above  the  EU  average 
dependency on ecosystem services, ranking fourth 
among  Member  States.  Several  sectors  such  as 
agriculture,  fisheries,  construction  and  water 
utilities 
(see  Graph  A9.1)  are  particularly 
dependent  on  ecosystem  services.  100%  of  the 
gross  value  added  generated  by  these  sectors  is 
directly  dependent  on  ecosystem  services.  This 
means  that  failure  to  maintain  the  capacity  of 
ecosystems 
to  deliver  services  could  entail 
significant  costs  or  even  stop  production  in  these 
sectors.  Protecting  and  restoring  key  ecosystems 
would 
long-term 
competitiveness of these sectors. 

maintain 

help 

the 

(201) Adopted by Royal Decree 1057/2022 of 22 December 2022. 

78 

Graph A9.1: Direct dependency (1) on ecosystem 
services(2) of the gross value added generated by 
economic sector in 2022 

(1) Dependency based on the sector’s own operations, 
excluding value chain operations within countries and across 
international value chains. A high dependency indicates a high 
potential exposure to nature-related shocks or deteriorating 
trends, which means that the disruption of an ecosystem  
service could cause production failure and severe financial 
loss. 
(2) Ecosystem services are the contributions of ecosystems to 
the benefits that are used in economic and other human 
activity, including provisioning services (e.g. biomass 
provisioning or water supply), regulating and maintenance 
services (e.g. soil quality regulation or pollination), and cultural 
services (e.g. recreational activities). 
Source: Hirschbuehl et al., 2025, The EU economy's 
dependency on nature. 

Targeted  action  on  nature  protection  and 
restoration  is  necessary  to  meet  Spain’s 
nature  restoration  targets.  It  should  be  noted 
that,  between  2006  and  2012,  the  extent  of  soil 
areas  providing  flood  control  ecosystem  services 
decreased  by  18%  due  to  soil  sealing (202).  Spain 
also  needs  to  restore  up  to  113 410  km2  of 
habitats listed in Annex I to the Habitats Directive, 
corresponding  to  up  to  22.4%  of  its  land (203). 
Spain  requires  EUR 8.1  billion  of  investment  per 

(202) European Commission, European Environment Agency, 2021, 

Accounting for ecosystems and their services in the 
European Union. 

(203) European Commission, 2022, Impact assessment 

accompanying the proposal for a Regulation on nature 
restoration. 

0%20%40%60%80%100%AgricultureForestryFishery and acquacultureMining and metalsConstructionWater utilitiesHealthcare deliveryAviation travel and tourismFood beverages and tobaccoSupply chain and transportPublic services and othersElectricityChemical and materials industryElectronicsOil and gasReal estateHeat utilitiesAutomotiveRetail consumer goods and…Information technologyBanking and capital marketsInsurance and asset…Digital communicationsHighMediumLow 
 
   
 
year  to  effectively  protect  and  restore  its  natural 
capital,  mitigate  the  impacts  of  climate  change 
and  preserve  the  country's  rich  biodiversity  (see 
Graph  A9.2).  The  current  level  of  financing  for 
biodiversity  and  ecosystem  conservation  in  Spain 
is  around  EUR 3.1  billion  per  year.  Therefore,  the 
investment  gap  is  estimated  to  be  around  EUR  5 
billion  per  year,  corresponding  to  0.37  %  of  its 
GDP.  This  shortfall  undermines  the  country’s 
commitment  to  global  biodiversity  agreements 
and 
social 
development. 

long-term 

economic 

and 

its 

Graph A9.2: Investment needs and gaps in EUR 
million, in 2022 constant prices 

Source: European Commission, DG Environment, 
Environmental investment needs & gaps assessment 
programme, 2025 update. 

Sustainable agriculture and land use 

Spain’s  carbon  removals  fall  short  of  the 
level  of  ambition  needed  to  meet  its  2030 
target  for  land  use,  land-use  change  and 
forestry  (LULUCF).  Spain’s  land-use  sector  has 
provided  constant  net  carbon  removals  in  recent 
years,  with  forests  playing  a  major  role.  To  meet 
its  2030  LULUCF 
target,  additional  carbon 
removals of  -5.3 million tonnes of CO2 equivalent 
(CO2eq)  are  needed (204).  The 
latest  available 

projections  show  a  gap  to  target  of  6.1  million 
for  2030 (205).  Therefore, 
tonnes  of  CO2eq 
additional  measures  need  to  be  applied  to  reach 
the 2030 target (206).  

Spanish  agriculture  is  still  a  notable  source 
of  greenhouse  gas  emissions  and  continues 
to  have  a  significant  impact  on  air,  water 
and  soils.  In  2022,  agriculture  generated  34.9 
million  tonnes  of  CO2eq,  accounting  for  around 
14% of the country's total emissions. This includes 
27.9  million  tonnes  of  CO2eq  from  livestock.  The 
utilised  agricultural  area  (UAA)  in  Spain  increased 
by  5.2%  from  23.5  million  hectares  in  2012  to 
24.7  million  hectares  in  2022.  This  increase 
translated  in  an  increase  in  nutrient  losses  from 
agriculture,  mainly  from  mineral  fertilisers  and 
manure.  This  poses  a  significant  environmental 
concern  and  a  threat  to  human  health.  This  is 
reflected  in  the  country's  nitrogen  balance  of 
41 kg of nitrogen per hectare of UAA. Furthermore, 
according to data from the Nitrates Directive, 23% 
of  groundwater  monitoring  stations 
in  Spain 
recorded  average  nitrate  concentrations  above 
50 mg/l  between  2016  and  2019,  exceeding  the 
healthy 
consumption. 
Although  the  livestock  density  index  was  0.7  in 
2020,  slightly  below  the  EU  average  of  0.75, 
ammonia  emissions  have  been  on  a  downward 
trend,  falling  by  5%  between  2018  and  2022. 
Between  2017-2022,  pesticides  were  detected  in 
26%  of  surface  water  bodies  at  levels  exceeding 
the set thresholds.  

for  human 

threshold 

Spain  is  transitioning  to  a  sustainable  food 
system  by  implementing  policies  to  reduce 
the  environmental  impact  of  agriculture.  In 
2022, 5.3% of its agricultural land had landscape 
features  such  as  woods  and  non-productive 
grasslands, below the EU average of 5.6%. Organic 
farming,  which  reduces  the  use  of  synthetic 
fertilisers  and  pesticides,  made  up  10.8%  of 
Spain's  agricultural  land,  a  39%  increase  since 
2012.  Spain  aims  to  reach  20%  of  UAA  under 
organic  farming  by  2030  which  it  will  be  able  to 
achieve,  if  the  current  growth  trend  in  organic 
farming surface is maintained in the coming years. 
impact  of 
the  environmental 
To  mitigate 
agriculture, 
has 
to  promote  water 
implemented  measures 

government 

Spanish 

the 

(204) National LULUCF targets of the Member States in line with 

(206) Projections submitted in Spain’s draft updated national 

Regulation (EU) 2023/839. 

energy and climate plan, 2023. 

(205) Climate Action Progress Report 2024 COM/2024/498. 

79 

 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000BiodiversityWaterBaselineGap 
   
 
 
resilience  under  the  common  agricultural  policy 
strategic plan, including verifying the permit to use 
irrigation  water  issued  by  the  competent  water 
authority  as  a  prerequisite  for  access  to  certain 
aid (207). The plan also supports the increase in the 
share of organic farming and the use of soil cover, 
promotes  crop  rotation  and  diversification,  and 
helps to reduce nutrient losses, along with support 
for  other  sustainable  agriculture  practices.  These 
long-term 
measures  are 
competitiveness  of  Spain’s  agri-food  system  and 
its bioeconomy, which have a significant economic 
the 
role. 
production  and  processing  of  biological  products, 
contributed EUR 74.6 billion of added value to the 
country's  gross  domestic  product 
in  2021. 
Agriculture  generated  EUR 31.1  billion,  while  the 
food industry contributed EUR 21.9 billion (208). 

encompassing 

bioeconomy, 

crucial 

The 

the 

for 

(207) Annex to Spain’s CAP strategic plan “Contribución del PEPAC 
23-27 a la mejora de la gestión del agua en la agricultura”. 

(208) European Commission, 2023, EU Bioeconomy Monitoring 

System dashboards. 

80 

 
 
Table A9.1:  Key indicators tracking progress on climate adaptation, preparedness and environment 

(1) The data show the average for the timespan 2006-2023 based on EFFIS - European Forest Fire Information System. 
(2) Scale: 0 (no protection gap) – 4 (very high gap). EIOPA, 2024, Dashboard on insurance protection gap for natural catastrophes. 
(3) van Daalen, K. R. et al., 2024, The 2024 Europe report of the Lancet Countdown on health and climate change: unprecedented 
warming demands unprecedented action, The Lancet Public Health. 
(4) This indicator measures total water consumption as a percentage of the renewable freshwater resources available for a given 
territory and period. Values above 20% are generally considered to be a sign of water scarcity, while values equal or greater than 
40% indicate situations of severe water scarcity. 
(5) European Commission, 2024, 7th Implementation Report from the Commission to the Council and the European Parliament on 
the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) (Third River Basin 
Management Plans and Second Flood Risk Management Plans). 
(6) For this indicator, the EU average includes figures for the UK under the previous configuration, EU-28. 
(7) European Commission, 2023, EU Bioeconomy Monitoring System dashboards. 
(8) Nitrates can persist in groundwater for a long time and accumulate at a high level through inputs from anthropogenic sources 
(mainly agriculture). The EU drinking water standard sets a limit of 50 mg NO3/L to avoid threats to human health. 
(9) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2024 
greenhouse gas inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839 – Annex IIa. 
Source: Eurostat, EEA. 

81 

Climate adaptation and preparedness:20182019202020212022202320182021Drought impact on ecosystems0.365.930.030.7411.336.846.772.76[area impacted by drought as % of total]Forest-fire burnt area (1)81 623     81 623     81 623     81 623     81 623     81 623     [ha, annual average 2006-2023]Economic losses from extreme events2 178       4 942       2 421       2 910       11 204     7 132       24 142       62 981       [EUR million at constant 2022 prices]Insurance protection gap (2)----1.88         1.88         [composite score between 0 and 4]Heat-related mortality (3)116          116          116          116          116          [number of deaths per 100 000 inhabitants in 2013-2022]Sub-national climate adaptation action67            73            75            76            72            78            4144[% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:20182019202020212022202320182021Water Exploitation Index Plus, WEI+ (4)6.07.86.46.78.8-4.54.5[total water consumption as % of renewable freshwater resources]Water consumption16 341     16 048     16 022     15 980     16 824     -           [million m3]Ecological/quantitative status of water bodies (5)[% of water bodies failing to achieve good status]Surface water bodies---41%---59%Groundwater bodies---25%---93%Biodiversity and ecosystems:20182019202020212022202320182021Conservation status of habitats (6)8.9-----14.7-[% of habitats having a good conservation status]Common farmland bird index------72.274.42000=100Protected areas---2828--26[% of protected land areas]Sustainable agriculture and land use:20182019202020212022202320182021Bioeconomy's added value (7)67 719     66 982     66 938     73 765     634 378     716 124     [EUR million]Landscape features----5              -[% of agricultural land covered with landscape features]Food waste--90---[kg per capita]Area under organic farming9.39.710.010.810.87.99-[% of total UAA]Nitrogen balance40.446.238.941.0--[kg of nitrogen per ha of UAA]Nitrates in groundwater (8)51.748.243.440.7--[mgNO3/l]Net greenhouse gas removals from LULUCF (9)47 957-     46 988-     46 475-     47 516-     47 417-     -           256 077-     240 984-     [Kt CO2-eq]SpainEU-27SpainEU-27SpainEU-27SpainEU-27 
 
  
 
FAIRNESS 
ANNEX 10: LABOUR MARKET 

Spain’s  labour  market  has  shown  resilience 
and  improvement,  with  robust  job  creation 
contributing  to  historic  employment  highs. 
However,  substantial  structural  challenges persist, 
including  high  unemployment,  skills  mismatches, 
and  an  ageing  workforce 
that  may  hinder 
productivity. Third-country nationals have played a 
large  role  in  employment  growth  but  often  face 
precarious  working  conditions.  Young  and  older 
workers  remain  underrepresented  in  the  labour 
market. Nevertheless, Spain is currently on track to 
reaching  its  2030  employment  target  of  76%. 
Continuing 
job  quality,  fostering 
lifelong  learning  and  the  silver  economy,  aligning 
supporting 
skills  with  market  needs,  and 
vulnerable  groups  through  more  effective  active 
labour market policies remain crucial to ensuring a 
competitive and inclusive labour market. 

improve 

to 

from 

third- 

contribution 

Spain’s  labour  market  continued  to  make 
progress 
in  2024,  but  key  structural 
challenges  remain.  The  employment  rate  (for 
people  aged  20-64)  reached  the  historic  high  of 
71.4%  in  2024,  supported  by  strong  GDP  growth, 
the  expansion  of  services  and  professional 
activities, and public sector job creation (see Annex 
2).  Employment  grew  by  3.0%  in  2023,  with  a 
significant 
country 
nationals.  However,  the  employment  rate  remains 
(75.8%),  highlighting 
below  the  EU  average 
persistent barriers to the labour market integration 
of  young  people,  medium-skilled  workers  (Annex 
12)  and  older  women.  In  addition,  Spain  set  a 
target  for  employing  persons  with  disabilities  of 
51% by 2030 (a relative increase of 91% over 10 
years).  The  activity  rate  (for  people  aged  15-64) 
was  close  to  the  EU  average  in  2024  (74.6%  vs 
75.4%),  showing  that  Spain’s  employment  gap  is 
driven  by  high  unemployment  rather  than  low 
participation.  Unemployment  decreased  in  2024 
and  is  projected  to  decline  further,  reaching  11% 
by  2025  and  10.7%  by  2026 (209).  Despite 
improvements, it is the highest in the EU in 2024, 
at 11.4%, with long-term unemployment at 3.8%, 
both  double  the  EU  average.  However,  Spain’s 
share  of  long-term  unemployment  within  total 
the  EU  average, 
unemployment  aligns  with 
indicating  no  disproportionate 
concentration 
compared to other Member States. Unemployment 
disproportionately  affects  young  people,  older 

(209) European Commission Autumn Forecast 2024. 

workers,  and  third-  country  nationals.  Although 
decreasing,  labour  market  slack  (210)  remained 
among  the  highest  in  the  EU  in  2024  (19.3%  vs 
the  EU  average  of  11.7%),  underscoring  Spain’s 
high unmet needs for employment and potentially 
sustaining  job  precariousness,  particularly  among 
vulnerable  groups.  Regional  disparities  persist  in 
2024,  although  are  narrowing,  with  a  gap  of 
12.7 pps  in  employment  rates  between  Andalucía 
(64.1%)  and  Madrid  (76.8%)  (aged  20-64)  and  a 
gap  of  8.9  pps  in  unemployment  rates  between 
(16.5%)  and  Comunidad  Foral  de 
Andalucía 
Navarra 
the 
(aged  15-74).  Reaching 
employment  rate  target  of  76%  by  2030  would 
require an average annual employment growth of 
1.1%  between  2023  and  2030,  far  below  the 
2.3%  annual  growth  recorded  between  2013  and 
2019. 

(7.6%) 

Graph A10.1: Key rates: activity, unemployment, 
long-term unemployment, youth unemployment, 
NEET 

Source: Eurostat, Labour Force Survey [lfsi_emp_a, une_rt_a, 
edat_lfse_20, une_ltu_a] 

still 

face 

Young  people 
considerable 
challenges  in  the  labour  market,  but  since 
2021  Spain  has  been  among  the  Member 
relative 
States  with 
strongest 
improvement 
in  most  youth  employment 
indicators.  In  2024,  the  youth  employment  rate 

the 

(210) The labour market slack is the underutilisation of labour 

resources, including unemployment, underemployment, and 
those available for work but not actively seeking it. 

82 

656769717375770510152025303540452009201020112012201320142015201620172018201920202021202220232024%%ESActivity rate 15-64 (rhs)Unemployment rate 15-74 (lhs)Long-term unemployment rate 15-74 (lhs)Youth unemployment rate 15-29 (lhs)NEET rate 15-29 (lhs) 
 
 
 
   
 
 
 
in 

Regional 

disparities 

(for  people  aged  15-29)  was  38.4%,  well  below 
the  EU  average  of  46.8%,  reflecting  both  a  lower 
activity  rate  (50.5%  vs  55.9%  in  the  EU)  and 
higher  unemployment.  Youth  unemployment  (15-
29) stood at 20.2% in 2024, almost twice the EU 
youth 
average. 
unemployment  are  large,  ranging  from  28.7%  in 
Andalucía to 15.5% in Cataluña. These challenges 
are  caused  by  structural  issues,  such  as  skills 
mismatches  or  limited  transitions  from  education 
to  stable,  high-quality  jobs  (Annex  12),  which 
hinder  Spain’s  competitiveness.  The  share  of 
young  people  (15-29)  neither  in  employment  nor 
in  education  and  training  decreased  over  the  last 
decade  but  remained  above  the  EU  average 
(12.3% vs 11.2% in 2024). Within this group, 6.2% 
are unemployed and 5.8% are inactive, suggesting 
difficulties  in  labour  market  integration.  Public 
employment  services  have  an  important  role  to 
play in this context. Efforts to address these issues 
in line with the recovery and resilience plan (RRP) 
include  the  Statute  of  Trainees,  whose  pre-draft 
law  aims  to  regulate  compensation,  limit  the 
number  of  trainees  per  workplace,  and  enforce 
compliance  through  imposing  fines.  The  European 
Social Fund Plus supports youth employment with 
more  than  EUR 1.8  billion  in  funding,  having 
reached  more  than  21 000  unemployed  people 
between 2021 and 2024. 

Third-country  nationals,  who  play  an 
important  role  in  employment  growth,  are 
often  exposed  to  job  precariousness.  They 
contributed almost half of the employment growth 
between  Q1-2022  and  Q3-2024,  primarily  in 
service  and  sales  occupations (211).  However,  in 
2024,  the  unemployment  rate  among  third-
country nationals (18.4%) was significantly higher 
than  that  of  native  workers  (10.3%)  and  the  EU 
average  for  that  group  (12.5%),  while  female 
third-country  nationals 
faced  even  greater 
disadvantages, with an unemployment rate gap of 
9 pps 
to  native  women.  These 
challenges  are  linked  to  third-country  nationals 
being  heavily  concentrated  in  more  precarious 
sectors  such  as  domestic  work  and  care  services, 
where non-Spanish nationals represent 68.5% and 
50.2%  of  workers,  respectively (212).  Specifically, 
many women migrate from Latin America to Spain 
responding to the growing demand for workers in 

compared 

(211) Funcas, El dato de año 2024. 

(212) Fedea, Observatorio Trimestral del Mercado Laboral, 2024-

T2. 

live 

the  country's  care  service  sector (213)  amid 
comparatively  lower  public  support  for  families 
(Annex  11).  Similarly,  49.3%  of  agricultural 
workers  are  third-country  nationals  highlighting 
their  critical  contribution  to  Spain’s  agrifood 
industry.  However,  an  estimated  12 000  third-
country  nationals  in  this  sector,  particularly  in 
southern  Spain, 
informal  settlements 
in 
without  basic  services  or  social  protection, 
enduring  harsh  working  conditions  (214).  Labour 
market  discrimination  further  exacerbates  these 
barriers,  limiting  access  to  quality  employment 
and  carrying  an  estimated  economic  impact  of 
EUR 12  billion  annually  –  around  1%  of  Spain’s 
GDP in 2022 (215).  These challenges translate into 
third-country  nationals  being  more  likely  to  hold 
fixed-term (23.3%) or part-time (19.3%) contracts 
(15.3%  and  12.6%, 
than  native  workers 
Looking 
respectively). 
demographic 
ahead, 
forecasts 
(Instituto  Nacional  de 
INE 
Estadística),  AIReF  (Autoridad  Independiente  de 
Responsabilidad  Fiscal)  and  Eurostat  project  that 
immigration  will  remain  a  significant  driver  of 
labour  market  dynamism  in  2025.  In  response  to 
these trends, the Spanish government has enacted 
migration  reforms  outlined  in  the  medium-term 
fiscal-structural  plan  to  simplify  residence  and 
work  permits,  expand 
job  opportunities,  and 
address labour shortages. 

from 

In 

of 

these 

2024, 

barriers. 

over  half 

Older  workers  also  encounter  significant 
employment 
their 
unemployment rate stood at 10.5%, way above EU 
average  of  4.4%,  while  long-term  unemployment 
affected 
individuals, 
complicating their re-entry into the workforce due 
to  upskilling  and  reskilling  challenges  (Annex  12). 
Women  in  this  age  group  face  even  greater 
disadvantages,  with  an  employment  rate  that  is 
13.5 pps  lower  than  that  for  men.  For  example, 
older  women  make  up  most  beneficiaries  of  the 
unemployment benefit for individuals over 52 (216), 
reflecting  differences  in  access  to  and  incentives 

(213) Banco de España, Una caracterización de los flujos 

migratorios hacia España y otros países de la Unión Europea. 

(214) Asociación Pro Derechos Humanos de Andalucía, Las 
fronteras internas en Andalucía: las vulneraciones de 
derechos en los asentamientos de Huelva y Almería. 

(215) Ministerio de Inclusión, Seguridad Social y Migraciones, 

Análisis del impacto económico de la discriminación y la 
desigualdad entre la población autóctona y la extranjera 
residente en España. 

(216) SEPE, Prestaciones por desempleo: Resumen de datos. 

83 

 
 
 
for 

the  occupational  and 

for  workforce  participation.  Population  ageing  has 
also  contributed  to  reduced  employment  flows, 
job-to-job  transitions (217)  which  are 
including 
critical 
sectoral 
reallocation  needed  to  support  Spain’s  digital  and 
green  transitions  (Annex  12).  To  address  these 
challenges, 
the  European  Social  Fund  Plus 
supported  almost  20 000  older  workers  with 
training  and  employment  initiatives  up  to  2024. 
Under  the  RRP,  the  action  plan  for  developing 
micro-credentials  aims  to  transform  universities 
into lifelong learning institutions, ensure equity of 
access,  and  create  personalised  and  flexible 
training  pathways.  These  actions  have 
the 
potential to help upskill and reskill older workers. 

Demographic trends are reshaping the labour 
market,  creating  competitiveness  challenges 
as  the  workforce  ages  and  the  younger 
population declines. Over the past two decades, 
risen 
the  average  age  of  employees  has 
significantly,  from  37.5 
to  43.5  years  for 
employees  and  from  44  to  48  years  for  self-
employed  individuals.  Non-Spanish  nationals,  who 
are  on  average  3.4  years  younger  than  Spanish 
nationals,  have  helped  mitigate  some  of  these 
demographic  pressures (218).  However,  the  overall 
trend reflects broader shifts, including a sharp rise 
in the old-age dependency ratio, which is projected 
to grow by 28.2 pps from 30.8% in 2023 to 59% 
in 2050 (53% according to INE).  This increase far 
exceeds  the  projected  EU  average  growth  of 
17.1 pps,  underscoring  the  unique  challenges 
faced  by  Spain.  Given  these  demographic  trends, 
the lower employment rates among older workers 
compared to middle-aged workers could pose risks 
to  Spain’s  competitiveness.  Regions  such  as 
Castilla  y  León  and  Asturias  are  particularly 
affected,  with  nearly  1 in 4  workers  over  the  age 
of  55 (219),  illustrating  stark  regional  disparities 
and  challenges  as  regards  rural  depopulation 
(Annex 17). The public sector is among the sectors 
most  affected,  with  nearly  30%  of  employees 
aged  55  or  older (220).  Similarly,  self-employment 
is  experiencing  a  significant  demographic  shift, 
with  one  third  of  self-employed  individuals  aged 
46-55  and  increasing  numbers  in  the  56+  age 

(217) Banco de España, The impact of population ageing on 

Spanish labour market flows. 

(218) Banco de España, Informe Anual 2023, Capítulo 3. 

(219) INE. 

(220) INE. 

group (221),  raising  concerns  about  the  long-term 
sustainability  of  private-sector  entrepreneurship. 
To  address  these  challenges,  the  Just  Transition 
Fund  will  support  some  of  the  regions  most 
affected  by  aging  and  depopulation  by,  among 
other  initiatives,  reskilling  workers  from  carbon-
intensive 
jobs. 
Additional  policies  are  being  deployed  by  the 
Spanish Government’s Just Transition Institute. 

industries,  creating  sustainable 

Despite some progress, a persistent low level 
of  productivity  growth  remains  a  barrier  to 
sustainable  wage  increases.  Nominal  wages 
are projected to grow by 5.1% in 2024 and 3.1% 
in  2025 (222).  Real  wages,  which  fell  by  2.5%  in 
2022 and recovered by 2.1% in 2023, are forecast 
to grow modestly by 2% in 2024 and by 0.5% in 
2025 (223).  For  2024  and  2025,  however,  these 
rates would be among the lowest rates of growth 
for  real  wages  in  the  EU.  Nonetheless,  this 
recovery  in  real  wages,  driven  by  lower  inflation, 
will  fully  offset  2022’s  purchasing  power  losses. 
Over  the  past  15  years,  the  moderate  growth  in 
wages and unit labour costs (ULCs) has supported 
cost  competitiveness,  particularly  within  the  euro 
area,  and  has  likely  contributed  to  rising  export 
market shares and reduced imbalances. ULCs rose 
by  6.2%  in  2023,  less  than  in  most  EU  Member 
States,  but  are  expected  to  grow  slower  in  both 
2024  (4.0%)  and  2025  (2.9%).  Structurally  low 
productivity  growth  continues  to  constrain  wages. 
Despite  some  recent  increases,  Spain’s  labour 
productivity  growth  has  lagged  behind  the  EU 
average 
skills 
mismatches, a reliance on low-productivity sectors 
like  hospitality,  and  high  self-employment  rates 
(16.8%  in  2023  vs  10.8%  in  the  EU).  Most  self-
employed  workers  operate  without  employees, 
often  in  trade  or  lower-skilled  roles,  limiting  their 
and 
potential 
competitiveness. 

since  2017, 

contribution 

productivity 

hindered 

by 

to 

Spain  has  made  progress 
in  addressing 
labour market precariousness through recent 
reforms,  but  significant  challenges  remain. 

(221) Ministerio de Trabajo y Economía Social, Estadística de 

autónomos. 

(222) For nominal wage growth, pay per employee is considered. 
For real gross wages, the deflator used is the Harmonised 
Index of Consumer Prices the Harmonised Index of Consumer 
Prices (HICP). Data for 2024 and 2025 are based on the 
European Commission Autumn 2024 economic forecast. 

(223) European Commission Autumn Forecast 2024. 

84 

 
 
 
Under  the  RRP,  the  2021  labour  market  reform 
helped reduce the share of fixed-term contracts in 
the private sector from 21% in 2021 to 12.8% in 
2023 (224).  This  reform  has  particularly  benefited 
young people and migrants and has helped reduce 
job  rotation.  However,  fixed-term  employment 
remains  disproportionately  high 
in  the  public 
sector,  where  it  is  twice  as  prevalent  as  in  the 
private sector, particularly in health and education. 
This  has  kept  Spain’s  overall  share  of  temporary 
contracts  3.3 pps  above  the  EU  average.  High 
levels of involuntary part-time work (47.4% vs the 
18.8% in the EU for 20-64) and a larger share of 
workers  with  less  than  one  year  of  job  tenure 
(16.8%  vs  12.4%  in  the  EU)  further  exacerbate 
precariousness. Transition rates from temporary to 
permanent  contracts  also  remain  below  the  EU 
average (31.0% vs 36.3% in 2023) and decreased 
a  lot  in  2024  to  23.8%,  highlighting  persistent 
segmentation 
labour  market.  Social 
dialogue,  with  a  91.8%  collective  bargaining 
coverage (225),  offers  a  strong  framework  for 
addressing  these  challenges.  However,  gaps  in 
small to medium-sized enterprise representation – 
partly  due  to  the  lack  of  a  formal  register  for 
employers’  organisations  and  low  membership 
among  smaller  businesses  –  may 
limit  the 
effectiveness  of  social  dialogue  in  aligning  skills 
supply with the needs of the labour market. 

the 

in 

of 

accounted 

for  2.6% 

Spain’s  workforce  is  adapting  to  the  green 
transition but faces challenges regarding the 
digital  transition.  In  2024,  energy-intensive 
industries 
total 
employment  (3.5%  in  the  EU),  while  jobs  in 
environmental  goods  and  services  expanded  by 
46.7% between 2016 and 2022, reaching 2.7% of 
total  employment  (3.3%  in  the  EU).  Emission 
intensity per worker fell from 14.7 tonnes in 2015 
to  10.4  tonnes  in  2023,  outperforming  the  EU 
average of 12.3 tonnes. This reflects the progress 
Spain has made in sustainability efforts. However, 
the  digital  transformation  faces  obstacles.  ICT 
specialists made up 4.7% of employment in 2024 
(5.0%  in  the  EU)  despite  a  higher  share  of  ICT 
graduates  (5.2%  vs  4.5%  in  2022),  underscoring 
difficulties 
to 
employment due to skills mismatches (Annex 12). 

transitioning  from 

training 

in 

Graph A10.2: Employment growth by contract type 

(1) Employment (thousand), total, ages 20-64, year-on-year 
change based on non-seasonally adjusted data. Self 
employment is defined as the total of self-employed persons 
and contributing family workers.. 
Source: Eurostat, LFS [lfsq_egaps, lfsq_etgaed] 

The 

agricultural 

Labour  shortages  remain  low  overall  but 
concentrated  in  key  sectors,  posing  risks  to 
competitiveness.  Labour  shortages  are  partly 
driven  by  skills  mismatches,  particularly 
in 
medium-skilled  roles,  as  well  as  demographic 
changes  and  increasing  job  quality  expectations 
in 
among  workers.  Over  50%  of  employers 
report 
tourism,  agriculture,  and  construction 
significant difficulties in finding workers (226), even 
for  lower-skilled  roles  such  as  waiters,  cooks  and 
bricklayers. 
faces 
challenges  in  recruiting  mixed  crop  and  livestock 
farm  labourers,  while  the  industry  has  difficulties 
hiring  specialised  workers  such  as  chemical 
product  plant  and  machine  operators (227). 
In 
addition,  the  rising  demand  for  healthcare  and 
long-term  care  services  has  made  it  increasingly 
difficult  to  fill  roles  in  this  sector,  e.g.  nurses, 
family  and  specialist  doctors,  and  occupational 
therapists  (see  Annex  14).  Although  the  overall 
vacancy rate in industry, construction, and services 
has remained stable at 0.9% since 2022 (2.4% in 
the EU in 2024), shortages exist in specific sectors, 
such  as  public  administration  (3.4%).  In  2022, 
green  and  ICT  jobs  had  52%  and  212%  more 

sector 

(224) INE. 

(226) Banco de España, Encuesta a las empresas españolas sobre 
la evolución de su actividad: cuarto trimestre de 2024. 

(225) Ministerio de Trabajo y Economía Social, Estadística de 

(227) European Labour Authority, 2025 EURES Report on labour 

convenios colectivos de trabajo. 

shortages and surpluses. 

85 

-2000-1500-1000-50005001000150020002007-Q42008-Q42009-Q42010-Q42011-Q42012-Q42013-Q42014-Q42015-Q42016-Q42017-Q42018-Q42019-Q42020-Q42021-Q42022-Q42023-Q42024-Q4thsESPermanent employeesTemporary employeesSelf employmentOverall 
 
  
 
per 

than 

vacancies 
average, 
worker 
respectively (228),  highlighting  persistent  skills 
shortages  and  mismatches  (Annex  12)  that  could 
slow the twin green and digital transitions. Despite 
high  unemployment, 
labour  shortages  hinder 
to  an 
economic  performance, 
estimated  GDP  loss  of  1.3%  (2%  in  the  EU)  (229). 
Regional  disparities  also  exacerbate 
these 
challenges, with 3 out of 5 vacancies concentrated 
in Comunidad de Madrid, Cataluña, Andalucía, and 
Comunitat Valenciana (230). 

contributing 

(228) OECD Job Creation and Local Economic Development 2024 – 

Country Notes: Spain. 

(229) PWC, European Private Business Survey. 

(230) INE. 

86 

 
 
ANNEX 11: SOCIAL POLICIES 

and 

Risk of  poverty and  social  exclusion,  as  well 
as income inequality, remain critical issues in 
Spain, with child poverty standing out as one 
of the most pressing challenges in view of its 
implications. 
wider  economic  and  social 
Despite  an  economic 
recovery  and  strong 
employment  performance,  the  most  vulnerable 
groups  have  barely  benefited,  highlighting  social 
intergenerational 
deepening 
disparities 
inequality. Vulnerable  groups,  including children in 
single-parent households, children with migrant or 
Roma  backgrounds,  families  with 
low  work 
intensity and families with more than two children, 
face  heightened  risks  of  poverty  and  social 
exclusion.  The  persistently  low  effectiveness  of 
social  protection,  housing  affordability 
issues, 
energy  poverty  and  restricted  access  to  services 
exacerbate  these  challenges.  Spain  is  currently 
falling behind its  2030  national  poverty  reduction 
targets,  including  for  child  poverty,  highlighting 
persistent  social  disparities.  Addressing  these 
challenges  will  contribute  to  inclusive  growth  and 
competitiveness. 

Graph A11.1: At-risk-of-poverty or social exclusion 
rate and its components 

Source: Eurostat, EU-SILC [ilc_peps01n, ilc_li02, ilc_mdsd11, 
ilc_lvhl11n] 

Poverty  remains  the  most  pressing  social 
affecting 
disproportionately 
challenge, 
vulnerable  groups.  In  2024,  the  share  of  the 
population  at  risk  of  poverty  or  social  exclusion 
(AROPE) fell to 25.8% but remained well above the 
EU  average  of  21.0%.  Severe  material  and  social 
deprivation  remains  high  at  8.3%.  Certain  groups 
face  higher  poverty  risks,  often  linked  to  job 
market  integration  challenges.  The  AROPE  rate  is 

87 

more  than  double  the  national  average  for  some 
groups: single parents (50.3% in 2024), parents of 
more  than  two  children  (49.1%  in  2024),  non-EU 
nationals (53.4% in 2024). Roma also present high 
risk-of-poverty  rates  (AROP)  (98%  in  2021)  (231). 
The  AROPE  gap  between  non-EU-born  and  those 
born  in  Spain  was  among  the  widest  in  the  EU  in 
2024 (27.0 pps vs an average of 20.2 pps for the 
EU), as was their in-work poverty gap (16.9 pps vs 
11.3 pps).  Persons  with  disabilities  and  young 
people  (15-29)  have  a  high  risk  of  poverty  and 
social  exclusion  (32.9%  and  26.7%),  while  13.1% 
of persons with disabilities are severely materially 
and socially deprived, compared with 10.4% in the 
EU.  Spain  faces  significant  challenges  in  meeting 
its  2030  poverty  reduction  target  of  reducing  the 
number  of  people  at  risk  of  poverty  or  social 
exclusion  by  2.8  million,  including  0.7  million 
children. In 2023, 12.6 million people were at risk 
of poverty or social exclusion, including 2.8 million 
children.  These  figures  exceed  2019  levels  by 
383 000  overall  and  197 000  for  children, 
highlighting that more needs to be done to tackle 
this  issue.  To  address  these  challenges,  the 
(ESF+)  will  help 
European  Social  Fund  Plus 
to  promote  social 
mobilise  EUR 3.7  billion 
than  0.6  million 
inclusion, 
reaching  more 
vulnerable  people. 
In  December  2024,  Spain 
approved the new National strategy for preventing 
and  fighting  poverty  and  social  exclusion  2024-
2030.,  focusing  on  a  minimum  basic  income, 
affordable  housing  and  access  to  early  childhood 
education. 

Child poverty continues to worsen, with over 
one  in  three  children  affected  and  certain 
groups  being  more  impacted.  Following  an 
increase between 2018 and 2021, the AROPE rate 
for  children  decreased  by  0.8 pps  in  2022  before 
rising  again  to  34.6%  in  2024.  Severe  material 
and social deprivation, while improving, is also still 
high at 11.2% in 2024. A driver of this is also the 
severe material and social deprivation rate among 
children, at 11.2% (vs 7.9% in the EU). The rate of 
children  at  risk  of  poverty  (AROP)  rose  to  29.2%, 
compared  to  19.3%  in  the  EU.  Children  from 
parents  with  migrant  backgrounds  and  Roma 
children  are  among  the  most  affected,  alongside 
children  in  single-parent  households  and  children 
whose  parents  have  a  low  or  medium  level  of 

(231) EU Agency for Fundamental Rights (2021), Roma in 10 

European countries. For Roma, this indicator refers to people 
at risk of poverty (AROP). 

0510152025302015201620172018201920202021202220232024% of populationESAt-risk-of-poverty or social exclusion rateAt-risk-of-poverty rateSevere material and social deprivationPeople living in low work intensity households 
 
  
 
 
 
education.  Work  intensity  plays  a  significant  role: 
in  2024,  84.1%  of  children  in  very  low  work 
intensity  households  were  at  risk  of  poverty, 
compared  to  9.9%  in  those  with  very  high  work 
intensity.  Other  main  factors  relate  to  the  low 
efficiency  of  social  benefits  and  to  significant 
regional  disparities,  driven  by  uneven  social 
protection  coverage,  disparities 
in  access  to 
essential  services,  coordination  gaps  between 
national  and  regional  benefits,  and  urban-rural 
differences  in  service  availability,  with  child  AROP 
rates ranging from 16.8% in Cantabria to 49.3% in 
Melilla (232).  To  mitigate  the 
impact  of  child 
poverty, Spain is implementing the European Child 
Guarantee  as  part  of  its  2022  action  plan, 
supported by the ESF+. The 2024 implementation 
report  shows  progress,  e.g.  with  actions  taken  in 
inclusive education. Yet gaps remain to be filled, in 
particular as regards school meals and housing, to 
ensure children in poverty can benefit from equal 
opportunities and stop the costly intergenerational 
transmission of disadvantages, which hinders skills 
acquisition and job market integration. 

Graph A11.2: Children at risk of poverty or social 
exclusion 

Source: Eurostat, EU-SILC [ilc_pecs01] 

Further efforts are needed to reduce income 
inequality.  In  2024,  the  income  quintile  share 
ratio (S80/S20) decreased to 5.39 (4.66 in the EU), 
indicating  that  the  top  20%  of  earners  received 
5.39  times the income  of  the  bottom  20%.  While 
this  represents  a  slight  improvement,  it  remains 
among the highest in the EU. The impact of taxes 
and  social  benefits  on  income  inequalities  is 

(232) Evidence based on a study by the European Commission 
Joint Research Centre, using the EUROMOD model. 

88 

limited  (see  Annex  2),  reducing  Spain’s  S80/S20 
ratio by 39%, compared to 48% in the EU (233). 

in  the  minimum  wage  have 
Increases 
improved  social  outcomes,  but 
in-work 
poverty  remains  high.  In  2023,  real  gross 
disposable  household 
income  surpassed  pre-
financial  crisis  levels  (2008)  for  the  first  time, 
although  growth  has  been  among  the  slowest  in 
the  EU,  widening  the  income  gap  with  the  EU 
average  (see  Annex  10).  Between  January  2022 
and  January  2025,  the  statutory  minimum  wage 
grew  by  22.6%  in  nominal  terms  (8.8%  in  real 
terms), likely reaching the reference values set by 
the  Minimum  Wage  Directive  (50%  of  the  gross 
average  wage  and  60%  of  the  gross  median 
increases 
wage).  Simulations  suggest 
contributed  to  reducing  poverty  and 
income 
inequality,  benefiting 
low-income  households, 
young  people,  women  and  those  in  lower-paying 
jobs (234).  The  percentage  of  workers  earning  the 
minimum  wage  jumped  from  5.1%  in  2018  to 
11.5%  in  2023,  with  projections  of  12.7%  for 
2024 (235), reflecting increased wage compression. 
Nevertheless,  the  in-work  poverty  rate  remains 
the  EU  average  at  11.2%, 
3 pps  above 
disproportionally  affecting 
temporary  workers 
(13.2%)  and  non-EU  nationals  (29.7%),  who  are 
overrepresented in low-paid roles. 

these 

Despite  ongoing  efforts,  gaps 
in  social 
protection remain for some types of workers 
and  the  unemployed.  Material  and  social 
deprivation rates were notably higher among part-
time  workers  (24.5%  vs  12.1%  in  the  EU)  and 
temporary employees (20.4% vs 15.5% in the EU), 
reflecting 
job  market  segmentation  and  the 
prevalence  of  precarious  work  conditions.  Self-
employed  workers  also  face  high  AROPE  rates,  a 
significant  challenge  given  Spain’s  high  self-
employment  rate  (Annex  10).  To  address  this, the 
recovery  and  resilience  plan  includes  a  gradual 
transition  to  a  new  social  security  contribution 
system  for  the  self-employed,  based  on  real 
income. This reform aims to align their treatment 
with that of employees and improve social security 
coverage,  although  its  impact  will  require  close 
monitoring.  Unemployment  protection  has  also 

(233) European Commission, Economic inequalities in EU, 2024,. 

(234) Evidence based on a study by the European Commission 
Joint Research Centre, using the EUROMOD model. 

(235) Banco de España, Informe Anual 2023, Capítulo 3. 

222426283032342018201920202021202220232024EUSpain 
   
 
 
informal  employment 

been  strengthened,  reflecting  efforts  to  improve 
its scope and impact. However, many individuals in 
precarious  or 
remain 
ineligible, 
leaving  them  without  support.  The 
adequacy  of  benefits  also  remains  a  concern. 
Under  the  recovery  and  resilience  plan,  Spain 
reformed 
the  non-contributory  unemployment 
benefit  system  to  simplify  its  structure,  improve 
adequacy and extend coverage. A key new feature 
is  allowing  benefits  to  be  compatible  with  work, 
reintegration.  Other 
facilitating 
improvements 
the  60% 
calculation  rate  for  contributory  unemployment 
to  domestic 
benefits  and  expanding  access 
workers,  artists  and  workers  with  a 
fixed 
discontinuous contract. 

job  market 
include 

restoring 

Graph A11.3: Impact of social benefits on poverty 
reduction 

Source: Eurostat, EU-SILC [ilc_li10, ilc_li02] 

The  effectiveness  of  social  protection 
policies  is  limited,  particularly  in  poverty 
reduction, and coverage remains low. In 2024, 
the  impact  of  social  benefits  (excluding  pensions) 
on poverty reduction was one of the lowest in the 
EU (23.9% vs a 34.4% EU average). The gap  was 
even  wider  for  children,  where  the  impact  was 
20.2%,  less  than  half  the  EU  average  of  41.9%. 
Spain  allocated  a  quarter  of  its  GDP  to  social 
protection in  2023,  slightly  below the  EU  average 
of  26.8%.  However,  spending  is  heavily  skewed 
toward 
and 
sickness/healthcare  benefits  (29.4%),  while  areas 
like  family  and  child  support 
(5.5%),  social 
inclusion  (2.0%),  and  housing  (0.5%)  receive 
minimal funding, raising concerns about adequacy 
in  addressing  critical  needs.  Spain’s  social  benefit 
expenditure  per  inhabitant  (EUR 7 732  in  2023) 

benefits 

(41.2%) 

old-age 

was  also  below  the  EU  average  (EUR 10 222  in 
2023).  The  disparity  is  particularly  pronounced  in 
spending  on  family  and  child  benefits,  where 
Spain’s per capita investment was only half the EU 
average 
(EUR 428  vs  EUR 878),  underscoring 
in  support  for  children  and 
significant  gaps 
families.  Coverage  remains  low,  with  only  68.9% 
of  eligible  individuals  receiving  benefits  in  2023, 
compared  to  83.5%  in  the  EU,  the  fifth  lowest  in 
the EU. To address these gaps, Spain’s 2024-2030 
national  deinstitutionalisation  strategy  aims  to 
improve  care  services  and  empower  vulnerable 
groups and persons with disabilities. By prioritising 
person-centred  care,  expanding  community-based 
services and improving working conditions for care 
staff,  it  seeks  to  strengthen  social  protection  and 
improve the accessibility and quality of support for 
those most in need. 

still 

supported 

highlighted 

households 

is  advancing  but 

The  implementation  of  the  minimum  income 
faces 
scheme 
significant  challenges,  notably  low  take-up 
rates. Since its launch in June 2020, the national 
minimum  income  scheme  (ingreso  mínimo  vital) 
and 
943 620 
has 
2 805 670  individuals (236).  By  December  2024, 
472 604 households had benefited from the child 
support  supplement  (complemento  de  ayuda  a  la 
infancia),  with  an  average  monthly  amount  of 
EUR 69.72  per 
child  and  EUR 129.75  per 
household  with  children.  Despite  substantial 
progress, the 2024 minimum income report of the 
Independent  Authority  for  Fiscal  Responsibility 
(AIReF) 
bureaucratic 
barriers  that  hinder  accessibility,  particularly  for 
vulnerable  groups  like  homeless  individuals (237). 
As of December 2023, 56% of eligible households 
had  not  applied,  leaving  only  36%  of  potential 
beneficiaries  covered.  5%  of  non-take-up  stems 
regional 
from  households  already 
minimum  income  benefits,  as  most  regions  have 
not  aligned  their  schemes  with  the  minimum 
income  scheme.  Administrative 
inefficiencies 
remain  a  critical  issue,  as  65%  of  households 
under  the  minimum  income  scheme  in  2023  had 
their  benefit  amounts 
reviewed,  with  some 
required  to  repay  a  part  of  it  due  to  updated 
income  information  and  the  need  to  recalculate 
income  amounts.  The  child  support  supplement 
faces similar challenges, with only 19% of eligible 

substantial 

receiving 

(236) La Moncloa, December 2024. 

(237) AIReF, 3rd opinion - Ingreso mínimo vital. July 2024. 

89 

152025303540452018201920202021202220232024EU totalEU childrenSpain totalSpain children 
   
 
households  receiving  it  by  December  2023.  73% 
of potentially eligible households had not applied, 
underscoring  significant  non-take-up  across  both 
schemes. 
scheme 
guarantees income levels of only 30%-40% of the 
income,  well  below  the  EU  poverty 
median 
threshold  of  60%,  underscoring  its  insufficient 
adequacy (238). 

The  minimum 

income 

House prices picked up somewhat in 2024 (+8.3% 
year-on-year  in  Q3-2024)  and  were  estimated  to 
be  overvalued  by  10%.  The  number  of  building 
permits  continued  to  increase  in  2023  and  2024, 
signalling that supply is rising and could contribute 
to some moderation in the growth of house prices 
going forward. 

transition 

focused  on 

income, 
the 

the  minimum 
implementing 

income 
is  addressing  minimum 
Spain 
challenges through targeted support, system 
reforms and regional management. To address 
the 
non-take-up  of 
government 
integral 
is 
accessibility  plan, 
streamlining 
processes,  improving  clarity  and  proximity,  and 
ensuring transparency. Recent reforms allow for a 
fast 
non-contributory 
from 
unemployment  benefits  to  the  IMV,.  Moreover, 
amendments  in  the  IMV  law  allow  regions  to 
manage  the  national  minimum  income  benefit  to 
increase  take-up  and  improve  coordination  with 
other social benefits. País Vasco and Navarra now 
handle  the  national  minimum  income  recognition, 
modification  and  compliance,  while  the  central 
government  retains  financial  oversight  to  ensure 
consistency nationwide. Catalonia will assume the 
management  as  well in  2026.  This  could  improve 
complementarity  between  national  and  regional 
schemes  but  also 
regional 
disparities due to varying administrative capacities 
(see  Annex  6).  To  support  vulnerable  populations 
affected  by  the  floods  in  eastern  Spain,  the 
government  introduced  targeted  measures  linked 
to 
including  a  15% 
income, 
supplement for beneficiaries in affected areas and 
a  30%  increase  to  the  child  support  supplement. 
Minimum  income  applications  for  sudden  poverty 
were expedited and the  minimum income scheme 
helpline was reinforced. 

risks  widening 

the  minimum 

House  prices  have  increased  significantly 
over  the  last  decade,  rising  almost  50%  in 
nominal  terms  since  2015.  House price  growth 
was more moderate in 2023 (+4.0% after 7.4% in 
2022)  in  the  context  of  higher  interest  rates  and 
reduced  mortgage  lending,  with  the  number  of 
house  transactions  falling  by  12.5%  in  2023. 

(238) AIReF, 2nd opinion - Ingreso mínimo vital. June 2023; and 
Noguera, J. A., Prada, À. G. de la, & Álvarez, E. (2024), La 
garantía de ingresos como derecho de ciudadanía. El 
impacto del ingreso mínimo vital y su articulación con las 
rentas mínimas autonómicas: Una estimación. Future Policy 
Lab - Oxfam Intermon. 

90 

housing 

affordability 

Overall 
has 
deteriorated  over  the  last  decade  amid  low 
new  housing  supply.  Since  2015,  house  prices 
have grown more rapidly than household incomes 
and  the  standardised  house  price-to-income  ratio 
has increased by 11%. At the same time, it stands 
slightly  below  its  long-term  average.  While  the 
borrowing  capacity  of  households  improved  over 
the  last  decade,  the  foreclosures  and  evictions 
remained  more  pressing  issue  than  in  other  EU 
countries  While  the  rental  market  is  rather  small, 
the  ratio  of  new  rents  to  incomes  increased  over 
the  last  decade  in  city  centres  and,  to  an  even 
greater  degree,  outside 
centres.  The 
availability  of  social  rental  housing  is  rather  low. 
The ratio of dwellings per capita has decreased by 
4%  since  2015,  reflecting  a  broadly  stagnant 
number  of  dwellings  amid  growing  population. 
Despite  a  mild  increase  over  the  past  years,  the 
number  of  house  completions  per  capita  remains 
among  the  lowest  in  the  EU.  Residential  building 
permits  have  increased  over  the  past  years  and 
returned  to  pre-pandemic  levels.  The  government 
Housing Plan (2022-2025) provides public funding 
for affordable and social housing production. 

city 

The  lack  of  affordable  housing  is  a  growing 
challenge,  aggravating  social  issues  such  as 
homelessness,  young  people  being  unable  to 
move  out  of  the  family  home  and  evictions. 
In 2024, the national housing cost overburden rate 
stood  at  7.8%,  slightly  below  the  EU  average  of 
8.2%,  but  with  notable  disparities:  4.9%  in  rural 
areas  and  8.4%  in  cities.  The  burden  is  specially 
severe  for  those  at  risk  of  poverty,  with  29.9% 
struggling  with  housing  costs,  compared  to  just 
2.4%  of  those  not  at  risk  of  poverty,  further 
deepening social challenges. An estimated 28 552 
individuals  are  homeless,  equivalent  to  71.3 
people per 100 000 inhabitants (239), of which 77% 
are men and 23% are women. 21.1% are under 29 
years  of  age (240). 
Immigrants  make  up  a 

(239) INE, 2022. 

(240) https://www.feantsa.org/public/user/epoch/National-

Strategies/Homelessness-Strategy-Spain-Original2024.pdf. 

 
 
 
disproportionate  number  of 
the  homeless 
population (241).  Spain’s  social  housing  stock  is 
among  the  lowest  in  Europe  (3.3%  vs  8%  EU 
average),  leaving  an  estimated  4.5  million  people 
in housing exclusion (242). The 2023-2030 national 
(Estrategia 
strategy  to  combat  homelessness 
Nacional de Personas Sin Hogar 2023-2030) is the 
country‘s  strategic  framework  to  prevent  and 
tackle  homelessness,  prioritising  those  who  are 
sleeping  rough.  The  growing  housing  affordability 
issues  are  also  highlighted  in  the  low  number  of 
young  people  leaving  the  family  home,  with  only 
14.8% of young people (aged 16-34) moving into 
their own place in 2024 (243). In response to these 
challenges, the government introduced safeguards 
against  evictions  for  tenants  and  a  State-backed 
rental guarantee scheme for landlords. 

Energy  poverty  is    an  issue,  with  significant 
disparities  between  vulnerable  and  non-
In  2024,  17.5%  of 
vulnerable  households. 
households  were  unable  to  keep  their  homes 
adequately  warm,  nearly  double  the  EU  average 
(9.2%),  marking  a  sharp  rise  from  7.5%  in  2019. 
The challenge is particularly acute for those at risk 
of poverty, with 31.4% unable to afford adequate 
heating  compared 
to  14.2%  of  non-AROP 
households.  To  address  these  challenges,  the 
Spanish  government  has  extended  protections, 
including  energy-cost  subsidies,  for  vulnerable 
consumers.  Additionally,  public  transport  support 
measures remain in place, indirectly easing energy 
consumption costs for vulnerable groups. 

(241) https://www.feantsa.org/public/user/epoch/National-

Strategies/Homelessness-Strategy-Spain-Original2024.pdf. 

(242) Provivienda, "Observatorio de Vivienda," available at 

https://provivienda.org/observatorio/, and "Causes of the 
Problem: Housing Stock," available at 
https://provivienda.org/observatorio/causas-del-
problema/parque-de-vivienda/. 

(243) Consejo de la Juventud de España & Gobierno de España. 

(2024). Observatorio de Emancipación: 1.er semestre 2024. 
Resumen ejecutivo. 

91 

 
 
ANNEX 12: EDUCATION AND SKILLS 

Spain’s  competitiveness 
is  hampered  by 
in  people  transitioning  from 
challenges 
education  to  work,  which  are  linked  to  low 
basic  skills,  skills  mismatches  and  limited 
adult  learning.  The  country’s  education  and 
training  system  faces  difficulties  in  adapting  to 
the rapid changes brought by the green and digital 
transitions. Schools often fail  to adequately  equip 
young  people  with  the  basic  skills  that  lay  the 
foundations for skills development. Leaving school 
earlier  and  low  educational  attainment  impede 
upskilling  opportunities 
life  and 
employment  prospects.  Higher  education  and 
vocational  education  and  training  (VET)  often  fail 
to  align  with  labour  market  needs,  particularly  in 
the  growing  green  and  digital  sectors.  Adult 
learning  has  seen  modest 
participation 
improvements but remains low. Structural barriers 
further  hinder  Spain’s  competitiveness,  including 
the limited impact of active labour market policies 
and  the  difficulty  of  small  and  medium-sized 
enterprises  (SMEs)  in  identifying  learning  needs 
and providing training. 

later 

in 

in 

Participation  in  early  childhood  education 
and care continues to expand.  In 2023, 97.7% 
of  children  aged  three  and  over  attended  early 
childhood  education  and  care  (ECEC),  well  above 
the EU average of 94.6% and above the EU target 
of  96%.  Participation  in  formal  ECEC  of  children 
under  three  in  2023  (55.8%)  was  also  far  above 
both  the  EU  average  (37.5%)  and  the  national 
Barcelona  target  for  2030  (50.9%).  However, 
significant  differences  in  ECEC  participation  exist 
between  children  at  risk  of  poverty  or  social 
exclusion (AROPE) and the others (44% of children 
below  three  AROPE  vs  61.5%  of  children  not 
AROPE 
these 
differences  have  declined  significantly  compared 
to  2016.  There  are  also  major  differences  in 
participation  at  regional  level,  although  it  has 
narrowed  significantly  in  the  last  5  years.  The 
Recovery  and  Resilience  Facility  (RRF)  has  made 
EUR 671  million  in  funding  available  for  the 
creation  of  60  000  affordable public  ECEC  places 
by the end of 2025 (with priority for children aged 
1-2  years  in  areas  with  higher  poverty  or  social 
exclusion  risks  and in  rural  areas).  Funding  of  the 
programme  will  continue  through  the  European 
free 
Social  Fund  Plus 
(ESF+) 
from 
participation 
disadvantaged backgrounds. 

to  ensure 
children 

in  2023),  although 

in  ECEC 

ECEC 

for 

in 

High 
mathematics  and  a 

student 

underachievement 

in 
low  share  of  top 

performers  may  pose  a  risk  to  future 
productivity and competitiveness. According to 
the  2022  OECD  Programme  for  International 
Student  Assessment  (PISA) (244),  the  share  of 
underachieving 15-year-old students in Spain in all 
three  domains  (mathematics:  27.3%;  reading: 
24.4%;  and  science:  21.3%)  was  below  the  EU 
averages  (29.5%,  26.2%  and  24.2%  respectively) 
and  still  far  from  the  EU-level  target  (<15%).  At 
the  same  time,  the  share  of  top-performing 
students  has  not  improved  since  2012  and  has 
continued  to  lag  behind  the  EU  average,  raising 
concerns about the country’s ability to foster high-
skilled talent, especially for innovation. 

Regional differences in achieving basic skills 
are  significant.  In  the  PISA  2022  test  only  one 
region (Cantabria) has shown a moderate increase 
in scores for all three fields in the last decade. By 
contrast,  some  of  the  best  performing  regions  in 
(Basque  Country,  Catalonia  and 
mathematics 
Navarre)  showed  a  significant  decrease  (over  20 
points)  compared  to  PISA  2012(245).  Evidence 
shows  the  importance  of  targeted  policies  to 
mitigate territorial inequalities in education quality 
and  effective  equal  opportunities  throughout  the 
country (246).  The  gap  in  student  performance 
based 
and/or  migrant 
background,  although  still  significant,  remains 
below the EU average. 

socio-economic 

on 

persistent 

regional  and 

Early  school  leaving  remains  a  challenge, 
with 
gender 
disparities.  While  the  rate  of  early  leavers  from 
education and training has declined significantly in 
the past decade, at 13% in 2024, it remains well 
above  the  EU  average  of  9.3%.  with  a  significant 
gender  gap  at  5.8  pps  in  favour  of  women. 
Regional  disparities  in  early  school  leaving  rates 
have  also  diminished  but  persist,  with  only  2  out 
of 19 regions below or close to the EU average: 7 
regions  are  close  or  below  the  national  average, 
and the remaining 9 regions score between around 
15% to 26%. 

Several  measures  are  being  implemented  to 
improve  educational  outcomes.  Supported  by 
law 
the  RRF,  Spain  adopted  an  education 
emphasising  a  more  competence-based  approach 
to  learning.  This  was  reflected  in  the  curricula 

(244) OECD, 2023; MEFPD, 2023. 
(245) INEE, 2023. 
(246) López Rupérez &García García, 2023. 

92 

 
 
 
 
 
transitions  (e.g.  energy,  electronics)  need  to  be 
reinforced (see Annex 10). 

Graph A12.1: Employment rate of recent graduates 
not in education and training by educational 
attainment 

reform  for  primary  and  secondary  education, 
which  was  fully  implemented  in  2024.  The  RRF 
also  supports  the  programme  for  orientation, 
progress and educational enrichment (PROA+) and 
the  creation  of  vulnerable  student  support, 
guidance  and  psychoeducational  service  units. 
Both initiatives aim to reduce the number of early 
school leavers and improve educational outcomes. 
Strengthening  guidance  and  orientation  of 
students  to  align  learning  paths  with  individual 
preferences, 
future 
working  prospects 
is  essential,  not  only  for 
students’  future  well-being,  but  also  for  Spain’s 
competitiveness. 

learning  capabilities  and 

An  ageing  teacher  workforce  and  a  lack  of 
job  stability  are  challenges  for  the  teaching 
profession.  In  2022,  the  proportion  of  teachers 
(ISCED  1-3)  aged  55  and  over  was  below  the  EU 
average (20.6% vs 24.8%). However, national data 
show that the share of older teachers is higher in 
secondary  education  and  VET  than  in  primary 
education  and  even  higher  in  higher  education.  In 
addition,  a  significant  number  of  teachers  have 
(21.1%  of  all  teachers, 
temporary  contracts 
ranging  from  5.5%  to  41.1%  at  regional  level  in 
2024-2025 (247)) (see  Annex  10).  The  government 
aims  to  reduce  the  share  of  interim  teachers  to 
8%  by  the  end  of  2025.  Meanwhile,  entry 
requirements 
profession, 
unchanged  for  more  than  40  years,  are  being 
reviewed to strengthen recruitment and retention. 

teaching 

the 

to 

Spain’s  VET  system  continues  to  face 
challenges  in  aligning  with  labour  market 
needs  despite  recent  reforms.  VET  enrolments 
grew  by  33.1%  over  the  five  years  leading  up  to 
2022/2023.  However, 
upper-secondary  VET 
enrolment  remained  lower  than  the  EU  average 
(39.1%  vs  49.1%),  and  participation  in  dual  VET 
was  just  4.9% (248).  While  90.8%  of  recent  VET 
graduates  participated  in  work-based  learning  in 
2024,  employment  rates  remained  low  compared 
to the EU average (see below).  To  improve labour 
market  relevance,  all  intermediate  and  advanced 
VET  programmes  transitioned  to  a  dual  model  by 
September  2024.  Getting  SMEs  involved  and 
addressing  the  shortage  of  qualified  teachers 
remain  key 
is 
concentrated in healthcare, ICT and administration, 
while  critical  sectors  for  the  green  and  digital 

challenges.  VET  enrolment 

Source: Eurostat 

in 

greatest 

Recent  medium-skilled  VET  graduates  face 
securing 
challenges 
the 
employment.  Misalignments  between 
labour 
market needs and educational outcomes may help 
explain  why  the  Spanish  employment  rate  for 
recent  graduates  (aged  20-34)  not  in  education 
and  training  was  only  79.0%  in  2024,  3.4 pps 
below  the  EU  average.  Recent  medium-skilled 
graduates  face  particularly  poor  employment 
rates, at just 68.6%, well below the EU average of 
80%.  Closing  these  gaps and  making  the  Spanish 
closer 
economy  more 
requires 
competitive 
labour 
alignment  between  VET  curricula  and 
market  needs  as  well  as  the  networking  of  small 
and medium-sized enterprises and entities for the 
rotation  of  trainees  during  in-company  periods  to 
complement  learning  outcomes  and  facilitate  the 
transfer of knowledge and new practices between 
small  and  medium-sized  enterprises.  To  support 
these  efforts,  the  ESF+  will  invest  over  EUR 300 
million  to  expand  VET  places,  foster  collaboration 
with  SMEs  and  strengthen  outreach  to  students 
and companies. In addition, VET reforms set out in 
the  country’s  recovery  and  resilience  plan  (RRP), 
such as training in sustainable and energy-related 
skills  or  creating  new  centres  of  excellence,  are 
expected  to  improve  the  quality  of  courses  and 
teaching,  strengthen  links  with  labour  market 
needs and expand the number of VET places. 

(247)Informe-curso-2024-2025-1726135620.pdf 
(248) Ministry of Education, Vocational Training and Sports, Educabase. 

Spain  has  already  met  the  EU  objective  of 
45%  of  the  population  having  a  university 

93 

30405060708090% population 20-34ESHigh skilledHigh skilled EUMedium skilled VETMedium skilled VET EULow skilledLow skilled EU 
 
  
significant 

degree.  Tertiary  educational  attainment 
is 
steadily  increasing.  In  2024,  the  rate  among 
people  aged  25-34  grew  further,  reaching  52.6% 
(0.6 pps more than in 2023), much higher than the 
EU  average  (44.2%)  and  the  EU  target  (45%). 
regional  disparities 
Nevertheless, 
remain  in  tertiary  educational  attainment  rates 
(ranging  from  41.6%  to  67.8%).  Differences  are 
also  significant  by  birthplace  and  by  level  of 
urbanisation.  Compared  with  2016,  the  share  of 
students  enrolled  in  higher  education  in  science, 
technology,  engineering  and  mathematics  (STEM) 
fields  remained  stable  in  2022  at  around  24.5% 
and  below  the  EU  average  of  27.1%,  while  the 
share of ICT students (6.3%)  was higher than the 
EU  average  (5.2%).  Pupils  enrolled  in  medium-
level  VET  in  STEM  fields  was  28.3%  for  Spain  in 
2023 
(36.2%  EU  wide).  The  rate  of  STEM 
graduates among those aged 20-29 was the same 
as  the  EU  average  in  2022  (23  graduates  per 
1 000 inhabitants), and the share of ICT graduates 
among  all  graduates  was  above  the  EU  average 
(5.2%  vs  4.5%  in  2022).  Spain  is  broadening  the 
scope of scholarships to allow more students from 
middle-class  families  and  students  with  special 
educational  needs  access  tertiary  studies.  Under 
the  RRP,  the  reform  of  the  university  system 
includes,  among  other  measures,  performance-
based  funding  schemes  that  consider  the  job 
insertion  rates  of  their  graduates.  This  will 
incentivise  universities  to  offer  degrees  more 
relevant to the labour market and societal needs. 

significant 

Skills  mismatches  and  polarisation  hinder 
Spain’s 
labour  market  efficiency.  Skills 
mismatches  decreased  by  0.3 pps  in  2024  but 
remain  high  (22.6%)  and  above  the  EU  average 
(19.2%) (249).  This 
skills 
reflects 
polarisation  in  the  country,  with  42.0%  of  adults 
(25-64) holding tertiary qualifications (vs 36.1% in 
the  EU),  35.1%  having  low  qualifications  (vs 
19.6% 
just  22.9%  having 
intermediate qualifications  – the lowest in the EU 
(44.3%).  By  contrast,  80%  of  Spanish  SMEs  have 
difficulties 
in  finding  workers  with  the  right 
skills(250),  particularly  with  vocational  training (251). 
Overqualification affects 35.0% of workers, one of 
the  highest  rates  in  the  EU  (21.4%),  particularly 

in  the  EU),  and 

among  young  men (252).  Workers  born  outside  the 
EU face even greater challenges, with over half of 
them being overqualified compared to one third of 
natives.  Overqualification  is  most  prevalent  in 
hospitality  (83.2%)  and  agriculture  (73.9%)  but 
much  lower  in  education  (6.2%)  and  ICT  (7.3%). 
Given  the  growing  number  of  tertiary  graduates, 
overqualification  risks  may  grow  if  labour  market 
alignment  does  not  improve.  Providing  better 
information to families and guidance in secondary 
schools could help reduce overqualification (253). 

in  education  or  training 

Tackling the skills gaps is critical for Spain’s 
green  and  digital  transitions.  In  2024,  only 
13.5  of  employees  in  energy-intensive  industries 
participated 
in  the 
preceding  four  weeks,  even  though  59%  of 
Spanish  people  feel  unprepared  to  support  the 
green transition due to inadequate skills (254). Low-
skilled  workers  in  emission-intensive  roles,  who 
are  often  older  and  with  longer  tenures,  face 
significant challenges transitioning to greener jobs 
due to difficulties in reskilling (255). Skills gaps also 
remain  significant  in  the  digital  sector  despite 
Spain’s high digital competencies. In 2023, 75.3% 
of the working-age population (25-64) and 66.2% 
of the overall adult population had at least a basic 
level  of  digital  skills,  while  38.7%  had  an  above-
basic level of skills – well above EU averages. The 
share  is  higher  among  young  people  (16-19)  at 
81.2%,  also  well  above  the  EU  average  (66.5%), 
suggesting  a  strong  foundation  for  future  ICT 
graduates. However, these strengths have not fully 
led  to  professional  expertise  as  evidenced  by  the 
low  number  of  ICT  specialists (Annex  10)  and  the 
low  share  of  businesses  providing  ICT  training 
(21.2%  vs  22.3%  in  the  EU  in  2024).  The  RRP  is 
expected  to  play  a  crucial  role  in  closing  these 
gaps  through  investments  in  skills  development, 
including  in  the  green  and  digital  transitions.  The 
ESF+  also  contributes  EUR 67  million  under  the 
Strategic Technologies for Europe Platform (STEP), 
including investments in VET specialisation courses 
focused on green and digital skills. 

Participation  in  adult  learning  has  improved 
modestly  but  still  suffers  from  structural 
country’s 
barriers, 
competitiveness.  In  2022,  34.1%  of  adults (25-
64)  participated  in  learning  activities,  up  3.7 pps 

undermining 

the 

(249) The macroeconomic skills mismatch indicator measures the 

dispersion of employment rates across skill groups (proxied by 
qualification levels, ISCED 0-2 low; 3-4 medium and 5-7 high). 

(250) Eurobarometer 529. 
(251) Eurobarometer 537. 

(252) OECD, Survey of Adults Skills 2023: Spain. 
(253) Ballestar de las Heras and Sainz González (2023). 
(254) Special Eurobarometer 527. 
(255) OECD, Employment Outlook 2024 - Country Notes: Spain. 

94 

 
 
 
in 

rate, 

both 

from  2016  but  still  short  of  the  EU  average 
(39.5%) and far from Spain’s 2030 target of 60%. 
The  Programme  for  the  International  Assessment 
of Adult Competencies (PIAAC) from 2023 reveals 
persistently  low  literacy  and  numeracy  levels 
among  adults,  with  one  third  of  adults  showing 
low  proficiency.  Men,  older  individuals  and  low-
skilled  adults  participate  less  in  learning,  with 
participation  decreasing  by  age  and  skills  level, 
deepening  disparities  in  opportunities.  Systemic 
challenges, including the prevalence of SMEs in the 
country  (see  Annex  3),  limit  training  access  and 
labour 
opportunities.  The  coverage  of  active 
low  relative  to  the 
market  policies  remains 
unemployment 
programme 
participation  and  expenditure (256),  limiting  their 
impact. Spain is working to improve the evaluation 
of  public  employment  services  (PES)  policies,  but 
findings indicate that PES training is insufficiently 
targeted  at 
individuals  and  more 
effective  when  combined  with  other  services.  In 
2022,  60%  of  unemployed  workers  only  received 
initial  assessments  (257).  Half  of  company  training 
credits  went  unused  in  2022 (258),  with  most 
training  focusing  on  safety  and  administrative 
tasks  rather  than  digital  and  green  skills (259). 
Smaller  firms  reported  fewer  training  needs  and 
provided  less  training,  often  citing  reliance  on 
skilled  hires  or  heavy  workloads.  Policy  initiatives, 
such  as  the  planned  individual  learning  account 
(ILA)  scheme,  aim  to  make  training  more  flexible 
and  accessible.  ESF+  funding  will  mobilise  over 
learning, 
lifelong 
EUR 115  million  to  support 
helping 
skills  gaps  and  boost 
competitiveness and productivity growth. 

low-skilled 

close 

to 

(256) Banco de España, Informe Anual 2023, Capítulo 3. 
(257) SEPE, Evaluación ex post PAPE 2022. 
(258) Fundae, Formacion para el empleo, Balance de situación 2023. 
(259) Fundae, Evaluación del papel de las entidades externas en la 
calidad de la formación programada por las empresas. 

95 

 
 
ANNEX 13: SOCIAL SCOREBOARD 

Table A13.1:Social Scoreboard for Spain 

(1) Update of 5 May 2025. Members States are categorised based on the Social Scoreboard according to a methodology agreed 
with the EMCO and SPC Committees. Please consult the Annex of the Joint Employment Report 2025 for details on the 
methodology (https://employment-social-affairs.ec.europa.eu/joint-employment-report-2025-0). 
Source: Eurostat 

96 

34,113,066,212,09,85,3971,411,43,8101,125,834,623,923,47,855,01,8Critical situationTo watchWeak but improvingGood but to monitorOn averageAdult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Equal opportunities and access to the labour marketSocial Scoreboard for SpainBest performersBetter than averageEarly leavers from education and training(% of  the population aged 18-24, 2024)Young people not in employment, education or training(% of the population aged 15-29, 2024)Gender employment gap(percentage points, population aged 20-64, 2024)Income quintile ratio (S80/S20, 2024)Dynamic labour markets and fair working conditionsSocial protection and inclusionShare of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2023)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2024)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2024)Self-reported unmet need for medical care (% of the population aged 16+, 2024)Disability employment gap (percentage points, population aged 20-64, 2024)Housing cost overburden (% of the total population, 2024)At risk of poverty or social exclusion (AROPE) rate (% of the total population, 2024)Employment rate(% of the population aged 20-64, 2024)Unemployment rate(% of the active population aged 15-74, 2024)Long term unemployment(% of the active population aged 15-74, 2024)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2023)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2024) 
 
 
 
  
 
 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

system 

fairness,  while 

Spain’s 
health 
performs 
faces 
comparatively  well.  However, 
it 
challenges that need be addressed to further 
improve  the  health  of  its  population  and 
the 
social 
competitiveness  of  its  economy.  Territorial 
disparities in the allocation of budgetary resources 
for  health,  and  the  availability  of  healthcare 
workers  -  especially  for  primary  care,  remain  key 
challenges.  Efficiency  gains  may 
increase 
budgetary  space  and  contribute  to  closing  the 
existing gaps in access to healthcare and improve 
the long-term resilience of the health system.   

boosting 

Spain  achieves 
relatively  good  health 
outcomes.  Life  expectancy  at  birth  rebounded  to 
its pre-COVID-19 level and was among the highest 
in the EU in 2023. While women can expect to live 
5.5 years longer than men, they live 1.1 year less 
in  good  health  than  men.  Treatable  mortality, 
constantly improving in the last decade, is one of 
the  lowest  in  the  EU,  suggesting  that  the  health 
system is effective.  

Graph A14.1: Life expectancy at birth, years 

Source: Eurostat (demo_mlexpec) 

Despite  a  low  level  of  spending,  health 
outcomes  in  Spain  are  good,  yet  there  are 
gaps  in  access  to  healthcare,  with  room  for 
efficiency  gains.  The  share  of  total  public 
spending  on  healthcare  and  health  spending  per 
capita,  were  below  the  EU  average  in  2022.  An 
uneven  distribution  of  healthcare 
resources 
between  regions  and  growing  waiting  times  in 
primary  care  present  challenges  to  access  to 
healthcare.  The  implementation  of  the  reform  of 
primary  care  included  under  the  Spanish  recovery 
and  resilience  plan  (RRP)  would  benefit  from 
further  investment.  Investment  in  primary  care 
under  the  RRP  is  limited  to  EUR  230  million,  for 
digitalisation.  The  number  of  hospital  beds  per 
capita  is  among  the  lowest  in  the  EU,  with 
substantial regional disparities. Investments under 

the  Spanish  RRP  of  EUR  2.4  billion  (1.5%  of  the 
RRP’s  total  value)  contribute  to  capital  formation, 
with  a  sizeable  allocation  to  renew  and  expand 
hospital  equipment,  which  should  in  turn  reduce 
disparities  in  access  to  services.  Complementary 
investments worth more than EUR 1.6 billion under 
the  cohesion  policy  funds  for  2021-2027  focus 
mainly on health infrastructure, equipment and e-
health.  The  coverage  of  mental  healthcare, 
rehabilitation  services,  and  dental  and  eye  care 
requires  further 
improvement,  which  will  be 
partially addressed by the reform to expand health 
coverage included in the RRP.  

place 

changes 

Healthcare  costs  are  projected  to  increase 
significantly  over  the  next  decades  as 
increasing 
demographic 
pressure  on  public  finances  (see  Annex  1). 
Benefits from existing resources can be maximised 
through efficiency gains. This will require stronger 
governance  mechanisms,  such  as  increasing  the 
role of economic evaluation in funding and pricing 
decisions  and  setting  objectives  for  the  rational 
use of medicines, especially in the hospital sector. 
spending  on 
rises 
Addressing  uneven 
pharmaceuticals  across  regions  and  unwarranted 
variations  between  regions  in  the  cost  of medical 
procedures  and  prescriptions,  also  provides  scope 
for efficiency gains. It remains to be seen to what 
extent  the  reform  to  improve  the  rational  use  of 
medicines in the RRP will contribute to addressing 
these challenges.  

in 

Graph A14.2: Treatable mortality 

Age-standardised death rate (mortality that could be 
avoided through optimal quality healthcare) 
Source: Eurostat (hlth_cd_apr) 

Stepping  up  disease  prevention  efforts  can 
also  benefit  efficiency.  In  2022,  the  share  of 
spending  on  prevention  in  Spain  accounted  for 
3.8% of total spending on health, much lower than 
the  EU  average  of  5.5%.  Mortality 
from 
cardiovascular  diseases  and  cancer  is  relatively 

97 

84.082.383.383.284.081.380.480.180.681.420192020202120222023SpainEU64.662.662.261.062.191.389.291.793.389.720182019202020212022per 100 000 populationSpainEU 
 
          
          
 
 
Table A14.1:Key health indicators 

*The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple 
average is used based on 2022 (or latest 2021) data except for Luxembourg (2017). Doctors’ density data refer to practising 
doctors in all countries except Greece, Portugal (licensed to practise) and Slovakia (professionally active). Density of nurses: data 
refer to practising nurses (EU recognised qualification) in most countries except France and Slovakia (professionally active) and 
Greece (hospital only). **‘Available hospital beds’ covers somatic care, not psychiatric care. ***The EU median is used for patents. 
Source: Eurostat database; European Patent Office; ****European Centre for Disease Prevention and Control (ECDC) for 2023. 

to 

reduce 

diseases, 

low. Nevertheless, addressing lifestyle risk factors, 
especially high alcohol consumption among people 
aged 15 and over, high smoking/vaping rates, low 
levels  of  physical  activity  and  growing  rates  of 
overweight,  require  more  effort  (260).  The  public 
health  strategy,  adopted  under  the  Spanish  RRP, 
entrusted  a  national  network  of  public  health 
surveillance  bodies  with  developing  evidence-
based  cross-sectoral  policies 
the 
prevalence  of  both  communicable  and  non-
communicable 
address 
occupational  and  environmental  health  issues. 
Other  strategic  efforts  include  the  2024-2027 
plan  for  smoking  prevention  and  control  and  the 
2022-2026  national  strategy  for  mental  health, 
which  emphases  staff  shortages  as  a  main 
bottleneck in access to mental healthcare. Another 
public  health measure is to  rationalise  the  use  of 
In  2023,  the  consumption  of 
antimicrobials. 
antibiotics  in  Spain  was  well  above  the  EU 
average, despite the national target (261) to reduce 
total  consumption  by  27%  between  2019  and 
2030.  Spain  participates in  the  EU4Health-funded 
joint action on antimicrobial resistance.  

and 

to 

limit 

staff 

Shortages  of  health 
the 
availability  of  care,  especially  in  primary 
care.  For  several  years,  the  density  of  nurses  in 
Spain (6.2 per 1 000 population in 2021) has been 
below  the  EU  average  of  7.6  per  1 000.  The 
density  of  doctors  is  only  slightly  above  the  EU 
is  unequally 
average.  The  health  workforce 

(260) OECD/European Commission (2024), Health at a Glance: 

Europe 2024 - State of Health in the EU Cycle, Chapter 4. 

(261) National target set by the Council Recommendation on 

stepping up EU actions to combat antimicrobial resistance in 
a ‘one health’ approach, 2023/C 220/01. 

98 

in  filling  vacancies 

distributed  across  the  country  and  there  are 
problems 
in  rural  areas, 
particularly  for  primary  care  physicians.  In  2020, 
the  number  of  primary  care  physicians  ranged 
from  0.6  to  1.1  per  1  000  population  while  the 
number of primary care nurses ranged from 0.5 to 
0.9  depending  on  the  region.  The  number  of 
specialist doctors varied from 1.5 to 2.6 per 1 000 
population,  and  the  number  of  specialist  nurses 
ranged from 3.0 to 6.9.  

Despite  the  ageing  workforce,  with  in  particular 
60%  of  general  practitioners  aged  50  and  over, 
the  number  of  doctor  and  nursing  graduates  per 
100 000 population is among the lowest in the EU. 
latest  projection(262)  ordered  by 
The 
the 
government  shows  that 
long-term  needs  for 
physicians are set to increase by 9% by 2035, with 
the  specialisations  with  the  biggest  potential 
shortfalls  being  family  medicine,  anaesthesiology, 
geriatrics, psychiatry and radiology.  

Working  conditions  remain  far  from  ideal,  with  a 
high  use  of  temporary  contracts  (41.9%  of  all 
health  workers  in  2020,  up  from  28.5%  in  2012) 
(see  Annex  10).  The  reform  included  in  the  RRP 
aims  for  a  fairer  distribution  of  professionals 
across regions, and improved career prospects and 
working  conditions.  The  impact  of  Royal  Decree-
Law  12/2022,  part  of  this  reform,  which  included 
temporary 
to  reduce 
measures 
contracts, has yet to be assessed.   

the  use  of 

The Spanish health system has the potential 
to  drive  innovation  and  foster  industrial 

(262) source: Ministry of Health 

20192020202120222023EU average* (latest year) Cancer mortality per 100 000 population218.3214.5213.3212.9n.a.234.7 (2022)Mortality due to circulatory diseases per 100 000 population 214.5 217.8 213.0 213.9n.a.336.4 (2022)Current expenditure on health, purchasing power standards, per capita2 5042 5612 7242 814n.a.3 684.6 (2022)Public share of health expenditure, % of current health expenditure 70.5 73.2 73.7 74.0n.a.81.3 (2022)Spending on prevention, % of current health expenditure 2.13.03.63.8n.a.5.5 (2022)Available hospital beds per 100 000 population** 259 261 260 258n.a.444 (2022)Doctors per 1 000 population*4.44.64.54.3n.a.4.2 (2022)*Nurses per 1 000 population* 5.9 6.1 6.3 6.1n.a.7.6 (2022)*Mortality at working age (20-64 years), % of total mortality13.512.613.513.013.214.3 (2023)Number of patents (pharma / biotech / medical technology)1591461238614729 (2023)***Total consumption of antibacterials for systemic use,                    daily defined dose per 1 000 inhabitants****24.919.720.023.224.120.0 (2023) 
 
 
 
      
 
 
areas 

development  in  the  EU  medical  sector.  Spain 
levels  of  public 
reports  among  the  highest 
spending  on  health  research  and  development  in 
the  EU.  In  2023,  147  European  patents  were 
granted to patentees with Spanish residency in the 
pharmaceuticals, 
combined 
biotechnologies  and  medical  devices  (vs  an  EU-
level  median  of  39)  (263).  Spain  is  among  the  EU 
countries with the highest number of clinical trials 
reported 
includes 
investments  to  support  innovations  and  research 
and 
sector, 
development 
investments  under  several 
complemented  by 
cohesion policy regional programmes.  

The  Spanish  RRP 

health 

(264). 

the 

of 

in 

Spain  is  among  the  EU  countries  with  the 
highest uptake of e-health and overall health 
system  digitalisation,  including  data  storage 
and  sharing.  For  instance,  in  2022,  the  share  of 
people  accessing  their  personal  health  records 
online was above the EU average (40% vs 27.7%). 
The  digital  health  strategy,  adopted  in  2021, 
created  a  framework  for  the  digitalisation  of 
healthcare,  including  related  investments  under 
the  cohesion  policy.  These 
the  RRP  and 
investments  focus  on:  (i)  increasing  the  digital 
capacity  of  health  institutions  at  all  levels;  (ii) 
improving the interoperability of systems; (iii) data 
management;  and  (iv)  accelerating  telemedicine. 
The introduction of the ‘Insurance ID card’ in Spain 
led 
‘patient 
implementation  of 
the  electronic  e-prescription 
summary’  and 
programmes, allowing the exchange of clinical and 
pharmaceutical  information  across  regions  and 
national  borders.  Spain  participates 
the 
EU4Health  joint  action  on  the  European  Health 
Data  Space  and  benefits from  a  grant  supporting 
secondary use of data in healthcare.  

the 

the 

to 

in 

(263) European Patent Office, Data to download | epo.org. 
(264) EMA (2024), Monitoring the European clinical trials 

environment, p. 9. 

99 

 
 
HORIZONTAL 
ANNEX 15: SUSTAINABLE DEVELOPMENT GOALS 

dimensions 

This Annex assesses  Spain’s  progress on  the 
Sustainable Development Goals (SDGs) along 
competitiveness, 
of 
the 
and 
fairness 
social 
sustainability, 
macroeconomic stability. The 17 SDGs and their 
related  indicators  provide  a  policy  framework 
under  the  UN’s  2030  Agenda  for  Sustainable 
Development.  The  aim  is  to  end  all  forms  of 
inequalities  and  tackle  climate 
poverty,  fight 
change  and 
the  environmental  crisis,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  on  the  SDGs. 
The graph below is based on the EU SDG indicator 
set developed to monitor progress on the SDGs in 
the EU. 

is 

improving  on  all  SDGs  on 
Spain 
competitiveness (SDGs 4, 8, 9) but still needs 
to  catch  up  with  the  EU  average  in  some  of 
them  (SDGs  8  and  9).  It  has  a  high  share  of 
households  with  a  high-speed  internet  connection 

Graph A15.1: Progress towards the SDGs in Spain 

(SDG 9; 96.3% of households in 2023; EU average: 
78.8%).  In addition, the percentage of adults with 
at least basic digital skills (SDG 4; 66.2% in 2023) 
is  above  the  EU  average  of  55.6%.  Despite  some 
improvements in the productivity indicators, Spain 
ranks below the EU average on most of them. On 
SDG 8  (Decent  work  and  economic  growth),  the 
percentage  of  young  people  not  in  employment, 
education  or  training  aged  15-29  remains  high 
(12% in 2024) and is above the EU average (11% 
in  2023).  In  addition,  the  Spanish  research  and 
innovation  system  suffers  from  underinvestment, 
as  shown  by  gross  domestic  expenditure  on  R&D 
(SDG 9;  1.49%  of  GDP  in  2023  against  an  EU 
average  of  2.24%)  and  R&D  personnel  (1.19%  of 
the active population in 2023; EU average: 1.56%, 
see Annexes 8 and 11). The Spanish recovery and 
resilience  plan  (RRP)  includes  significant  reforms 
and  investments  to  boost  innovation  and  digital 
skills;  these  are  complemented  by  Cohesion  Fund 
investments (see Annex 10). 

Spain  is  making  progress  in  most  indicators 

For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable development in the European Union’; for 
details on extensive country-specific data on the short-term progress of Member States: Key findings – Sustainable development 
indicators - Eurostat (europa.eu). A high status does not mean that a country is close to reaching a specific SDG, but signals that it 
is doing better than the EU on average. The progress score is an absolute measure based on the indicator trends over the past 
five years. The calculation does not take into account any target values, as most EU policy targets are only valid for the aggregate 
EU level. Depending on data availability for each goal, not all 17 SDGs are shown for each country. 
Source:  Eurostat, latest update of 28 April 2025. Data refer mainly to the period 2018-2023 or 2019-2024. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

100 

 
 
 
 
 
 
and  families  with  children.  The  Spanish  RRP 
contains  investments  and  reforms  to  increase 
social  and  affordable  energy-efficient  housing; 
these  are  complemented  by  Cohesion  Fund 
investments. 

is 

improving  on  SDG 

Spain 
indicators 8 
(Decent  work  and  economic  growth)  and  17 
(Partnerships  for  the  goals)  related  to 
macroeconomic  stability.  However,  it  is  still 
below  the  EU  average  and  is  moving  away 
from  its  targets  on  SDG  16  (Peace,  justice 
and  strong  institutions).  Spain’s  real  GDP  per 
capita  has  been  recovering  after  the  pandemic 
(SDG 8;  EUR 27 740  in  2024  vs  EUR 26 930  in 
2019)  but  remains  below  the  EU  average  of 
EUR 29  280.  Spain  has  a  lower  investment  share 
of  GDP  (SDG 8)  than  the  EU  average  (19.7%  of 
GDP  vs  22.4%  for  the  EU  in  2023).  Spain  faces 
challenges  in  particular  on  the  sustainability  of 
public  finances.  The  Spanish  RRP  includes  several 
measures  on  taxation  and  the  effectiveness  of 
public  spending.  These  are  expected  to  improve 
the  sustainability  of  public  finances  and  support 
substantial  additional 
investments,  which  will 
increase the investment share of GDP. On SDG 16, 
in 2024, 37% of the Spanish population perceived 
the  independence  of  the  justice  system  as  ‘very 
good’  and  ‘fairly  good’,  compared  to  an  EU 
average of 52% in 2024. 

As the SDGs form an overarching framework,  any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other annexes. 

related to sustainability (SDGs 2, 7, 9, 12, 13, 
14) but is also moving away from its targets 
on  some  of  them  (SDGs  6,  11,  15).  Spain 
needs  to  catch  up  with  the  EU  average  on 
many of these (SDGs 2, 6, 9, 11, 13, 14, 15).  
Spain  has  made  some  progress  on  energy 
indicators, including the share of renewable energy 
in  gross  final  energy  consumption  (SDG 7;  from 
17% in 2018 to 24.9% in 2023, slightly above the 
EU average of 24.6%). On SDG 6 (Clean water and 
sanitation), Spain is moving away from the goal. It 
would be beneficial for Spain to catch up with the 
EU average, for which the water exploitation index 
is  half  of  Spain’s.  Water  stress  and  scarcity  also 
contribute to a deteriorating SDG 15 (Life on land) 
where Spain is moving away from the targets too. 
The  drought  impact  on  ecosystems  increased  by 
1 600% between 2018 and 2023 and the share of 
the area at risk of severe soil erosion by water is 
40%  larger  than  the  EU  average.  Spain’s  RRP 
includes measures to address some of the water-
related  challenges,  such  as  hydrological  planning, 
complemented by Cohesion Funds improving water 
supply. 

While  Spain  is  improving  on  most  SDGs 
related to  social fairness (SDGs 1, 4, 5, 7, 8, 
10), is also moving away from the targets in 
one of them (SDG 3), and it still below the EU 
average  on  some  of  them  (SDGs 1,  8,  10). 
Spain  has  improved  on  several  fairness-related 
indicators  such  as  people  at  risk  of  poverty  or 
social  exclusion (SDG 1;  26.5%  in  2023 vs  27.3% 
in  2018),  the 
in-work  at-risk-of-poverty  rate 
(SDG 1;  11.3%  in  2023  vs  12.9%  in  2018),  the 
long-term  unemployment  rate  (SDG 8;  3.8%  in 
2024  vs  5.3%  in  2019),  and  early  leavers  from 
education  and  training  (SDG 4;  13  %  in  2024,  vs 
17.3  %  in  2019).  However,  it  is  still  performing 
worse than the EU average on all these indicators, 
and challenges persist on poverty reduction, social 
exclusion,  long-term  unemployment  and  early 
school  leaving  (see  Annexes  8,  9  and  10).  The 
Spanish RRP and Cohesion Funds include measures 
to  address  challenges  in  all  these  areas.  On  the 
negative side, the share of the Spanish population 
unable  to  keep  their  homes  adequately  warm 
increased  from  9.1%  in  2018  to  20.8%  in  2023 
and  is  nearly  twice  as  high  as  the  EU  average  of 
10.6%  (SDG  7).  The  severe  housing  deprivation 
rate  (SDG 1)  increased,  from  1.5%  in  2015  to 
2.9% 
living 
conditions.  This  adds  to  more  acute  housing 
affordability  challenges  for  the  most  vulnerable, 
including  young  people,  low-income  households 

in  2023,  which 

indicates  poorer 

101 

 
ANNEX 16: CSR PROGRESS AND EU FUNDS IMPLEMENTATION 

recommendations 

Spain  faces  structural  challenges  in  a  wide 
range  of  policy  areas,  as  identified  in  the 
country-specific 
(CSRs) 
addressed  to  the  country  as  part  of  the 
European  Semester.  They  refer,  among  other 
things,  to  improving  the  business  environment, 
increasing 
judicial  efficiency,  accelerating  the 
deployment  of  renewable  energy  and  energy-
efficient  solutions,  investing  in  energy  storage, 
electricity  transmission  and  distribution,  energy-
and  waste 
efficiency, 
enhancing  water 
management  and  addressing 
lack  of 
affordable  housing  and  skills  shortages  and 
mismatches. 

the 

The Commission has assessed the 2019-2024 
CSRs  considering  the  policy  action  taken  by 
Spain  to  date  and  the  commitments  in  its 
recovery  and  resilience  plan  (RRP).  At  this 
stage, Spain has made at least ‘some progress’ on 
84%  of  the  CSRs  (265),  and  ‘limited  progress’  on 
13% (Table A16.2). 

to 

by 

competitiveness, 

EU funding instruments provide considerable 
resources 
supporting 
Spain 
investments  and  structural  reforms  to 
increase 
environmental 
sustainability  and  social  fairness,  while 
helping  to  address  challenges  identified  in 
the  CSRs.  In  addition  to  the  EUR 163  billion 
funding  from  the  Recovery  and  Resilience  Facility 
(RRF) in 2021-2026, EU cohesion policy funds (266) 
are providing EUR 35.6 billion to Spain (amounting 
to  EUR 51.6  billion  with  national  co-financing)  for 
2021-2027 (267) to boost regional competitiveness 
and  growth.  Support  from  these  instruments 
combined represents around 13.25% of 2024 GDP 
(268).  The  contribution  of  these  instruments  to 
different  policy  objectives  is  outlined  in  Graphs 
A16.1  and  A16.2.  This  substantial  support  comes 
on  top  of  financing  provided  to  Spain  under  the 

financial 

2014-2020  multiannual 
framework, 
which  financed  projects  until  2023  and  has  had 
significant  benefits  for  the  Spanish  economy  and 
society.  Project  selection  under  the  2021-2027 
cohesion  policy  programmes  has  accelerated, 
while significant volumes of investment are yet to 
be mobilised. 

The  Spanish  RRP  contains  397  investments 
and  197  reforms  to  stimulate  sustainable 
growth  and  help  the  transition  towards  a 
low-carbon,  digital  and  more  resilient  and 
inclusive economy. A year before the end of the 
RRF  timespan,  implementation  is  well  on  its  way 
with  30%  of  the  funds  disbursed.  Spain  has 
fulfilled 30 % of the milestones and targets in its 
RRP  (269).  Increased  efforts  are  needed  to  ensure 
completion  of  all  RRP  measures  by  31  August 
2026.  Strengthen  coordination  among  different 
levels  of  administration,  along  with  streamlining 
procedures, can help to accelerate fund absorption 
and implementation pace. 

Spain  also  receives  funding  from  several 
other  EU  instruments,  including  those  listed 
in  table  A16.1.  Most  notably,  the  common 
agricultural policy (CAP) provides Spain with an EU 
contribution of EUR 31.5 billion (270) under the CAP 
strategic  plan  for  2023-2027.  A  further  EUR 1 
billion is available under the Asylum, Migration and 
Integration  Fund  (AMIF),  together  with  the  border 
management  and  visa  instrument  (BMVI)  and 
internal  security  funds.  Furthermore,  operations 
amounting to EUR 4.3 billion (271) have been signed 
under  the  InvestEU  instrument  backed  by  the  EU 
guarantee,  improving  access  to  financing  for 
riskier operations in Spain. 

(265) 3% of the 2019-2024 CSRs have been fully implemented, 
16% substantially implemented, and some progress has 
been made on 65%. 

(266) In 2021-2027, cohesion policy funds include the European 
Regional Development Fund, the European Social Fund Plus 
and the Just Transition Fund. The information on cohesion 
policy included in this annex is based on adopted 
programmes with the cut-off date of 5 May 2025. 

(267) European territorial cooperation (ETC) programmes are 

excluded from the figure. 

(268) RRF funding includes both grants and loans, where 

(269) As of mid-May 2025, Spain has submitted 5 payment 

requests, the last one being under assessment. 

(270) An overview of Spain’s formally approved strategy to 

implement the EU’s common agricultural policy nationally 
can be found at: https://agriculture.ec.europa.eu/cap-my-
country/cap-strategic-plans/spain_en  

applicable. GDP figures are based on Eurostat data for 2024. 

(271) Data reflect the situation on 31.12.2024. 

102 

 
 
 
 
 
 
Graph A16.1: Distribution of RRF funding in Spain 
by policy field 

(1) Each RRP measure helps achieve the aims of two of the 
six policy pillars of the RRF. The primary contribution is shown 
in the outer circle, while the secondary contribution is shown 
in the inner circle. Each circle represents 100% of the RRF 
funds. Therefore, the total contribution to all pillars displayed 
on this chart amounts to 200% of the RRF funds allocated. 
Source: European Commission 

Graph A16.2: Distribution of cohesion policy 
funding across policy objectives in Spain 

Source: European Commission 

the 

(ERDF) 

European 

2021-2027, 

is  boosting 

Cohesion  policy  funds  aim  to  increase  the 
productivity  and  competitiveness  of  Spain’s 
firms and improve the business environment. 
Regional 
In 
Development  Fund 
the 
digitalisation  of  the  economy, 
improving  the 
business  environment,  with  a  focus  on  public 
administration, by supporting ICT solutions and e-
services  introducing  innovative  tools.  The  ERDF 
and  the  Just  Transition  Fund  (JTF)  will  support 
business  development  and  innovation,  providing 
support to over 100 000 businesses and improving 
R&D  infrastructure  for  over  43 000  researchers. 
Spain  is  also  making  significant  use  of  the 
Strategic Technologies for Europe Platform (STEP) 
to  strengthen  the  competitiveness  of  its  regions. 
Spain has thus far allocated over EUR 500 million 
of  cohesion  policy  funding  to  STEP  priorities 
covering digital  technologies and deep tech, clean 

JTF 

increasing 

transitions, 

efficient 
The 

technologies 
supports 

and 
resource 
and 
the 
biotechnologies. 
diversification  of  the  economy  in  regions  most 
affected  by  the  closure  of  coal  mines  and  coal-
fired  powerplants,  mitigating  the  effect  on  the 
labour  market.  The 
regional  economy  and 
European  Social  Fund+  (ESF+)  also  supports  the 
twin 
Spain’s 
competitiveness  and  productivity.  In  particular,  it 
allocates over EUR 650 million to promoting digital 
skills and jobs and EUR 700 million to green skills 
and  jobs.  It  supports  action  to  align  labour  skills 
with  market  needs,  such  as  digital  training,  skills 
accreditation  and  lifelong  learning  programmes, 
reaching nearly 280 000 people, mostly with lower 
education  levels.  More  than  125 000  participants 
have  benefited  from  improvements  to  education 
and  training  systems,  including  the  expansion  of 
dual  vocational  and  education  and  training  and 
enhanced teacher training programmes. 

energy 

market 

inland  waterways 

are 
in  Spain, 

contributing 
for 

to 
Other 
funds 
competitiveness 
instance 
through  open  calls.  The  Connecting  Europe 
Facility  has  financed  strategic  investments  for 
instance in rail infrastructure, in the deployment of 
alternative  fuel  infrastructure  for  a  greener  road 
transport  and  the  modernisation  of  both  Spain’s 
transport 
maritime  and 
networks; 
integration, 
decarbonisation of the energy system and security 
of  energy  supply,  and  in  particular  electricity 
interconnectivity;  as  well  as  the  deployment  of 
submarine  cables  to  enhance  the  connectivity 
between  the  Canary  Islands,  and  advanced  the 
deployment  of  5G  in  smart  communities.  Horizon 
Europe  has  supported  research  and  innovation, 
from  scientific  breakthroughs 
to  scaling  up 
innovations with Climate, Energy and Mobility and 
Digital,  Industry  and  Space  as  top  priorities  in 
Spain.  The  Technical  Support  Instrument  (TSI) 
supported  Spain  with  the  application  of  Artificial 
advanced 
Intelligence 
the 
management 
development  of  gender  mainstreaming  and 
distributional  impact  assessment  methodologies, 
and  the  evaluation  and  monitoring  of  the  impact 
of the new Startup Law. 

solutions 
the 

for 
road 

network, 

the 

of 

to 

contains  ambitious 
Spain’s  RRP  also 
measures 
business 
improve 
environment  and  competitiveness.  As  part  of 
the  measures  covered  by  payment  requests 
submitted over the past year, Spain committed to 
providing  a  favourable  business  environment 

the 

103 

Green transitionDigital transformationSmart, sustainable andinclusive growthSocial & territorial cohesionHealth & resilienceNext generationSmarter EuropeGreener EuropeConnected EuropeSocial EuropeEurope closer to citizensJTF specific objective 
     
 
     
through reforms  benefiting  small  and  medium-
sized  enterprises  and 
innovative  firms.  This 
involved  the  adoption  of  (i)  the Law  on  Business 
Creation and Growth and (ii) the Start-Ups Law. In 
the field of research, development and innovation, 
Spain  has  invested  in  improving  the  research, 
by 
development 
strengthening  research  infrastructure, knowledge 
generation,  knowledge  transfer  and  public-private 
partnerships. 

innovation 

system 

and 

EU  funds  are  playing  a  significant  role  in 
promoting  environmental  sustainability  and 
green  transition  in  Spain  during  the  current 
seven-year  EU  budget  (multiannual  financial 
framework).  The  ERDF  will  invest  over  EUR 250 
million  in  new  or  improved  systems  to  enhance 
monitoring, warning, preparedness and response in 
includes 
to  natural  disasters.  This 
relation 
reinforcing  the  firefighting  fleet  to  prevent  and 
contain  forest  fires.  Around 6  million  people  will 
benefit from new or upgraded capacity for waste-
water  treatment  and  ERDF  support  is  promoting 
nature-based  water  management  solutions,  such 
as  the  restoration  of  river  areas.  The  ERDF 
supports  renewable  energy  generation  in  Spain, 
particularly 
in  high-potential  regions  such  as 
Canarias  and  the  JTF  supports  the  regions 
previously  engaged  in  coal-mining  or  coal-based 
power production in the green transformation. The 
CAP  strategic  plan  allocates  49%  of  its  rural 
development  budget 
to 
environmental and climate objectives, and 23% of 
its  direct  payments budget  (EUR 5 552  million)  to 
eco-schemes.  These  funds  focus  on  carbon 
sequestration,  biodiversity  support  and  measures 
to  combat  soil  erosion,  with  measures  such  as 
sustainable 
rotation, 
management  of  pastures,  protection  of  birds  by 
limiting the use of fertilisers and pesticides, use of 
cover  crops,  creation  of 
landscape  features, 
minimum  tillage  and  direct  showing.  Spain  also 
uses  nearly  EUR 819  million  of 
rural 
development  funding  to  promote  afforestation, 
agroforestry,  fire  prevention  and  restoration  and 
adaptation of forests. 

(EUR 2 674  million) 

farming, 

organic 

its 

including 

Spain’s  RRP, 
the  REPowerEU 
chapter, has a comprehensive set of reforms 
and  investments  for  the  green  transition. 
Measures  covered  by  the  payment  requests 
submitted  over  the  last  year  include  improving 
energy  efficiency  in  buildings  through  renovation 

and  reforms  to  funding  for  smooth  building 
renovation. In  terms  of  energy  transition  for  a 
sustainable  economy,  Spain  has  delivered  on 
significant  reforms focusing  on  green  budgeting, 
waste  management,  forestry  and  investment  in 
restoring  coastline.  Approval  has  been  given  for 
focusing  on  electric  and 
strategic  projects 
connected  vehicles,  the  agrifood  sector,  naval 
industry,  the  semiconductors/chip  sector  and  the 
decarbonisation  of  industry,  while  EUR 1.2 billion 
has  been  allocated  to  projects  transforming 
industry. 

to 

challenges  due 

Promoting  fairness,  social  cohesion  and 
improving  access  to  basic  services  are 
among  the  key  priorities  of  EU  funding  in 
Spain.  For  example,  the  ERDF  and  JTF  will  fund 
new  and  modernised  education  facilities  with 
classroom  capacity  for  over  260 000  pupils. 
Planned  ERDF  investments  in  healthcare  facilities 
are  expected  to  benefit  15  million  people  a  year. 
This figure includes 243 000 people a year in the 
outermost region of Canarias, which faces specific 
healthcare  access 
its 
remoteness  and  where  the  ERDF  is being  used  to 
modernise  and 
increase  the  capacity  of  17 
healthcare  facilities,  as  part  of  a  concerted  effort 
to  improve  access  to  different  basic  services. 
Spain  dedicates  32%  of  the  ESF+  allocation 
(EUR 3.6  billion)  to  social  inclusion  and  almost 
11%  (EUR 1.2  billion)  to  combating  child  poverty, 
promoting  social  fairness.  More  than  504 000 
from  social 
people  have  already  benefited 
integrated 
including 
inclusion  measures, 
employment  pathways,  training  programmes,  and 
initiatives  targeting  vulnerable  groups.  More  than 
800  000  children  are  expected  to  receive  ESF+ 
like  educational 
support 
support, free early childhood education, and socio-
educational  programmes  for  vulnerable  children, 
contributing  to  the  2030  child  poverty  reduction 
target.  In  addition,  the  AMIF  supports  asylum 
measures,  from  reception  to  legal  assistance,  as 
well  as  integration  measures,  including  language 
training,  civic  orientation  courses,  exchanges  with 
information  and  other  support 
host  society, 
services. Special asylum actions were adopted for 
children and people with special needs, as well as 
special 
for  vulnerable 
people. 

integration  measures 

through  measures 

Spain’s  RRP  contains  several  reforms  and 
investments  related  to  fairness  and  social 

104 

 
 
Table A16.1:Selected EU funds with adopted allocations - summary data (million EUR) 

(1) The cut-off date for data on disbursements under the RRF is 31 May 2025. 
(2) Cohesion policy 2014-2020 allocations include REACT-EU appropriations committed in 2021-2022. 
(3) These amounts relate only to disbursements made from 2021 onwards and do not include payments made to the Member 
State before 2021.  Hence the figures do not comprise the totality of payments corresponding to the 2014-2020 allocation. The 
cut-off date for data on disbursements under EMFAF and EMFF is 29 April 2025.  The cut-off date for data on disbursements 
under cohesion policy funds, AMIF, BMVI and ISF is 5 May 2025. 
(4) AMIF - Asylum, Migration and Integration Fund; BMVI- Border Management and Visa Instrument; ISF - Internal Security Fund. 
(5) Expenditure outside the CAP strategic plan is not included. 
(6) The cut-off date for data on EARDF disbursements is 5 May 2025. The information on EAGF disbursements is based on the 
Member State declarations until March 2025.  Disbursements for the Direct Payments (EAGF) started in 2024. 
Source: European Commission 

justice  among  Barnahus-type  services  in  Spanish 
regions. 

to 

adopted 

legislation 

policies.  Measures  covered  by  the  payment 
requests  submitted  over  the  last  year  include  a 
legislative  reform  to  simplify  and  make  hiring 
incentives  more  effective.  In  this  context,  Spain 
has 
simplify and 
unemployment 
improve non-contributory 
assistance  by  addressing  the  previous  system 
fragmentation,  enhancing  coverage, 
improving 
design  and  including  previously  excluded  groups. 
The  TSI  has  further  supported  Spain  with  the 
assessment  of 
the 
compatibility  of  unemployment  benefits  with 
work-based  learning  and  income.  Spain  is  also 
tackling  issues  related  to  housing  through  the 
adoption  of  legislative  measures,  such  as  the 
Housing  Law.  In  the  area  of  health,  Spanish 
authorities have benefitted from the TSI to ensure 
the  adequate  and  successful  implementation  of 
the 
Assessment 
Regulation.   Finally,  on  the  child  protection  front, 
Spain received support to strengthen child-friendly 

innovative  formulas  for 

Technology 

Health 

EU 

105 

Instrument/policyDisbursed since 2021   (1)             RRF grants (including the RepowerEU allocation)47 962.5RRF loans340.0 Instrument/policyAllocation 2014-2020 (2)Allocation 2021-2027 Disbursed since 2021 (3)    (covering total payments to the Member State on commitments originating from both 2014-2020 and 2021-2027 programming periods) Cohesion policy (total)42 074.435 561.931 900.9European Regional Development Fund (ERDF)29 099.323 397.420 767.0European Social Fund (ESF, ESF+) and the Youth Employment Initiative (YEI)15 759.611 295.710 864.5Just Transition Fund (JTF) 868.7 269.3European Maritime, Fisheries and Aquaculture Fund (EMFAF) and the European Maritime and Fisheries Fund (EMFF)1 057.11 120.4684.9Migration, border management and internal security - AMIF, BMVI and ISF (4) 759.41 021.0443.9The common agricultural policy under the CAP strategic plan (5)Disbursements under the CAP Strategic Plan (6)Total under the CAP strategic plan9 685.9European Agricultural Guarantee Fund (EAGF)9 081.7European Fund for Agricultural Development (EAFRD) 604.2Allocation 2023-202731 509.426 106.35 403.1Allocation 2021-2026 79 854.283 160FisheriesMigration and home affairs 
 
 
 
 
 
 
 
 
      
 
Table A16.2:Summary table on 2019-2024 CSRs 

(Continued on the next page) 

106 

SpainAssessment in May 2025Relevant SDGs2019 CSR 1Some progressEnsure that the nominal growth rate of net primary government expenditure does not exceed 0.9 % in 2020, corresponding to an annual structural adjustment of 0.65 % of GDP.No longer relevantSDG 8, 16Take measures to strengthen the fiscal [framework]Some progressSDG 8, 16and public procurement frameworks at all levels of government.Some progressSDG 9Preserve the sustainability of the pension system.Substantial progressSDG 8Use windfall gains to accelerate the reduction of the general government debt ratio.No longer relevantSDG 8, 162019 CSR 2Some progressEnsure that employment services have the capacity to provide effective supportSome progressSDG 8and ensure that social services have the capacity to provide effective support.Some progressSDG 1, 2, 10Foster transitions towards open-ended contracts,Substantial progressSDG 8including by simplifying the system of hiring incentives.Some progressSDG 8Improve support for families,Some progressSDG 1, 2, 10reduce fragmentation of national unemployment assistanceSubstantial progressSDG 1, 2, 10and address coverage gaps in regional minimum income schemes.Substantial progressSDG 1, 2, 10Reduce early school leavingSome progressSDG 4and improve educational outcomes, taking into account regional disparities.Some progressSDG 4, 10, 11Increasecooperationbetweeneducationandbusinesseswithaviewtoimprovingtheprovision of labour market relevant skills and qualifications,Some progressSDG 4, 8, 9in particular for information and communication technologies.Some progressSDG 4, 92019 CSR 3Some progressFocus investment-related economic policy on fostering innovation,Some progressSDG 9, 10, 11resource efficiencySome progressSDG 6, 10, 11, 12, 15and energy efficiency,Some progressSDG 7, 10, 11upgrading rail freight infrastructureSome progressSDG 10, 11and extending electricity interconnections with the rest of the Union, taking into account regional disparities.Limited progressSDG 7, 9, 10, 11, 13Enhance the effectiveness of policies supporting research and innovation.Some progressSDG 92019 CSR 4Some progressFurthertheimplementationoftheLawonMarketUnitybyensuringthat,atalllevelsofgovernment,rulesgoverningaccesstoandexerciseofeconomicactivities,inparticularforservices, are in line with the principles of that LawSome progressSDG 9and by improving cooperation between administrations.Some progressSDG 92020 CSR 1Some progressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability,whileenhancing investment. No longer relevantSDG 8, 16Strengthenthehealthsystem’sresilienceandcapacity,asregardshealthworkers,criticalmedical products and infrastructure. Some progressSDG 32020 CSR 2Some progressSupport employment through arrangements to preserve jobs, Substantial progressSDG 8effective hiring incentives and Some progressSDG 8skills development. Some progressSDG 4Reinforce unemployment protection, in particular for atypical workers.Substantial progressSDG 1, 2, 10Improve coverage and adequacy of minimum income schemes and Some progressSDG 1, 2, 10family support, as well as Some progressSDG 1, 2, 10access to digital learning. Some progressSDG 42020 CSR 3Some progressEnsuretheeffectiveimplementationofmeasurestoprovideliquiditytoSMEsandtheself-employed, including by avoiding late payments. Substantial progressSDG 8, 9Front-load mature public investment projects and Some progressSDG 8, 16promote private investment to foster the economic recovery. Some progressSDG 8, 9Focus investment on the green and digital transition, in particular on fostering research and innovation, Some progressSDG 9clean and efficient production and use of energy, energy infrastructure, Some progressSDG 7, 9, 13water and waste management and Some progressSDG 6, 12, 15sustainable transport.Some progressSDG 11 
 
 
  
 
Table (continued) 

(Continued on the next page) 

107 

2020 CSR 4Some progressImprove coordination between different levels of government and Limited progressSDG 16strengthen the public procurement framework to support recovery in an efficient manner.Some progressSDG 92021 CSR 1No longer relevantIn 2022, use the Recovery and Resilience Facility to finance additional investment in support of the recovery while pursuing a prudent fiscal policy. Preserve nationally financed investment. No longer relevantSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-term fiscal positions and ensuring fiscal sustainability in the medium term. No longer relevantSDG 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthe green and digital transition. No longer relevantSDG 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthandsocialprotectionsystems for all.No longer relevantSDG 8, 162022 CSR 1No longer relevantIn2023,ensureprudentfiscalpolicy,inparticularbylimitingthegrowthofnationallyfinancedprimarycurrentexpenditurebelowmedium-termpotentialoutputgrowth,takingintoaccountcontinuedtemporaryandtargetedsupporttohouseholdsandfirmsmostvulnerabletoenergypricehikesandtopeoplefleeingUkraine.Standreadytoadjustcurrentspendingtotheevolving situation.No longer relevantSDG 8, 16Expandpublicinvestmentforthegreenanddigitaltransitions,andforenergysecuritytakingintoaccounttheREPowerEUinitiative,includingbymakinguseoftheRecoveryandResilience Facility and other Union funds.No longer relevantSDG 8, 16Fortheperiodbeyond2023,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringcredibleandgradualdebtreductionandfiscalsustainabilityinthemedium term through gradual consolidation, investment and reforms.No longer relevantSDG 8, 162022 CSR 2Proceedwiththeimplementationofitsrecoveryandresilienceplan,inlinewiththemilestonesand targets included in the Council Implementing Decision of 13 July 2021.Submitthe2021-2027cohesionpolicyprogrammingdocumentswithaviewtofinalisingthenegotiations with the Commission and subsequently starting their implementation.2022 CSR 3Some progressIncreaserecyclingratestomeetUniontargetsandpromotethecirculareconomybyenhancingcoordinationamongalllevelsofgovernmentandundertakingfurtherinvestmenttomeet separate collection of waste and recycling obligations,Some progressSDG 6, 10, 11, 12, 15as well as to enhance water reuse.Some progressSDG 6, 12, 152022 CSR 4Some progressReduce overall reliance on fossil fuels.Some progressSDG 7, 9, 13Acceleratethedeploymentofrenewableenergy,withafocusondecentralisedinstallationsandself-consumption,includingbyfurtherstreamliningpermittingproceduresandimprovingaccess to the grid.Substantial progressSDG 7, 8, 9, 13Support complementary investment in storage, network infrastructure,Some progressSDG 7, 9, 13electrification of buildingsLimited progressSDG 7and transport,Some progressSDG 11and renewable hydrogen.Substantial progressSDG 7, 9, 13Expand energy interconnection capacity.Limited progressSDG 7, 9, 13Increase the availability of energy-efficient social and affordable housing, including through renovation.Some progressSDG 1, 2, 7, 10RRP implementation is monitored by assessing RRP payment requests and analysing reports published twice a year on the achievement of the milestones and targets. These are to be reflected in the country reports. Progress on the cohesion policy programming documents is monitored under the EU cohesion policy. 
 
 
  
 
Table (continued) 

Source: European Commission 

108 

2023 CSR 1Some progressWind down the emergency energy support measures in force, using the related savings to reduce the government deficit, as soon as possible in 2023 and 2024. Should renewed energy price increases necessitate new or continued support measures, ensure that such support measures are targeted at protecting vulnerable households and firms, are fiscally affordable and preserve incentives for energy savings.Substantial progressSDG 8, 16 Ensureprudentfiscalpolicy,inparticularbylimitingthenominalincreaseinnationallyfinancednet primary expenditure in 2024 to not more than 2,6 %.No progressSDG 8, 16Preserve nationally financed public investment and ensure the effective absorption of grants under the Facility and of other Union funds, in particular to foster the green and digital transitions.No progressSDG 8, 16 Fortheperiodbeyond2024,continuetopursueamedium-termfiscalstrategyofgradualandsustainableconsolidation,combinedwithinvestmentsandreformsconducivetohighersustainable growth, in order to achieve a prudent medium-term fiscal position.Full implementationSDG 8, 162023 CSR 2Maintainthemomentuminthesteadyimplementationofitsrecoveryandresilienceplanand,followingtherecentsubmissionoftheaddendum,includingtheREPowerEUchapterandtheadditionalloanrequest,rapidlystarttheimplementationoftherelatedmeasures.Ensurecontinuedsufficientadministrativecapacityinviewoftheplannedincreaseinthesizeoftherecoveryandresilienceplan.Proceedwiththespeedyimplementationofcohesionpolicyprogrammes, in close complementarity and synergy with the recovery and resilience plan.2023 CSR 3Some progressReduce reliance on fossil fuels.Some progressSDG 7, 9, 13Accelerate the deployment of renewable energy, with a focus on decentralised installations and self-consumption, including by further streamlining permitting procedures and improving access to the grid.Substantial progressSDG 7, 8, 9, 13investing in energy storage, electricity transmission and distribution, andSome progressSDG 7, 9, 13cross-border electricity interconnections.Limited progressSDG 7, 9, 13Increasetheavailabilityofsocialandaffordableenergy-efficienthousing,includingthroughrenovation,Some progressSDG 1 ,2, 7, 10accelerate the electrification of buildings andLimited progressSDG 7the penetration of electromobility.Some progressSDG 11Step up policy efforts aimed at the provision and acquisition of the skills needed for the green transition.Some progressSDG 42024 CSR 1Some progressSubmit the medium-term fiscal-structural plan in a timely manner.Full implementationSDG 8, 16InlinewiththerequirementsofthereformedStabilityandGrowthPact,limitthegrowthinnetexpenditure28in2025toarateconsistentwith,interalia,puttingthegeneralgovernmentdebtonaplausiblydownwardtrajectoryoverthemediumtermandreducingthegeneralgovernment deficit below the 3% of GDP Treaty reference value.Some progressSDG 8, 16Ensure fiscal sustainability including by: (i) reviewing and simplifying the tax system to support economic growth and employment, cohesion and the green transition;Limited progressSDG 8, 10, 12and (ii) improving the quality, efficiency and equity of public spending.Some progressSDG 8, 162024 CSR 2StrengthenadministrativecapacitytomanageEUfunds,accelerateinvestmentsandmaintainmomentumintheimplementationofreforms.Addressrelevantchallengestoallowforacontinued,swiftandeffectiveimplementationoftherecoveryandresilienceplan,includingtheREPowerEUchapter,ensuringcompletionofreformsandinvestmentsbyAugust2026.Acceleratetheimplementationofcohesionpolicyprogrammes.Inthecontextoftheirmid-termreview,continuefocusingontheagreedpriorities,whileconsideringtheopportunitiesprovidedby the Strategic Technologies for Europe Platform initiative to improve competitiveness.2024 CSR 3Limited progressImprovewatermanagementtobetteraddresstheadaptationtopresentandfutureeffectsofclimatechangeandensurelong-termeconomic,socialandenvironmentalresilience,byimproving coordination among all levels of government and administrationLimited progressSDG 6, 12, 15and scaling up existing solutions for drought risk reduction and sustainable water management in agriculture, water efficiency and infrastructure investments,Limited progressSDG 6, 12, 15and by supporting the development of nature-based solutions.Some progressSDG 6, 12, 15RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union.RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets. Progress with the cohesion policy programming is monitored in the context of the Cohesion Policy of the European Union. 
 
  
 
ANNEX 17: COMPETITIVE REGIONS 

While  Spain  continues  facing  significant 
disparities  between  regions,  the  current 
growth  momentum  offers  an  opportunity  to 
trigger  structural  change.  Investing  in  new 
innovative sectors, protecting and attracting talent, 
upgrading risk prevention and water management, 
and 
administrative 
coordination,  would  contribute  to  strengthening 
competitiveness,  the  resilience  and  attractiveness 
of the regional economies. 

improving 

policy 

and 

since 

convergence 

Regional  disparities  in  Spain  remain  high, 
with  most  regions  diverging  from  the  EU 
average,  but  the  country’s  sustained  growth 
and 
the  COVID-19 
pandemic offers an opportunity to bridge the 
gap.  Spain  has  improved  its  relative  position  as 
regards  the  EU  average,  with  GDP  per  head  in 
purchasing  power  standard  (PPS)  increasing  from 
a three-decade minimum of 83% in 2020 to 91% 
in  2023.  In  2023  there  were  six  Spanish  regions 
which  had  reached  or  exceeded  the  EU  average 
(Map A.17.1). Three of these (Aragon, Cataluña and 
Iles  Balears)  were  still  below  or  well  below  EU 
average 
(2022) 
demonstrating  the  continuation  of  post-pandemic 
recovery in these regions. However, between 2014 
and  2023,  12  Spanish  regions  grew  slower  than 
the national average of 1.6%. In addition, Madrid’s 
GDP  per  head  (123%  of  EU  average)  in  2023 
remained  nearly  double  the  GDP  per  head  of  the 
five  least  affluent  regions,  Melilla  (60%),  Ceuta 
(66%),  Andalucía  (68%)  Extremadura  (69%)  and 
Canarias (71%). 

preceding 

year 

the 

in 

Regional disparities in growth are mirrored in 
the  labour  market  conditions.  In  2024,  the 
national  employment  rate  of  people  aged  20-64 
(71.4%)  was  below  the  EU  average  (75.8%). 
Employment  rates  in  Madrid,  Aragón,  Comunidad 
Foral  de  Navarra,  Cataluña  (all  above  75%)  yield 
rates  close  to  or  above  the  EU  average,  while 
Extremadura,  Andalucía,  Ceuta  and  Melilla  score 
significantly  lower  below  65%.  There  are  also 
disparities  in  relation  to  the  gender  employment 
gap, where most regions score better than the EU 
(pps) 
average 
employment  gap  between  men  and  women),  but 
Castilla-la  Mancha  and  Ceuta  lag  behind  with  a 
gap of 17 and 21 pps or more. Moreover, regions 
that  struggled  to  increase  their  employment  rate 
tend  to  also  have  difficulties  in  integrating  young 
people  into  the  labour  market  (see  Annex  10). 
Youth  unemployment  remains  particularly  high  in 
Ceuta  (66.5%),  Melilla  (62.6%),  as  well  as  above 

(EU=10.0  percentage  points 

30%  in  Andalucia  Extremadura,  Principado  de 
Asturias  and  Canarias.  Policies  directed  at  these 
target  groups  (women  and  young  people),  which 
seek to protect,  strengthen  and  attract  talent,  are 
key  for  tackling  the  disparities  in  the  regional 
labour markets. 

Map A17.1:  GDP per head compared to the EU 
average (in purchasing power standard), 2023 

Source: Eurostat 

Such  policies  would  also  help  address 
depopulation.  Although  the  Spanish  population 
grew  by  4.4%  overall  over  10  years  to  2023, 
driven  primarily  by  immigration,  5  of  the  19 
regions recorded a population decline, with severe 
depopulation  rates  in  Asturias  (-4.7%),  Castilla  y 
León (-4.2%) and Extremadura (-4.2%). 

Competitiveness 

disparities 

hand  with 

Disparities in GDP per head in Spain go hand 
in 
labour 
in 
labour  productivity, 
productivity. 
measured  as  GDP  per  hour  worked,  was  at  its 
highest  –  at  or  above  both  the  national  and  EU 
averages  -  in  País  Vasco,  in  the  capital  region  of 

In  2022, 

109 

 
 
 
 
 
 
 
Madrid and in Navarra. At the opposite end, Murcia 
and  Extremadura  recorded  the  lowest  levels  of 
labour  productivity  (Table  A17.1)  Gaps  in  labour 
productivity  across  Spanish  regions 
increased 
steadily  from  the  economic  crisis  of  2008  until 
2017,  then  decreased  mainly  due  to  the  least 
productive  regions  catching  up.  While  the  data 
from 2022 show an increase in internal disparities 
compared  to  2017-2021,  mainly  due  to  the  high 
least 
productivity  growth 
productive  regions  have  also  been  catching  up, 
albeit slowly.  

in  País  Vasco,  the 

Index  2.0, 

Competitiveness  of  most  Spanish  regions 
ranks  below  the  EU  average.  As  shown  in  the 
Regional  Competitiveness 
regional 
disparities  in  the  competitiveness  of  Spanish 
regions  are  mainly  driven  by  disparities  in  higher 
education,  lifelong 
learning,  efficiency  of  the 
labour  market  and  in  innovation,  where  more 
developed  regions  continue  leading  the  country’s 
record, 
País  Vasco.  Addressing 
disparities  in  higher  education  and  improving  the 
alignment  of  skills  with  regional  and  national 
market  needs  would  prepare  the  ground  to 
strengthen  knowledge  and 
innovation  across 
regions. 

especially 

Graph A17.1: Labour productivity per hour 

Unit: Real GDP per hour worked (EUR, 2015 prices) 
Source: ARDECO (JRC) 

In  this  vein,  there  is  significant  scope  to 
strengthen R&D, especially by firms.  In 2022, 
expenditure  in  R&D  scored  low  in  Spain  (1.4%  of 
GDP,  against  an  EU  average  of  2.3%),  and  was 
concentrated in the richest regions of the country. 
País  Vasco  was  the  only  region  to  reach  the  EU 
average  (2.3%).  R&D  expenditure  was  lowest  in 
least  developed  and  transition 
many  of  the 
regions,  especially 
(0.7%), 
Canarias  (0.6%),  Baleares  (0.5%),  Melilla  (0.4%) 
and  Ceuta  (0.2%).  R&D  private  expenditure  only 

in  Extremadura 

represents  0.81%  of  GDP  and  has  followed  a 
similar regional distribution over the last 20 years. 

is  an 

intensity, 

In  Spain,  sectors  with  low  productivity  and 
R&D 
like  retail,  agrifood  or 
tourism,  have  greater  weight  in  GDP  than  in 
other EU countries, and this has increased in 
recent  years  (272).  There 
increasing 
dependence  of  the  economies  of  Canarias  and 
Baleares on tourism, or of Valencia and Murcia on 
the  retail  sector.  Taken  together,  retail,  agrifood 
and  tourism  represent  more  than  30%  of  the 
regional  gross  value  added  in  Murcia,  Andalucía, 
Baleares  and  Canarias,  and  more  than  40%  of 
regional  employment 
in  Murcia,  Extremadura, 
Andalucía,  Baleares  and  Canarias.  These  regions 
would  benefit  from  their  specialisation  patterns 
being  modified  and  diversified  as  well  as  from  a 
move  towards  sectors  with  higher  productivity 
levels,  like  renewables  –  where  Spain  has  a 
substantial untapped potential – electronics or the 
digital sector (273). 

resilient, 

cohesive 

competitive, 

Regional  smart  specialisation  strategies 
suggest  encouraging  patterns  of  regional 
specialisation  in  high  added  value  sectors. 
However,  further  diversifying  regional  economic 
specialisation, especially in less developed regions, 
would  better  cushion  potential  shocks  linked  to 
climate change and water shortages and achieve a 
more 
and 
sustainable  economic  fabric.  This  is  the  case,  for 
instance, for the aeronautics sector, mainly located 
in  Andalucía,  Castilla-la  Mancha,  Madrid  and  Pais 
Vasco, and for which R&D investments are key for 
competitive 
keep 
regions 
these 
advantage (274).  Castilla 
León,  Cataluña, 
Comunidad  Valenciana,  Aragón,  Galicia  and 
Navarra  have  also  a  competitive  edge  in  the 
automotive  sector,  with  very  efficient  production 
plants  and  a  highly  qualified  labour  force (275). 
Agri-food  is  a  key  sector  in  13  out  of  the  17 
regional  specialisation  strategies.  The  sector  is 
particularly vital in terms of share of employment 
and  gross  value  added  in  Extremadura,  La  Rioja, 

their 

to 

y 

(272) https://www.caixabankresearch.com/es/economia-y-

mercados/analisis-coyuntura/gran-reto-economia-espanola-
mejorar-productividad 

(273) TEDv Industrial dashboard. 

(274) Agenda sectorial industria aeronáutica and Smart 

Specialisation Strategies of the regions mentioned. 

(275) Plan estratégico automoción 2019-2025 and Smart 
Specialisation Strategies of the regions mentioned. 

110 

202530354045201220132014201520162017201820192020202120222015 EUR per hour workedOther NUTS2 regionsCapital regionNational averageEU 27 average 
     
 
Table A17.1:Selection of indicators at regional level in Spain 

Source: Eurostat and JRC 

Castilla-la Mancha, Castilla y Leon and Murcia (276). 
Nevertheless,  productivity  levels  have  decreased 
by  23%  compared  to  2017 (277).  Given  the 
challenge  posed  by  climate  change  and  water 
availability  in  all  Spanish  regions,  investments  in 
digitalisation  and  sustainability  of  production  are 
necessary to secure the future competitiveness of 
this sector. 

Improving Spanish’s quality of governance is 
a  precondition  for  bridging  the  gap  with  the 
EU’s  most  advanced  Member  States  and 
regions.  Large  disparities  across  Spanish  regions 
exist in terms of quality of government. Castilla y 
León,  Andalucía  and  Extremadura  show 
the 
country’s  lowest  values  for  the  European  Quality 
of Government Index (278). Moreover, this index has 
In  particular, 
been  decreasing  since  2010. 
insufficient  cooperation  and  coordination  between 
the  national  and  regional  levels  (279)  hamper  the 

(276) https://www.unicajabanco.com/content/dam/unicaja/unicaja-
corporacion/documentos-corporacion/noticias/el-sector-
agrario-industria-alimentaria-en-espa%C3%B1a-2023.pdf 

(277) Informe economico FIAB 2022. 

(278) European Quality of Government Index 2024| University of 

Gothenburg 

(279) Tribunal de Cuentas de Espana, Informe de Fiscalización de las 

Actuaciones para las Relaciones de Cooperación Multilateral entre 
la Administración General del Estado y las Comunidades 
Autónomas Desarrolladas en el Marco de la Gestión de la 
Pandemia COVID-19 (N.º 1.495). 

regions’ capacity to attract investments and talent. 
Improving  both  the  country’s  and  regions’  quality 
important  part  of 
of  governance 
strengthening  the  competitiveness  of  Spanish 
regions.  

is  an 

Social fairness 

Spain  has  the  potential  to  provide  both 
sufficient  quality  housing  for  a  growing 
population  and  competitive  accommodation 
for  tourists,  although  further  efforts  are 
needed  in  the  short  run.  The  housing-cost 
overburden (280) for households in Spain is highest 
in urbanised areas and is particularly significant in 
regions  with  high  tourism  intensity.  In  2024,  this 
affected  8.4%  of the population in  cities,  7.8% in 
towns  and  suburbs,  and  4.9%  in  rural  areas 
(percentages similar to EU level and lower in rural 
areas).  However, 
tourism 
intensity largely surpassed the national average of 
8%, especially Madrid and Baleares, and Canarias 
(9%).  In  such  regions,  tourism  can  be  a  double-
edged sword: a major factor for economic growth 

regions  with  high 

(280) The housing cost overburden rate is the percentage of the 

population living in households where the total housing costs (‘net’ 
of housing allowances) represent more than 40% of disposable 
income (‘net’ of housing allowances).  

111 

GDP per head (PPS)Real GDP per head growthProductivity - GDP per person employed (PPS)Real productivity growth (per person employed)Productivity - GDP per hour worked (PPS)Real productivity growth (per hour worked)R&D expenditureEmployment rate 20-64Youth unemployment rateEuropean Quality of Government IndexPopulation with high educational attainmentEarly leavers from education and trainingParticipation in lifelong learningHousing cost overburdenAccess to alternative fuel infrastructureGreenhouse gas emissionsIndex EU-27 = 100Average annual % changeIndex EU-27 = 100Average annual % changeIndex EU-27 = 100Average annual % change% of GDP% of population aged 20-64% of labour force aged 15-24EU-27=0% of population aged 25-64% of population aged 18-24% of population aged 25-64% of total populationNumber of electric vehicles charging points within 10 kmtCO2eq. per person20232014-202320232014-202320222013-20222022202420242024202420242024202420222023European Union (27 MS)1001.61000.61000.92.2875.814.936.19.313.38.22877.1Spain911.6970.1930.51.4471.426.542.013.016.07.82405.7Galicia842.0940.7901.21.0871.125.7-0.3942.210.815.63.8336.3Principado de Asturias821.6970.1920.50.8469.432.90.0644.310.516.34.95910.3Cantabria831.6970.6930.70.9073.621.70.6248.85.516.16.8486.4País Vasco1161.61140.61121.02.2374.223.20.0556.25.018.46.21136.0Comunidad Foral de Navarra1081.31080.31050.91.8175.822.90.0550.19.918.27.31538.6La Rioja961.41000.1940.60.8774.431.70.2141.617.014.54.0356.8Aragón1011.31020.1950.61.0775.923.40.0441.311.915.34.09210.6Comunidad de Madrid1231.71060.31030.61.9676.820.40.3450.910.516.111.26792.1Castilla y León871.8950.1900.51.3573.127.7-1.2442.010.815.95.76111.4Castilla-La Mancha751.4960.0850.50.6768.929.00.0333.614.614.37.21610.9Extremadura691.584-0.581-0.20.7065.435.4-0.7635.113.014.84.6187.7Cataluña1031.31020.1970.41.8975.722.1-0.2345.913.716.08.45214.7Comunitat Valenciana771.489-0.1860.31.1770.325.6-0.1838.212.919.38.81824.2Illes Balears1001.51060.4950.70.4674.423.5-0.2634.620.115.411.01475.0Andalucía681.485-0.2820.31.0564.136.9-0.7636.215.514.67.2695.5Región de Murcia761.6840.3780.61.0868.727.20.0933.018.216.16.3707.6Ciudad de Ceuta661.0840.1851.20.2156.566.535.914.620.86.372.2Ciudad de Melilla601.076-0.4821.80.3555.362.631.826.015.612.1121.4Canarias711.282-0.481-0.10.5567.328.5-0.1435.413.114.09.3224.6 
 
 
 
 
   
 
average and have shown a higher decrease in 
the  last  five  years  compared  to  other  EU 
countries,  although  the  country's  transition 
to  climate  neutrality  still  faces  challenges. 
Several Spanish regions recorded emissions above 
the EU average (7.1 CO2 tonnes per head), namely 
Aragón  (10.6),  Castilla-La  Mancha  (10.9)  and 
Castilla y León (11.4). The primary contributors to 
GHG  emissions  across  regions  in  Spain  are  the 
industry  and  transport  sectors.  The  most  energy-
intensive industries are regionally distributed along 
the  Ebro  River  basin  (Map  A.16.3),  requiring 
technological  advancements  to  lower  emissions. 
Looking  at  the  individual  sectors,  steel  shows  a 
slow  but  steady  reduction  in  emissions,  while  the 
chemical 
complex 
decarbonisation  challenges,  though  progress  has 
been  made  since  2005.  In  the  cement  sector, 
emissions  have  significantly  decreased,  largely 
due  to  a  reduction  in  national  production.  The 
nonferrous  metals  sector  has  made  progress 
towards  reaching  common  targets  since  the 
2000s. 
are 
particularly  important  in  Catalonia,  a  region  with 
high energy-intensive chemical activity. 

faces  more 

Therefore, 

continued 

efforts 

sector 

Map A17.2:  Energy-intensive industries 2021: 
Country Study Spain 

but  also  a  hindrance 
attractiveness due to its pressure on housing. 

for  welfare  and 

On access to healthcare and primary schools, 
there is a striking rural-urban divide. While in 
rural  areas  only  18%  of  the  population  live  in 
places  within  a  10-minute  drive  from  the  nearest 
hospital  (scoring  well  below  the  EU  average  in 
rural  areas  -  29%),  in  urbanised  areas  this  rate 
increases to 73% – a nearly fivefold disparity (see 
Annex  14).  Likewise,  access  to  primary  schools  is 
significantly  lower  in  rural  areas,  as  only  38%  of 
rural residents have a primary school within a 15-
minute walk (281), compared to an average of 64% 
in urbanised areas. This is nevertheless above the 
EU average for rural areas (31%). 

and 

across 

modern 

Spanish 

At  the  same  time,  extensive  broadband 
transport 
coverage 
infrastructure 
regions 
provide  opportunities  to  increase  access  to 
services of general interest. Broadband access 
shows  very  slight  differences  between  cities 
(97%),  towns  (96%),  suburbs  and  rural  areas 
(93%),  while  transport  infrastructure  rates  above 
the  EU  average  (77%)  in  all  Spanish  regions, 
except  Galicia,  Ceuta  and  Extremadura.  These 
infrastructures,  in  particular  digital  infrastructure, 
provide  an  excellent  setting  for  e-services  in  the 
educational  and  medical  fields,  improving  access 
to basic services outside major urban settlements. 
Simultaneously,  people  on  the  smaller  islands  of 
Canarias,  still  suffer  from  double  insularity  (282), 
therefore  being  highly  dependent  on  transport 
infrastructure  to  access  certain  basic  services, 
making  this  an  investment  priority  for  the  next 
years. 

Sustainability 

In  2023,  Spain’s  average  greenhouse  gas 
(GHG) emissions per head were below the EU 

(281) Commission calculations based on Eurostat data. 

(282) 
Double insularity refers to  geographical remoteness from 
1) the continental part of the Member State and from 2) the European 
Union (EP report ‘Islands of the European Union: State of play and 
future challenges, March 2021, Research for REGI Committee -
ISLANDS OF THE EUROPEAN UNION: State of play and future 
challenges | Think Tank | European Parliament) 

Source: Syndex based on data from AEGE, UNESID, FEIQUE, OFICEMEN, 
AEA, MITECO 

Investment in alternative fuel infrastructure 
in  Spain  presents  an  opportunity  to  cut 
emissions  in  the  transport  sector.  At  national 
level, access to alternative fuel infrastructure was 
slightly  below  the  EU  average  in  2022,  with  240 
electric  vehicle  charging  points  available  within  a 
10-kilometer  distance  of  where  people  lived, 
compared  to  the  EU  average  of  287  (283).  At  the 

(283) Indicators of access to alternative fuel infrastructure are based on 

calculations by DG REGIO and the JRC, using data from the 
European Alternative Fuels Observatory (EAFO), Eurostat, TomTom 
and Eco-Movement. 

112 

 
 
 
 
 
 
 
Map A17.3:  Human exposure to harmful climate 
impacts 

Source: JRC based on Eurostat 

same  time,  significant  regional  disparities  were 
evident:  Ceuta,  Melilla,  Castilla-La  Mancha  and 
Extremadura  had  the  lowest  access,  while  Madrid 
and  Cataluña  recorded  the  highest  levels  of 
availability  for  such 
infrastructure  using  this 
metric. 

The  green  energy  transition,  along  with  the 
growing  role  of  renewable  energy,  offers 
unique  opportunities  for  less  developed  and 
transitioning  Spanish  regions,  particularly  in 
rural areas (284). In 2023, disparities in untapped 
potential  for  solar,  wind,  and  hydro  power  among 
Spain’s  NUTS  2  regions  were  significant.  Regions 
such  as  Canarias,  Ciudad  de  Melilla  and  Asturias 
rank among the top-performing regions in the EU. 
By contrast, Andalucía, Aragón, Castilla-La Mancha 
and Murcia were among the EU’s lower-performing 
regions,  suggesting  they  have  a  high  untapped 
potential to benefit from the green transition. 

and 

risk  management 

Most  Spanish  regions  are  likely  to  face 
increased risks from floods, forest  fires and 
water  shortages  (285)  (Map  A17.4).  Effective 
prevention 
climate 
strategies  reflecting  Spain’s  distinct  geography 
and  risk  prospects  are  crucial  to  mitigate  the 
escalating  impacts  of  extreme  weather  events, 
and  water  scarcity.  These  phenomena  will  exert 
significant 
resources, 
on 
particularly  water,  and  especially  in  tourism-
islands.  Therefore, 
intensive  regions  and  the 
prioritising  efficiency  in  water  use  and  nature-
based  solutions  is  important  to  ensure  long-term 
economic  sustainability  in  many  Spanish  regions 
(see also Annex 9). 

pressure 

natural 

(284) Source: JRC, see: 9th Report on economic, social and territorial 

cohesion, Map 4.5. 

(285) Source: JRC, see: 9th Report on economic, social and territorial 

cohesion, Map 4.1. 

113