COMMISSION STAFF WORKING DOCUMENT 2026 Country Report - Spain Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Spain
Date: 2026-06-03
Institutions: European Commission, Reform and Investment Task Force
Subjects: Spain, budget policy, defence expenditure, economic policy, economic recovery, economic reform, employment policy, housing policy, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.6.2026  SWD(2026) 209 final  COMMISSION STAFF WORKING DOCUMENT 2026 Country Report - Spain Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Spain {COM(2026) 209 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

The Spanish economy has proven resilient 
in  recent  years,  achieving  robust  growth 
rates  amid  domestic 
resilience  and 
external  headwinds.  Following  a  gradual 
recovery from the pandemic, since 2023 Spain 
has  shown  solid  economic  performance 
featuring  broad-based 
job  creation  and 
moderate real income gains supporting private 
consumption.  Gross  fixed  capital  formation 
returned to its pre-pandemic level in 2023 and 
has been supported by the implementation of 
the  recovery  and  resilience  plan  (RRP).  Over 
this  period,  the  rise  in  intangible  assets  and 
non-residential  constructions,  coupled  with  a 
modest  growth  of  equipment  and  machinery, 
have  been  the  key  drivers  of  investment 
growth.  At 
housing 
construction has remained relatively subdued. 

same 

time, 

the 

in 

has 

steadily 
growth 
Spain’s  GDP 
outperformed  other  major  euro  area 
economies throughout the post-pandemic 
period  but  its  per-capita  income  growth 
still  lags  behind.  The  limited  growth  of 
Spain’s  GDP  per  capita  could  be  partially 
explained  by  the  strong  population  growth 
experienced 
recent  years,  fuelled  by 
continuous migration flows. At the same time, 
labour  productivity 
it  also  reflects  weak 
in  productivity  per 
growth,  particularly 
employee  even 
though  with  significant 
(see  Annex 18). 
disparities  across  regions 
Following  the  pandemic,  productivity  per  hour 
picked  up  notably, 
increasing  by  2.5% 
compared to 2019 levels. This is partly due to 
the  continued  decline  in  hours  worked  per 
employee. 
per 
employee  and  per  full-time  equivalent  has 
to 
broadly  stagnated,  also 
adversely  affecting  how  wage  dynamism 
evolved. 

contributing 

productivity 

Conversely, 

Internal  and  external  debt  ratios  kept 
declining,  with  less  reliance  on  foreign 
capital.  Businesses  continued  to  reduce  their 

2 

in 

2025 

stood 

debt levels in recent years as the debt-to-GDP 
ratio  of  both  households  and  non-financial 
corporations 
over 
25 percentage  points  (pps).  below  the  level 
registered  in  2019.  Widened  current  account 
surpluses,  mainly  on  the  back  of  the  robust 
growth  of  services  exports,  underscored  the 
sustained 
net 
international investment position. At the end of 
2025,  this  position  reached  a  positive  30 pps 
differential compared to its value in Q4-2019. 

improvement 

the 

of 

by 

In  2025  the  labour  market  momentum 
was  mainly 
foreign 
sustained 
migration.  Job  creation  grew  by  2.6%  last 
year.  The  number  of  jobs  added  throughout 
the year filled by foreign-born workers account 
for 7.9% of the total. The unemployment rate 
fell below 10% in the last quarter of 2025 for 
the  first  time  in  more  than  a  decade.  Youth 
unemployment,  at  23%,  is  at  its  lowest  level 
since  the  global  financial  crisis  but  remains 
one of the highest across the EU. 

Headline inflation edged down to 2.7% in 
2025. Overall inflation  – as measured by the 
harmonised 
index  of  consumer  prices  - 
slowed-down  by  0.2 pps  compared  to  2024. 
This  is  mainly  due  to  the  moderation  of  food 
prices,  notably  processed  food,  and  non-
energy industrial goods, which offset the sharp 
year-on-year  rise  in  energy  inflation.  Inflation 
excluding  energy  and  food  eased  mildly, 
despite sustained price pressure from services, 
notably  in  the  insurance  and  transport  sector, 
and, to a minor extent, tourism. In a context of 
high  labour  demand,  nominal  wage  growth 
exhibited a solid increase in recent quarters. 

GDP  growth  expanded  by  2.8%  in  2025 
and  is  projected  to  remain  robust  in  the 
near  term  before  moderating  in  the  next 
years.  This  year  the  Spanish  economy  is 
forecast to grow by 2.4%, before decelerating 
to 1.9% in 2027 and gradually approaching its 

 
 
Box 1:  UN Sustainable Development Goals (SDGs) 

Spain performs above the EU average and is further improving on most SDGs related to 
education  and  gender  equality  (SDGs 4  and  5)  but  needs  to  catch  up  with  the  EU 
average on reduced inequalities (SDG 10). 

Challenges  persist  on  poverty  reduction,  social  exclusion,  long-term  and  early  school 
leaving.  Despite  decreasing,  the  percentage  of  Spaniards  unable  to  keep  their  homes 
warm enough remains among the worst in the EU. The severe housing deprivation rate 
(SDG 1) also increased, which indicates poor living conditions. Out of the 17 indicators, 
targets  for  7 SDGs  remain  below  the  EU  average.  These  relate  to  poverty  (SDG 1), 
environmental  sustainability  (SDGs 6  and  15)  and  economic  growth  and  fairness 
(SDGs 8, 9, 10 and 16). For more on this, see Annex 17. Spain adopted in February 2026 
a revised National Sustainable Development Strategy 2030. 

medium-term  potential.  Domestic  demand  is 
set  to  remain  robust,  upheld  by  private 
consumption  and,  to  a  lesser  extent,  the 
positive  performance  of  investment.  At  the 
fragile  external 
same 
time, 
environment 
the 
contribution  of  external  demand  to  GDP 
growth.  Moreover,  a  progressive  slowdown  of 
migration flows and demographic ageing is set 
to reduce both labour force expansion and the 
dynamism of employment. 

the  more 
is  set 

to  weigh  on 

Structural challenges call for an 
economic shift 

skills 
persistent 
the 
Addressing 
mismatches  and  promoting 
further 
upskilling of the workforce is essential to 
boost  productivity (1).  According  to  OECD 
data,  around  two  thirds  of  Spanish  SMEs 
report  difficulties  hiring  labour  force  with  the 
appropriate  skills,  while  a  large  number  of 
employers  report  hiring  problems  due  to  skill 
shortages.  Despite  progress,  further  boosting 
the  attractiveness  of  medium-level  vocational 
education and training (VET), including through 
the 
full 
set  out 
implementation  of  the  dual  VET  system  by 
2025/2026,  and  promoting  adult  learning, 
upskilling  and  reskilling  programmes  –  both 

framework 

the 

for 

within  firms,  in  particular  SMEs,  and  through 
public  schemes  –  would  be  key  to  improving 
labour  market  outcomes.  These  elements 
would  contribute  to  a  better  match  between 
the education system and the skills required in 
the labour market, with a focus on STEM as an 
important  factor  underpinning  productivity 
growth  most  notably  in  the  less  developed 
regions (see Annex 18). 

in  R&D 

Weak  business  innovation  paired  with 
ineffective  science-business  mechanisms 
remains  a  key  challenge.  Low  private 
investment 
together  with  an 
underdeveloped collaboration between science 
and 
in 
traditionally low-value sectors such as tourism 
and 
innovation 
performance  in  some  regions  of  the  country 
(see Annex 4). 

industry,  and  a 

concentration 

agriculture, 

hinders 

Access  to  growth  financing  remains  an 
important constraint to firms’ expansion. 
Venture  and  equity  capital  markets  are  still 
underdeveloped,  as  Spanish  firms  financing 
still  heavily  rely  on  bank  loans.  At  the  same 
time, the allocation of private savings does not 
sufficiently 
business 
expansion. Together, these factors continue to 
inhibit  the  reallocation  of  resources  towards 
more  productive  activities.  The  IMF  points  at 
insufficient  market  size  and  lack  of  access  to 
the  key  factors 
equity  financing  among 

innovative 

support 

(1)  See OECD Economic Surveys: Spain, Volume 2025/22  

3 

 
 
 
underlying  young  firms’  inability  to  scale  up 
rapidly (2). 

and 

strengthening 

Promoting  greater  use  of  market-based 
the 
financing 
connection  between  businesses  and 
capital  market  participants,  including  by 
increasing  the  role  of  pension  funds  and 
investments,  could 
incentivising  retail 
expand  access  to  financing  for  firms. 
Moreover,  the  lack  of  effective  diversification 
of  financing  source  might  weigh  on  the 
dynamism of private investment. According to 
the  OECD,  many  Spanish  firms  (particularly 
SMEs) report the lack of available financing as 
a considerable long-term barrier to investment 
in  2023.  Additionally,  the  EIB  Investment 
Survey (3) signals that around 20% of Spanish 
firms  expressed  concerns  with  the  cost  of 
external financing. 

Weaknesses  in  the  business  environment 
continue to hamper firms’ growth. Spain’s 
business  structure  remains  dominated  by 
micro-enterprises with low capitalisation and a 
limited  propensity  to  innovate.  Additionally, 
such 
regulatory 
retail 
as 
barriers, 
domestic  market 
and 
restrictiveness, 
fragmentation  across 
regions  weigh  on 
business  dynamism  and  ultimately  on 
prosperity and workers incomes. 

Increasing spending needs and 
limited fiscal space highlight the 
importance to focus on the quality 
of public finances 

Despite  short-term  improvements,  Spain 
faces  major  challenges  in  meeting  its 
medium-term  fiscal  commitments  amid 
rising  spending  pressures  resulting  from 
ageing  and  political  fragmentation.  Fiscal 
commitment  by  Spain  in  its  medium-term 
fiscal  structural  plan  (MTFSP)  for  2025-2028, 
improvement  of  the  structural 
imply  an 

(2)  See IMF, 2025 

(3)  See EIB, 2025 

primary balance of 1.6 pps of GDP until 2028. 
As  the  measures  detailed  in  the  MTFSP  only 
partially  address  these  challenges,  additional 
efforts  would  be  required  to  meet  its  fiscal 
in  a  context  of  political 
commitments 
fragmentation  (no  budget  has  been  approved 
by  parliament  since  2023),  rising  defence 
expenditure 
expenditure 
pressures  due  to  ageing  and  related  policy 
choices. 

continued 

and 

Spain’s  debt  and  deficit  have  declined, 
result  of  positive 
including  as  a 
macroeconomic 
and 
developments 
structural  adjustment  of  public  finances. 
Since  the  pandemic,  the  general  government 
deficit  has  decreased  by  around  7.5 pps  and 
the  debt  by  around  20 pps.  Although  strong 
nominal  growth 
contributed  significantly, 
improved fiscal outcomes were also driven by 
increased  tax 
intake,  supported  by  solid 
employment  growth  and  sustained  corporate 
earnings. 
public 
expenditure  has  dropped  by  around  5 pps  of 
GDP,  mostly  because  current  expenditure 
decreased  in  terms  of  GDP,  whereas  public 
investment grew slightly, supported by the RRP 
and investments in defence. 

Additionally, 

overall 

Positive  revenues  helped  reduce  the 
deficit  to  2.4%  in  2025,  thanks  to  the 
phase-out  of  energy-related  measures 
and  the  2024  tax  reform,  with  further 
improvements projected in 2026. In 2026, 
the  government  deficit  is forecast  to  stabilise 
at  2.4  %  of  GDP  as  the  positive  revenue 
developments  are  set  to  compensate  for  the 
sets  of  measures  to  mitigate  the  effects  of 
the  conflict  in  the  Middle  East  and  the 
consequences  of  the  floods  in  Andalusia  and 
Extremadura.  The  debt-to-GDP  ratio  fell  to 
100.7%  in  2025,  and  is  expected  to  drop 
below 100% for the first time since 2019. 

Defence  and  national  security  spending 
remain  relatively  low  but  is  increasing 
including  with  EU  support. 
gradually, 
Spain remains one of the EU countries with the 
lowest  defence  expenditure 
in  national 
accounts  terms  (0.9%  of GDP  in  2024),  but it 
increasing 
is  expected  to  gradually  keep 
towards  2029.  In  April  2025,  the  government 
approved the Industrial and Technological Plan 

4 

 
 
2.5 pps  by  2040,  reaching  around  16%  of 
GDP.  By  2070,  pension  spending  is  set  to 
reach  17%  of  GDP,  compared  to  an  EU 
average  of  12%  Supplementary  pension 
schemes could strengthen the resilience of the 
pension  system  by  diversifying  retirement 
income  sources  (see  Annexes 2  and  6).  Their 
role  could  be  strengthened  by  introducing 
auto-enrolment  in  the  second  pillar,  easing 
portfolio  investment  limits  and  setting  up 
pension 
retirees 
tracking 
estimate their pension rights. 

to  help  future 

Both  public  healthcare  and  long-term 
care  expenditure  are  below  the  EU 
average, but their projected increases, in 
particular  that  of  healthcare,  could  pose 
a significant fiscal risk beyond the MTFSP 
period.  Public  healthcare  and  long-term  care 
expenditures  are  projected  at  5.9%  and  0.8% 
of  GDP,  respectively,  in  2025  (below  the  EU 
average of 6.6% and 1.7%). They are expected 
to 
increase  by  0.8 pps  and  0.2 pps, 
respectively,  by  2040  (against  respective  EU-
average  increases  of  0.3 pps  and  0.4 pps), 
requiring  additional  fiscal  buffers.  The  wealth 
gap  between  younger  and  older  populations 
is  therefore  also 
continues  to  widen. 
necessary  to  rebalance  public  expenditure 
towards policies supporting young people such 
as  education,  access 
to  housing,  and 
employment. 

It 

the 

levels 

different 

There  is  scope  for  better  coordination 
between 
of 
government  in  Spain  to  improve  the 
business  environment,  the  efficiency  of 
public 
fiscal 
spending  and  ensure 
sustainability.  AIReF  has  repeatedly  called 
for  better  coordination  across  governments 
to  better 
(central, 
implement 
the 
spending  reviews.  While  compatible  with  the 
new  EU  fiscal  framework,  there  is  also  scope 
to  better  update  Spain’s  law  on  budgetary 
sustainability, 
stability 
financial 
spending 
translation  of 
facilitating 
commitments  in  the  MTFSP  to  all  levels  of 
government. 

local) 
recommendations  of 

regional  and 

and 
the 

the 

for Security and Defence, aimed  at increasing 
the  level  of  defence  and  security  investment. 
While Spain has reached the 2% NATO target, 
this  is  below  the  5%  committed  by  all  NATO 
Member States. In April 2026, Spain requested 
fiscal  flexibility for defence expenditure under 
the  EU’s  national  escape  clause (4). 
In 
February, the Council approved Spain’s request 
for  EUR 1 billion  in  EU  loans  under  SAFE 
(Security Action for Europe) to support defence 
investment. 

the 

Commission’s 

There  is  scope  to  make  the  tax  mix 
simpler and more growth-friendly, in line 
with 
2025 
recommendation  to  review  and  simplify 
the tax system. Spain has a growing reliance 
on 
labour  taxation,  while  revenues  from 
consumption  and  environmental  taxes  remain 
comparatively  low.  Spain  has  the  largest  VAT 
policy  gap  in  the  EU  (see  Annex 3)  and  tax 
lead  to  an  average  annual 
expenditures 
loss  of  around  4 pps  of  GDP, 
revenue 
fiscal 
according 
authority, AIReF. 

independent 

to  Spain’s 

Economic efficiency could be enhanced by 
broadening  the  VAT  base,  limiting  the 
application  of 
rates,  while 
reduced 
compensating  lower-income  households 
through  targeted  cuts  to  the  taxation  of 
earnings from labour or transfers. Quality 
of  public  finances  could  also  benefit  from 
enhanced  monitoring  of  tax  expenditures, 
which  is  discontinued  at  central  government 
level  since  2022  despite  the  constitutional 
mandate.  A  consolidate  reporting  of  tax 
including  all  territorial 
expenditures 
levels 
support  evidence-based  economic 
would 
policy. 

Spain  is  projected  to  have  the  second-
highest public pension spending in the EU 
by 2070. Gross public pension spending as a 
percentage  of  GDP  is  projected  to  grow  by 

(4)  The activation of the national escape clause provides 

EU Member States with budgetary flexibility to increase 
defence expenditure, without an immediate need to 
finance such increase with spending cuts or revenue-
raising measures. The flexibility thus gives Member 
States the necessary time to accommodate higher 
defence expenditure within national budgets. 

5 

 
 
Expanding social and affordable 
housing requires additional policy 
action 

Spain’s housing sector faces deep-rooted 
structural  challenges.  The  Spanish  housing 
market  features  a  severe  mismatch  between 
supply and demand, together with a lack of a 
substantial  stock  of  affordable  and  social 
housing,  including  social  rental  options.  These 
vulnerabilities  are  particularly  relevant  in  the 
main  urban  and  metropolitan  centres,  islands 
and  coastal  areas.  The  shortage  of  dwellings 
dedicated to social purposes, representing just 
1.5–1.7%  of  the  total  housing  stock  and  far 
below  the  EU  average  of  6–7%,  with  high 
regional  differences,  exacerbates  pressure  on 
to  price 
the 
increases (see Annex 7). At the same time, the 
high fragmentation and low productivity of the 
Spanish  construction  sector,  dominated  by 
than 
small  and  micro-firms  with 
10 employees,  can  be  another  factor  limiting 
the supply. 

rental  market,  contributing 

less 

performance 

labour  market 

The continuous increase of housing prices 
over 
the  past  decade  exacerbates 
affordability issues. House prices have been 
rising  steadily  across  Spain  since  2014  and 
this rise  has accelerated  in last few years, on 
is 
average,(see  Annex 18).  This 
largely 
underpinned  by  a  number  of 
intertwined 
factors. These include Spain’s robust economic 
and 
and 
significant population increases due to inward 
migration  contributing  to  increased  demand 
for housing, as well as the influence of foreign 
buyers  in  the  market.  Growing  housing  costs 
amplify  existing  affordability  challenges  and 
disproportionately  affect 
low-income  and 
vulnerable groups. Homelessness is on the rise 
and the Roma population keeps facing severe 
housing  challenges.  In  this  context,  housing 
support  in  the  framework  of  social  protection 
the  country’s 
remains 
ageing  housing 
(at  an  average 
stock 
43.5 years  old)  exacerbates  issues  such  as 
energy  poverty 
(which  despite  decreasing 
remains  15.9%  in  2025)  and  accessibility 
gaps,  highlighting  urgent  renovation  needs 
(see Annex 16). 

limited.  Moreover, 

Rising  housing  costs  are  a  factor 
hampering  labour  mobility  across  the 
country.  High  housing  costs  and  general 
affordability  issues  –  notably  in  cities  and 
regions offering good job opportunities – limit 
labour  mobility  within  Spain.  They  make  it 
more  difficult  for  workers  to  move  between 
regions  and  for  young  people  to  move  out  of 
their  family  home.  This  hampers  efficient 
labour 
skills 
and 
mismatches,  representing  a  challenge  for 
Spain’s competitiveness. 

allocation 

increases 

to 

Spain 

in  new 

accelerate 

A  2025  country-specific  recommendation 
urged 
the 
implementation  of  a  number  of  policy 
actions.  Additional  efforts  are  needed  to 
comply with the recommendation and improve 
constructions  and 
accessibility 
(12/2023), 
renovations.  The  Housing  Law 
implemented  under  the  RRP,  for  example,  
aims  at  boosting  the  provision  of  social 
housing and allowing the limitation of rents in 
its 
stressed 
  across 
implementation 
regions  and  could  undermine 
the 
achievement  of 
intended  objectives. 
Moreover,  limited progress  has  been  achieved 
on  the  reform  of  the  Land  Law,  which  was 
proposed in 2024 and still pending adoption. 

remains  uneven 

Nonetheless, 

areas. 

the 

its 

A number of other policy initiatives have 
been  announced  and  some  of  them  have 
been  recently  rolled  out.  These  include  the 
creation of the CASA47 state agency geared at 
expanding the affordable rental  stock. In April 
2026, the Spanish government also adopted a 
state  housing  plan  2026–2030 
(totalling 
EUR 7 billion)  to  increase  funding  for  social 
and  affordable  housing  with  an  indefinite 
protection 
the 
rehabilitation  of  the  existing  housing  stock. 
The  effectiveness  of  the  policy  initiatives 
intended  to  increase  housing  supply,  including 
social  housing,  will  depend  on  the  use  of 
efficient  business  models  to  maintain  the 
housing  stock  and  on  substantial  investment 
over time (see Annex 16). 

regime  and 

to  promote 

Spain’s 
calls 

housing 
Tackling 
far-reaching 
challenges 
measures  to  expand  supply  and  increase 
the  social  housing  stock.  Facilitating  land 

ongoing 
for 

6 

 
 
availability,  streamlining  permitting  processes, 
and  reducing  administrative  bottlenecks  can 
help  overcome  some  of  the  constraints  that 
have slowed housing development. Making use 
of  vacant  houses  and  converting  non-
residential  buildings  into  dwellings  have  the 
potential  to  further  increase  the  available 
housing stock contributing to better addressing 
the  growing  demand.  Expanding  the  social 
housing stock and, in the absence of additional 
supply of social housing, preserving the social 
housing purpose in case of ownership transfer 
is  essential  to  help  low-  and  middle-income 
households  accessing  housing, 
reducing 
regional  disparities,  while  promoting  social 
inclusion  (see  Annex 16).  Lastly,  using  new 
business  models  for  the  promotion  and 
maintenance of the social housing stock could 
help improve the financial sustainability of the 
social housing system. 

Efforts are being made to address 
economic resilience challenges 

key elements to reduce dependency on critical 
raw  materials.  Spain  recently  approved  the 
Action  Plan  for  the  Sustainable  Management 
of Mineral Raw Materials, with  more than EUR 
400  million  allocated.  Simplified  permits  on 
prospective mine sites could further boost the 
business case for smaller sites in the country, 
also  because  of  the  existing  seven  strategic 
projects allocated. 

Regional disparities remain strong 

structural 

challenges 
Long-standing 
in  most  Spanish  regions.  All 
remain 
Spanish  regions  but  four  (Madrid,  Basque 
Country, Navarra and Catalonia) remain below 
the EU average GDP per capita (see Annex 18). 
In  addition,  the  concentration  of  population 
growth  in  coastal  zones  and  the  capital  area 
aggravates  territorial  imbalances  in  labour 
supply,  public  services,  and  development 
capabilities.  This,  in  turn,  leads  to  further 
depopulation in many regions. 

for 

Spain is making progress in strengthening 
its  economic  resilience  but  continues  to 
face  structural  challenges.  Industry  has 
shown  resilience  despite  slower  growth  in 
2025,  amid  global  uncertainty,  higher  energy 
costs  and  strong  international  competition. 
Through  initiatives  such  as  PERTE  (Strategic 
Projects 
and 
Economic 
Transformation),  Spain  is  promoting  strategic 
sectors, 
energy 
technologies, electric mobility,  semiconductors 
and  social  and  care  economy,  with  strong 
support  from  EU  funds.  Continued  investment 
in grids, storage and faster permitting remains 
important  to  ensure  security  of  supply  and 
support  electrification  of  the  industry,  while 
thereby 
strengthening  energy  sovereignty, 
reinforcing economic resilience.. 

renewable 

Recovery 

including 

Spain  relies  on  imports  of  many  critical 
raw materials essential for the green and 
digital  transitions.  Spain  shows  strong 
capabilities 
circular 
economy  initiatives  and  diversifying  supply 
(with  7  strategic  projects  selected  by  the 
European  Commission  aiming  to 
improve 
Europe’s  critical  minerals  supply).  These  are 

to  boost 

recycling, 

7 

Their 

impacts 

change. 

considering 

Addressing 
regional  disparities  also 
levels  of 
requires 
the 
regional  exposure  and  vulnerability  to 
climate 
vary 
significantly  between  the  wetter  northern 
regions  and  the  drier  southern,  inland  and 
island  areas.  The  outermost  region  of  the 
Canary Islands  remains strongly specialised in 
tourism,  a  sector  that  provides  substantial 
employment  and  external  income.  Continued 
diversification  and 
innovation  across  all 
economic  sectors,  with  a  particular  emphasis 
innovation,  climate  change 
on 
adaptation  and  mitigation    in  the  tourism 
sector 
further 
diversification  through  smart  specialisation 
both within and beyond tourism. 

promoting 

fostering 

needed, 

is 

Regional economies show strong sectoral 
differences. Industrial activity and innovation 
performance in Spain is concentrated in a few 
regions,  and  ICT  and  financial  services  are 
mainly located in Madrid and Barcelona. Some 
coastal  and 
regions  are  strongly 
specialised  in  tourism-related  activities,  which 
support 
and 
entrepreneurship,  while  also  highlighting  the 

employment 

regional 

island 

 
transition-related 

importance  of  diversification  and  resilience 
policies.  In  parallel,  there  are  former  coal-
dependent regions (such as Asturias, and parts 
of  Castile  and  Leon,  Aragon  and  Andalusia) 
employment  and 
face 
demographic  challenges.  This  has  an  impact 
on  a  highly  fragmentated  labour  market  with 
unemployment rates varying between regions, 
from  28%  in  Melilla  to  7.6%  in  Navarra  (see 
Annex 11).  This  reality  also 
impacts  the 
regional  social  and  employment  services, 
including  benefits  provision,  coverage,  access 
and  quality.  Spain's  reliance  on  traditional 
industries  like  coal  mining  in  Asturias  and 
Andalusia face significant socio-economic and 
environmental  challenges  affecting  the  ability 
of  the  areas  on  which  those  industries  are 
located to remain attractive places to live and 
work. 

for 

risk 

factor 

Changes  in  population  dynamics  are  an 
important 
the 
competitiveness  of  several  regions.  While 
most  regions  recorded  positive  net  migration 
of  people  aged  15–39,  these  inflows  were 
largely  concentrated  in  coastal  regions  and 
major  cities.  Cities  and  suburban  areas 
expanded  overall  whereas  rural  areas  lost 
4.4% of their population and continued to face 
poorer access to essential services, particularly 
healthcare (see Section 4 on skills, quality jobs 
coordination 
fairness).  More 
and 
between  social,  education,  labour  and  health 
services  at  both  national  and  regional  levels 
could  also  produce  an  improvement.  This 
face  a  key 
means 
competitiveness risk: limited capacity to secure 
investment and attract talent, which constrains 
their  ability  to  develop  higher-productivity 
economic  activities  and  undermines  residents’ 
right to stay. 

that  some 

regions 

social 

transition’ 

shortages 

and 
constrain 

Skills 
educational 
regional 
disparities 
competitiveness.  Some  less-developed  and 
‘just 
(e.g.  Asturias  or 
regions 
Andalusia  –  see  Annex 18)  have  early-school-
leaving  rates  above  the  EU  average  and  PISA 
performances  below  the  EU  average.  This  is 
also  reflected  in  all  levels  and  aspects  of 
education, 
education: 
vocational  education  and  training,  and  adult 
(see  Annexes 12  and  13).  Best 
learning 

primary, 

higher 

practices can be learnt from those regions that 
have better results in all levels of educational 
outcomes,  even  more 
less 
developed  regions  (e.g.  Castile  and  Leon). 
Inequalities in access to quality education risk 
further  widening  socio-economic  disparities 
between regions. 

they  are 

if 

funding 

instruments 

competitiveness, 

provide 
EU 
considerable  resources  to  Spain.  They 
support investments and structural reforms to 
increase 
environmental 
fairness  and 
sustainability,  skills,  social 
security,  while  helping  to  address  challenges 
identified in the CSRs. Key instruments include 
the  Recovery  and  Resilience  Facility  (see  Box 
2)  and  Cohesion  policy  funds  (see  Box  3).  In 
addition, the Common Agricultural Policy (CAP) 
provides Spain with an EU contribution of EUR 
31.5  billion  under  the  CAP  strategic  plan  for 
2023-2027  (5),  while  EUR  1.1  billion  are 
allocated  under  the  Common  Fisheries  Policy 
(CFP).  A  further  EUR  1.6  billion  are  available 
under  the  Asylum,  Migration  and  Integration 
Fund 
the  Border 
together  with 
Management  and  Visa  Instrument  (BMVI)  and 
the  Internal  Security  Fund  (ISF).  Other  EU 
programmes  also  support  competitiveness  in 
Spain,  for  instance  through  open  calls  under 
Horizon  Europe  and  the  Connecting  Europe 
Facility. 

(AMIF), 

(5)  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  

8 

 
 
 
 
Box 2:  Key achievements of the Recovery and Resilience Facility (RRF) 

Spain’s  recovery  and  resilience  plan  (RRP)  represents  a  total  investment  budget  of 
EUR 102 billion,  corresponding  to  6.1%  of  GDP,  aimed  at  (i) supporting  the  green 
and digital transitions, (ii) strengthening economic resilience, and (iii) addressing long-
standing structural challenges identified in the European Semester. As of March 2026, 
EUR 71 billion (around 70% of the total allocation) has been disbursed following the 
satisfactory fulfilment of 263 milestones and targets. Implementation has progressed 
steadily,  with  a  growing  number  of  reforms  and  investments  already  fulfilled  and 
delivering tangible results on the ground. 

Highlights and impact of the plan 

•  Digital transformation. Deployment of the Digital Toolkit Programme, aimed 
at  digitising  SMEs,  micro-enterprises  and  the  self-employed.  In  addition,  as  a 
result  of  a  programme  aimed  at  digitising  the  education  system,  240 000 
classrooms  have  been  equipped  with  advanced  digital  tools,  700 000 
educators have undergone specialised training, and 300 000 electronic devices 
have been distributed. 

•  Green  transition.  Entry  into  force  of  the  Climate  Change  and  Energy 
Transition  Law,  the  consolidation  of  the  Strategic  Energy  and  Climate 
Framework, the National Climate Change Adaptation Plan and Spain's Climate 
Change  Risks  and  Impacts  Assessment,  the  National  Strategies  on  Green 
Infrastructure,  Connectivity  and  Ecological  Restoration  and  on  Energy 
Efficiency. In addition, investments have been implemented for the restoration 
of  200 km  of  riverbanks,  50 km  of  coastline  aimed  at  increasing  protection 
against  flood  risks  and  adapting  to  the  effects  of  climate  change  and 
additional 6GW of cumulative renewable energy capacity has been installed in 
Spain during the period Q1 2020 to Q4 2023.  RRP-related industrial initiatives, 
such as PERTEs, have significantly contributed to the structural transformation 
and decarbonisation of industrial ecosystems. 

•  Sustainable mobility. Entry into force of a regulation on low emission zones. 
An investment of EUR 400 million (strategic project for the economic recovery 
and  transformation,  PERTE)  has  been  directed  towards  promoting  electric 
vehicles.  Additionally,  the  railway  system  has  benefited  from  funding 
dedicated  to  upgrading  more  than  200 km  of  short-distance  rail  lines  and 
enhancing over 420 train stations. 

•  Labour  market  reform.  A  comprehensive  reform  of  the  labour  market  has 
been  implemented  to  restrict  the  use  of  temporary  contracts  to  cases  with 
valid  justification  and  to  encourage  the  adoption  of  permanent  contracts. 
Consequently,  the  proportion  of  temporary  employees  in  the  private  sector 
declined  from  25.4%  in  the  fourth  quarter  of  2021  to  15.6%  in  the  third 
quarter of 2025. 

9 

 
 
 
Box 3:  Contribution of cohesion policy funds 

EU  cohesion  policy  funding  is  supporting  Spain’s  efforts  to  increase 
competitiveness,  environmental  sustainability,  skills  and  social  fairness.  In 
the  2021-2027  programming  period,  EU  cohesion  policy  funds (6)  are  providing 
EUR 35.5 billion (amounting to EUR 50.3 billion with national co-financing), or 2.5% of 
2024  GDP,  to  Spain.  This  makes  cohesion  policy  one  of  the  main  sources  of  public 
investment in the country. The value of selected projects corresponded to 59.2% of the 
total allocation as of March 2026, with additional calls for projects in the pipeline. 

• 

Innovation, business environment and productivity. Nearly EUR 8.6 billion 
has been allocated for research and innovation, SMEs competitiveness and for 
the  regions  most  affected  by  the  transition  away  from  carbon-intensive 
activities. Around 29 000 firms have already seen their projects approved. 

•  Decarbonisation,  energy  affordability  and sustainability.  EUR 9.6 billion 
has  been  dedicated  to  clean  transition  projects,  including  EUR 1.5 billion  for 
drinking  water  and  wastewater  treatment,  expected  to  improve  services  for 
more than six million people. An additional EUR 2.1 billion is supporting energy 
efficiency  measures.  Furthermore,  over  EUR 0.8 billion  has  been  allocated  to 
climate  change  adaptation,  and  for  reconstruction  in  response  to  natural 
hazards. 

•  Skills, quality  jobs  and social  fairness:  With  almost  EUR  12 billion,  ESF+ 
programming largely responds to the most pressing social challenges affecting 
both  people  and  businesses.  EUR 2.9 billion  of  those  is  for  the  adaptation  of 
workers,  their  integration  and  skills  development,  while  EUR 1.8 billion  is 
dedicated  to  young  people  to  strengthen  vocational  education  and  training. 
Over  EUR 1.2 billion  goes  towards  Child  Guarantee  measures  aimed  at 
assisting  families  with  children  facing  poverty  and  social  exclusion,  while 
strengthening inclusive education for those with special needs. EUR 565 million 
is  allocated  to  addressing  material  deprivation  and  improving  overall  social 
inclusion and well-being. 

The mid-term review(7) reinforced cohesion policy’s contribution to emerging strategic 
priorities,  reallocating  nearly  EUR 3.2 billion.  More  than  half  of  reallocations  support 
competitiveness, particularly supporting critical technologies. The mid-term review will 
also  strengthen  defence,  will  expand  affordable  housing,  a  faster  deployment  of 
charging  infrastructure  and  a  better  water  management.  EUR 163 million  of  ESF+ 
funds  were  reallocated  to  support  STEP,  in  particular  training  related  to  STEP 
technologies relevant for the country. 

(6)  ERDF, ESF+, CF and JTF. 

(7)  The mid-term review is carried out halfway through the 

2021-2027 programming period. It is a formal 
assessment process required under Article 18 of the 
Common Provisions Regulation that aims to assess the 
implementation of programmes and, where necessary, 
propose adjustments to improve their performance, 
ensure their relevance in light of new and emerging 
needs and keep them aligned with other EU policies. 

10 

 
 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

Competitiveness  is  an  ongoing  challenge 
for  the  Spanish  economy.  In  2025,  Spain 
received  a  country-specific  recommendation 
(CSR)  to  (i) simplify  regulation,  (ii) improve 
regulatory tools, (iii) reduce  the  administrative 
burden  and  regulatory  fragmentation  across 
regions, 
judicial  efficiency  by 
streamlining 
judicial  proceedings  and  by 
further  digitalising  the  justice  system  in  all 
regions,  and  (v) facilitate  business  creation, 
innovation  and  expansion,  supporting  R&I 
investments  and  stronger  science-business 
linkages. 

(iv) increase 

Limited  progress  has  been  made,  with 
partial  efforts to simplify regulation and 
strengthen the institutional framework to 
boost  the  business  environment 
(see 
Annexes 5 and 7). Persistent structural deficits 
in  human  resources  and  digitalisation  hamper 
both  how  the  justice  system  performs  and 
helps  strengthen  the  business  environment 
(see Annex 7). More progress is also needed on 
the  Competitiveness  Compass’  directives  for 
closing  the  innovation  gap,  simplifying  the 
regulatory  environment,  and  optimising  the 
benefits  of  the  single  market.  This  includes: 
better alignment with single market rules (see 
Annex 5); 
regional 
regulatory  fragmentation  with  “Regime  20” 
and  facilitating  the  scale-up  of  seed  stage 
start-ups  through  access  to  growth  capital, 
including  public-private  venture  capital  and 
attracting  international  venture  funds  (see 
Annex 4). 

addressing 

further 

Boosting productivity and 
competitiveness in Spain through 
innovation and further private 
investment 

R&D 

faces 

chronically 

low 
investment. 

and 
Spain 
fragmented 
R&D 
expenditure  remains  low  and  private-sector 
investment  lags  behind  significantly.  Public 
R&D  expenditure  stood  at  just  0.65%  of  GDP 
in  2024,  well  below  both  the  EU  average 
(0.72%)  and  Spain’s  own  target  of  1.25%, 
while  private-sector  investment  (0.84%  GDP) 
remains significantly below the EU average of 
1.49%,  concentrated  in  a  limited  number  of 
large  firms  and  with  significant  disparities 
across regions (see Annexes 4 and 18). 

Business innovation and science-business 
linkages  in  Spain  remain  weak,  hindering 
productivity growth. Frail innovation outputs 
remain  below  the  EU  average  in  several 
indicators,  including  the  declining  number  of 
SMEs  active  in  R&D  (17%  drop  from  2008  to 
2024),  low  patent  applications  (1.2  patent 
application  per  billion  of  GDP  in  2022,  below 
the  EU  average  of  2.8)  and  a  high  share  of 
activity 
in  sectors  such  as  tourism  and 
agriculture,  partly  explains  lower  aggregate 
productivity  levels..  Universities  and  public 
research  organisations  face  challenges 
in 
developing  effective  mechanisms  to  incite 
science-business  collaboration  at  institutional 
level,  while 
intermediaries 
knowledge 
(including  commercialisation  and  knowledge 
transfer  offices)  lack  enough  support.  Giving 
universities  and  public  research  organisations 
greater  operational  autonomy  in  return  for 
financial  support  and  accountability  on  R&I 
outcomes could improve science-business links 
(see Annex 4). 

Inefficient  governance  and  bureaucratic 
challenges  hamper  innovation  policies.  A 
fragmented  and  misaligned  R&D  regulation 
framework  results  in  inefficiencies  in  public 
support 
to  business  R&D  and  heavy 
bureaucratic hurdles for firms. Addressing this 
misalignment, 
existing 
streamlining 
business  innovation  schemes  and  evaluating 

the 

11 

 
 
 
the  impact  of  the  policy  mix  would  reduce 
inefficiencies (see Annex 4). 

the 

Productivity  gains  depend  in  part  on 
innovation-scaleup  gap, 
closing 
helping  regions  currently  lagging  behind 
to  catch  up,  and  increasing  the  skills  of 
the  workforce.  Regional  disparities  across 
the  country  constrain  the  overall  innovation 
performance,  with  only  five  ‘strong  innovator’ 
regions  driving  progress  (Madrid,  Catalonia, 
Navarra,  the  Basque  Country  and  Valencia). 
The weak links between research, universities, 
technology transfer centres and industry cause 
the scale-up rate of innovative start-ups to be 
low compared to EU peers in high productivity 
sectors,  while  weaknesses  across  the  digital 
innovation 
(see  Annex 4). 
Moreover,  skill  mismatches,  alongside  skills 
in 
shortages  and  persistent  disparities 
educational  outcomes,  are  key  constraints  to 
long-term competitiveness (see Annex 18). 

chain  persist 

Spain’s start-ups thrive at the seed stage 
but  struggle  to  scale  due  to  scarce 
growth  capital.  This  gap  could  be  closed  by 
funds  paired  with 
public-private  venture 
to 
regulatory  sandboxes  and  measures 
incentivise SME growth. In this context, Spain’s 
“España  Crece”  Fund,  to  be  launched  in  2026 
and seeking to mobilise EUR 120 billion, could 
provide  needed  resources  through  combining 
public  funding  and  private  capital.  Meanwhile, 
shortages  of  STEM  and  digital  skills  drag  on 
efficiency.  Integrating  entrepreneurship  and 
core  education  and 
tech 
incentivising  STEM  education  would  build  a 
Finally, 
labour 
more 
strengthening  global 
like 
ties 
Barcelona  and  Madrid  –  by  attracting 
international  venture  funds  and  cross-border 
R&D  partnerships  –  would  favour  long-term 
bringing  more 
productivity 
knowledge  and  capital  into  the  economy  (see 
Annexes 4, 5, 6 and 13). 

force. 
for  hubs 

adaptive 

training 

growth 

into 

by 

Simplifying the regulatory 
environment and improving the 
institutional framework 

regulation 

is  working 

to  simplify 

Spain 
the 
regulatory environment. Most Spanish firms 
view  business  regulation  as  an  obstacle  to 
investment.  82%  report  this  concern  –  higher 
than  the  EU  average  of  69% (8).  Spain  is 
implementing  RRP  measures  designed  to 
improve  the  business  environment.  These 
measures  partly  address  its  2025  CSR  on 
simplifying 
reducing 
administrative  burden.  Spain  also  enacted  a 
Start-ups  Act  and  Business  Creation  and 
Growth  Act  under  the  RRP  in  2022  (see 
Annex 5).  These 
to  simplify 
procedures and foster conditions  conducive to 
business growth. The average time to register 
a  company  has  been  reduced  significantly 
from 30 to 10 days and most registrations are 
processed  in  just  one  day.  To  combat  late 
payments, 
the  Spanish  government  has 
enforced e-invoicing since early 2026. 

laws  aim 

and 

to 

the 

improve 

Nevertheless,  further  efforts  should  be 
made 
institutional 
framework.  The  Commission  services  will 
continue  analysing  the  payment  performance 
of  the  public  authorities  and  maintain  a 
constant  dialogue  with  stakeholders  to  detect 
instances  of  unfair  payment  practices  and 
deterioration  of  the  payment  performance, 
including  also  B2B  transactions.  Furthermore, 
preliminary  evidence  suggests  that  the  2022 
reform of the Insolvency Act may facilitate the 
restructuring of businesses, thereby improving 
business  dynamism  and  how  economic 
resources  are  allocated,  even  though  it  still 
needs 
(see 
Annex 5). 

implemented 

to  be 

further 

Spain’s  ‘Régimen 20’  initiative  aims  to 
address regulatory market fragmentation 
across regions, but it is limited in tackling 
structural 
initiative 
provides a framework for collaboration among 

challenges. 

This 

(8)  European Investment Bank, 2025, EIB investment 

survey – Spain 

12 

 
 
and 

judicial  delays  that  affect 

legal 
standing 
businesses 
citizens. 
professionals, 
Disparities 
regional  digitalisation  also 
in 
persist  and  exacerbate  limited  interoperability 
between  case  management  systems,  further 
constraining  the  efficiency  of  the 
justice 
system (see Annexes 7 and 18). 

Addressing barriers to and 
benefitting from the scale of the 
single market 

Spain  is  falling  short  in  leveraging  the 
scale  of  the  single  market.  Spain  did  not 
receive  a  CSR  related  to  the  single  market  in 
2025. However, the Competitiveness Compass 
highlighted the need to make further progress 
in  exploiting  the  scale  of  the  single  market 
(see Annex 5). 

in 
Spain  faces  significant  challenges 
aligning  with  EU  single  market  rules. 
Spain ranks among the EU’s worst performers 
in  transposing  single  market  directives.  These 
issues can result in greater regulatory barriers, 
hampering  productivity.  For  instance,  national 
rules  on  packaging  and  waste  management 
and  mandatory  sorting  labels  for  packaging 
require  firms  to  adapt  their  product  labelling 
specifically  for  the  Spanish  market,  creating 
additional  compliance  costs  for  companies 
operating across borders. 

on 

Differences in regional regulations across 
Spain 
increase  compliance  costs  and 
create  barriers  for  businesses  operating 
between  regions  and  from  other  EU 
countries.  Examples  of  this  include  regional 
taxes 
beverages, 
sugar-sweetened 
obligations  to  label  products  both  in  Spanish 
and  in  the  relevant  regional  language.  Easing 
administrative 
the 
implementation of the rules on the posting of 
regulatory 
help 
workers 
fragmentation  within 
the  single  market, 
facilitate  cross-border  mobility,  and  foster 
competitiveness, without undermining workers’ 
protections.  

requirements 

reduce 

could 

in 

the  national,  regional,  and  local  levels  of 
Spanish administration to identify and address 
barriers  faced  by  businesses.  Seven  initial 
barriers  were  identified.  Throughout  2025, 
this 
efforts  were  made 
fragmentation and address regional barriers in 
areas  such  as  business  opening  licences, 
digital  labelling,  energy  efficiency  certificate 
technicians,  setting  up  charging  points  and 
low-voltage installations.  

reduce 

to 

Further  coordination 
is  essential  for 
territorial  cohesion.  As  administrative 
capacity challenges hit less-developed regions, 
further  strengthening  coordination  between 
national, regional and local authorities through 
consistent  consultative  forums  and  clear 
mechanisms  for  co-planning,  co-funding  and 
decision-making  is  essential  to  strengthen 
territorial  cohesion  (see  Annex 18).  While  the 
bottom-up  approach  of  the  ‘Régimen  20’ 
initiative  can  serve  to  coordinate  reforms  in 
areas of agreement, it has not proven able to 
tackle  barriers  at  a  large  scale.  Spain  could 
benefit  from  a  mechanism  to  identify  such 
barriers and use the ‘Régimen 20’ initiative to 
implement  more 
changes. 
Discussions  are  underway  with  Portugal  to 
also  set  up  a  Portuguese-Spanish  Strategic 
Forum to Boost Competitiveness. 

structural 

is 

low 

Burdensome 

in 
Regulatory  restrictiveness 
services  but  is  one  of  the  highest  in 
licensing 
retail. 
and 
authorisation  procedures 
for  establishing 
businesses  create  additional  obstacles  for 
market  entry  and  investment.  Spain  could 
benefit  from  further  convergence  of 
its 
differing regional retail regulations to improve 
support 
the  business  environment  and 
competition,  including  in  the  retail  sale  of 
medicines. 

regions  continue 

Structural  staffing  shortages,  uneven 
digitalisation  and  limited  interoperability 
across 
to  hamper 
judicial quality and efficiency. In 2025 the 
Commission 
Spain 
recommended 
digitalise  the  justice  system  in  all  regions.  An 
effective  institutional  framework  is  essential 
for  competitiveness.  Spain  faces  persistent 
structural  shortages  of  judges,  placing  severe 
strain  on  courts  and  contributing  to  long-

that 

13 

 
is  outside  the  unitary  patent 
Spain 
system,  which  increases  costs  and  legal 
fragmentation.  In  Spain  European  patents 
can  only  be  enforced  through  national  courts, 
patent holders cannot benefit from centralised 
litigation  offered  by  the  Unified  Patent  Court. 
These challenges make Spain less attractive in 
terms of innovation support. 

Spain  has  an  open  and  diversified 
economy,  but  trade  participation  in  the 
EU single market is low, leaving potential 
gains  from  deeper  integration  to  be 
exploited.  Spanish  SMEs 
report  several 
barriers  to  scaling  up  in  other  EU  markets 
including barriers related to taxation and VAT, 
permitting  and  authorisation,  as  well  as 
territorial  supply  constraints.  Other  factors 
explaining its low trade participation in the EU 
single market include the small size of Spanish 
firms,  limited  innovation  and  technological 
capital,  skills  shortages,  as  well  as  the 
substantial size of Spain’s domestic market. 

14 

 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

of 

In  2025, 

transition 

renewable 

significantly  with 

in  Spain  has 
The  green 
the 
accelerated 
expansion 
electricity 
generation  and  can  be  further  advanced 
by addressing a number of long-standing 
the  Commission 
challenges. 
improve  water 
recommended 
that  Spain 
management 
expand 
and 
coordination, 
strengthening 
infrastructure, 
scale up solutions for flood and drought risks, 
and 
in  energy  storage,  electricity 
transmission  and  distribution  and  in  cross-
border  electricity  interconnections.  Spain  has 
implemented  several  measures  to  address 
is 
these 
in  all 
significant  room  for 
relevant policy areas. 

but 
improvement 

recommendations, 

efficiency, 

invest 

there 

to 

the 

irrigation  board, 

Spain’s  progress 
improving  water 
in 
management  and  efficiency  has  been 
moderate.  Despite  efforts 
improve 
governance,  including  the  establishment  of  a 
national 
lack  of 
coordination  between  national,  regional  and 
local  water policies, combined  with the partial 
implementation  of  the  Urban  Wastewater 
Treatment  Directive,  hinders  the  adoption  of 
an integrated approach to water management. 
Measures  in  the  common  agricultural  policy 
strategic 
the  European  Regional 
Development Fund, and the Spanish RRP have 
helped improve irrigation efficiency, the urban 
water  cycle,  and  wastewater  infrastructure, 
but  Spain  would  benefit  from  a  more 
sustainable  water  management  framework  - 
including 
consistent  water  pricing  and 
incentives  that  adequately  encourage  water 
saving-practices. 

plan, 

Improving the resilience and flexibility of 
the electricity grid infrastructure in Spain 
is  key.  While  the  investment  conditions  have 
been improved with the adoption of the 2025-
2030  transmission  network  plan,  addressing 
these  challenges  requires  coordinated  action 

15 

voltage 

to  modernise  grid  infrastructure,  including 
interconnections  with  neighbouring  countries, 
accelerating 
improving 
capacity  storage 
reducing 
bottlenecks  in  the  network.  This  in  turn  will 
make the system more flexible and accelerate 
decarbonisation across all sectors. 

control, 
facilities  and 

Addressing the challenges of the 
expansion of renewable energy 

Spain  is  rapidly  expanding  its  renewable 
energy  capacity,  contributing  to  lower 
electricity  prices  than  the  EU-average.  In 
2025,  renewables  made  up  54.9%  of  the 
electricity  mix  (see  Annex 9).  This  growth, 
mainly  due  to  the  increase  in  solar  and  wind 
energy  sources  (see  Graph 3.1)  and  further 
supported  by  the  RRP,  reflects  ongoing  policy 
efforts 
in  energy  transition,  technological 
advancements and investment in clean energy 
infrastructure. 
household 
electricity prices increased during the first half 
of  2025  and  electricity  remains  much  more 
expensive than gas for large businesses, partly 
due to higher taxes and levies. 

Nevertheless, 

Ensuring  the  resilience  and  flexibility  of 
the  grid  is  key  for  the  green  transition. 
Spain  has  taken  measures  to  strengthen  the 
resilience  of  the  energy  system  following  the 
electricity  blackout  of  28 April 2025. 
In 
addition,  Spain  should  carefully  assess  the 
recommendations of the final report from the 
expert  panel  set  up  by  the  European  Network 
of  Transmission  System  Operators 
for 
Electricity.  Spain  would  benefit  from  taking 
further  steps  to  enable 
its  transmission 
system  operator  to  move  away  from  the 
current  increased  use  of  gas  power  plants  to 
(‘reinforced 
maintain 
operation mode’). 

stability 

voltage 

 
 
Expansion  is  outpacing  grid  and  storage 
capacity.  The  rapid  expansion  of  renewable 
capacity has given rise to challenges linked to 
the  grid’s  ability  to  absorb  the  new  capacity 
and  the  need  for  additional  storage  capacity. 
(see  Annex 9).  In  this  regard,  Spain  sets  a 
target of 22.5 GW of energy  storage capacity 
by  2030  and 
it, 
installed capacity as of February 2026 stands 
at 8.15 GW, below its target. 

is  progressing  towards 

regulatory 

authority’s 

Simplifying  permitting  and 
improving 
further 
investment  conditions  would 
improve  the  deployment  of  renewable 
energy infrastructure. Challenges remain in 
accessing the grid, with a large queue for grid 
connection requests, and in translating access 
into operation, slowing down the clean energy 
transition.  In  relation  to  measures  addressing 
the Commission's 2025 recommendations, the 
national 
(CNMC) 
requirement  for  a  fairer  distribution  of  grid 
costs  for  the  integration  of  renewable  energy 
has  resulted  in  modest  improvements  of  the 
grid  investment  conditions.  Granting  permits 
for  the  approval  of  construction  of  renewable 
projects  currently  takes  an  average  of  18-24 
months.  Further  simplifying  and  standardising 
permitting  would 
significant 
disparities  between  regions.  The  ‘Régimen  20’ 
initiative 
territorial 
could  help  balance 
development  between  regions  and  increase 
the  approval  and  deployment  of  more 
renewable projects. 

tackle 

the 

Decarbonising the economy 

Continuous  efforts  are  needed  to  drive 
the  decarbonisation  of  the  economy  and 
support  the  electrification  of  industry 
and  transport. 
  Spain’s  manufacturing 
industry  has  high  greenhouse  gas  emissions 
and needs support to decarbonise faster. Spain 
also  needs  to  ramp  up  electrification  of 
industrial processes and transport, particularly 
in  view  of  the  increased  fuel  prices  in  the 
increasingly 
geopolitical 
uncertain 
environment.  Spain  has 
implemented  and 
announced  initiatives  aimed  at  decarbonising 
both  its  industrial  base  and  the  transport 
sector,  with  PERTEs  under  RRF.  Tailored 
solutions  for  Spain  could  include  support  to 
technologies; 
(i) develop 
new 
(iii) promote 
(ii) scale-up  existing  solutions; 
circular 
supply 
sustainable 
economy 
boosting 
strategies, 
national  capabilities  to  reduce  the  import 
dependency  of  critical  raw  materials;  and 
(iv) renovate  its  industrial  building  stock  (see 
Section 1 and Annex 5). 

chains  and 
including 

net-zero 

Graph 3.1: Spain's electricity generation mix by 
source of energy, 2025 

Cross-border  electricity  interconnection 
capacity  is  key  to  improving  the  Iberian 
Peninsula’s  market  integration.  Spain’s 
interconnection  capacity  with  neighbouring 
countries is set to expand in the coming years. 
The Spain–Portugal interconnection project can 
to  3.2 GW  and 
increase 
the 
capacity 
the  Bay  of  Biscay 
commissioning  of 
interconnection  between  Spain  and  France 
could  create  a  total  exchange  capacity  to 
5 GW.    Further  efforts  in  this  direction  would 
contribute  to  improving  grid  flexibility  and 
stability. 

Source: Eurostat 

16 

20%21%22%17%20%Solar photovoltaicNon-renewable (excl. nuclear)Wind energyHydropowerNuclear and others 
  
 
Boosting energy efficiency for 
increased emission reductions and 
power affordability 

Energy  efficiency  continues  to  be  a 
challenge  in  Spain  for  public  buildings 
and,  especially,  private  dwellings.  There 
have  been  significant  investments  under  the 
RRP  and  other  EU  funds  to  improve  energy 
efficiency  in  public  and  private  buildings. 
Spain’s  national  energy  efficiency  targets 
included  in  its  national  energy  and  climate 
plan  amount  to  43%  in  2030  (compared  to 
1990  levels)  and  to  reach  that  target,  a  total 
investment 
of  EUR 52 billion 
would  be  needed.  Existing  EU 
funding 
contributes to address this challenge, including 
for  the  just  transition  with  its  specific  socio-
economic challenges. 

in  additional 

Additional  support  measures  for  private 
dwellings  would  be  needed  to  further 
enhance  the  individual  energy  efficiency 
renovations. The current stock of households 
in  Spain  amounts  to  23 million.  Further  direct 
for  energy 
tax  deductions 
support  and 
efficiency 
reduce 
renovations  could  help 
energy  bills  and 
the  energy 
performance  of  dwellings,  particularly  for 
vulnerable  households  facing  energy  poverty 
and  limited  capacity  to  finance  renovations 
(see Section 4 and Annex 12). 

increase 

Supporting sustainable growth by 
mitigating vulnerabilities in water, 
biodiversity, land use and waste 
management 

While  some  steps  have  been  taken, 
improving  Spain’s  water  management 
system  remains  a  priority.  Spain’s  water 
resources  remain  under  significant  pressure 
due  to  long-term  declines  in  rainfall  and 
snowpack,  rising temperatures,  and  increasing 
further 
soil  aridity. 
compounded  by  strong  water  demand  from 
agriculture,  tourism,  and  the  energy  sector. 

pressure 

This 

is 

The  country  also  faces  intensifying  water 
quality  pressures,  with  23%  of  groundwater 
monitoring  stations  exceeding  EU  thresholds 
for  nitrate  concentrations,  and  pesticide 
contamination  affecting  water  bodies  (see 
Annex 10 and 18). 

(ii) effective 

A  more  sustainable  approach  on  water 
management  is  needed.  It  should  include 
(i) water-pricing  incentives  for  efficient  water 
the  Water  Framework 
use  aligned  with 
Directive; 
and 
coordination 
application of water policies at all levels of the 
streamlining 
administration, 
empowering 
decision-making 
small 
Water  Councils 
the 
municipalities; 
Urban  Wastewater 
Treatment  Directive; 
(iv) scaling up water reuse; and (v) investing in 
further 
the  water 
infrastructure 
management system (see Annex 19). 

including 
procedures, 
and 

(iii) implementation  of 

supporting 

of 

Further  action  to  protect  and  restore 
biodiversity would be beneficial for Spain. 
Spain’s  rich  biodiversity  is  under  threat,  with 
only  8.9%  of  habitats  and  18.9%  of  species 
having  a  good  status,  significantly  lower than 
(see  Annex 10).  This 
the  EU  averages 
degradation  has  severe 
for 
implications 
Spain's climate resilience and poses significant 
economic  and  competitiveness  risks,  as  Spain 
has  the  highest  degree  of  supply  chain 
dependency  on  ecosystem  services  in  the  EU. 
Specifically, 32% of Spain’s gross value added 
is  highly  dependent  on  ecosystem  services, 
the  EU  average  of  20%. 
compared 
Addressing Spain’s current investment gap for 
its  natural  capital  is  estimated  at  around 
EUR 5 billion per year (see Annex 10). 

to 

increase  of 

For  Spain  to  meet  its  2030  target  for 
land  use,  land-use  change,  and  forestry 
(LULUCF),  an 
its  carbon 
removals  is  needed.  Spain  has  one  of  the 
highest LULUCF emission gaps in the EU, with 
large  emissions  in  recent  years  primarily 
caused by wildfires. The projected gap to meet 
its  2030  target  is  estimated  to  be  around 
12 million  tonnes  of  CO2  equivalent  (see 
Annex 10).  Despite  taking  steps  to  improve 
carbon  sequestration,  such  as  promoting 
enhanced  carbon  sequestration  in  agricultural 
soils, further strengthening of sustainable land 

17 

 
financing  framework  is  essential.    In  addition, 
the  varied  governance  models  across  regions 
hinder  effective  responses  to  growing  risks 
from  natural  hazards  such  as  flooding  and 
wildfires (see Annex 19). 

by 

for 

2050, 

While  Spain  is  leveraging  EU  funds  to 
support  its  climate  adaptation  efforts, 
additional  measures  are  necessary  to 
protect its critical infrastructure. The cost 
of adapting Spain's transport infrastructure to 
climate  change  is  substantial,  with  estimated 
the  Trans-European  Transport 
needs 
Network  (TEN-T)  network  totalling  around 
including 
EUR 10.2 billion 
EUR 4.9 billion  for  rail  upgrades, 
including 
high-speed  lines  (see  Annex 10).  Spain  is 
investing 
improving  climate  adaptation 
under  the  RRP  (EUR  1  billion),  the  European 
Regional  Development  Fund  (EUR  1.23  billion) 
and other EU funds. However, tackling climate 
change  challenges  calls  for:  (i) climate  risk 
screenings  for  all  major  assets  (e.g.  energy 
and  transport  infrastructure);  (ii) high-impact 
upgrade measures through structural (e.g. use 
of  flood-resistant  designs  and  materials)  and 
non-structural  measures  (e.g.  climate-resilient 
(iii) nature-based 
and 
urban 
solutions,  like  restoring  ecosystems  to  reduce 
pressure on built infrastructure. 

planning); 

in 

use  and  forest  management  by  improving 
wildfire  prevention,  restoring  forests,  and 
protecting carbon-rich ecosystems is needed. 

the 

is  making  progress 

in  waste 
Spain 
management  and  the  circular  economy. 
Specifically,  the  government  has  taken  two 
it 
in  December  2025, 
important  steps: 
waste 
national 
new 
approved 
management plan (PEMAR 2025-2035), and in 
January 2026, it approved the second circular 
economy  action  plan.  The  plan  sets  out 
105 measures  and  allocates  approximately 
EUR 1.9 billion  in  investments  to  support  the 
transition towards a circular economy. 

However,  significant  challenges  remain. 
Key  indicators,  such  as  the  circular  use  of 
materials  and  the  recycling  rates  lag  behind 
EU  averages  (see  Annex 8).  For  example, 
Spain's  reliance  on  landfill  is  twice  the  EU 
average.  To  address  these  challenges,  Spain 
needs  to  effectively  implement  (i) its  national 
circular  economy  action  plans;  (ii) its  new 
national  and  regional  waste  management 
plans;  and  (iii) the  measures  outlined  in  its 
RRP. Spain would also benefit from building on 
its  existing  strengths  (high  recycling  rate  of 
packaging  waste  and  the  extended  producer 
responsibility schemes). 

Strengthening insurance coverage 
and adapting critical infrastructure 
to climate change 

Spain  remains  one  of  the  EU  countries 
most  vulnerable  to  climate  change, 
resulting  in  substantial  human,  economic 
and  environmental  losses.  Spain  incurred 
EUR 119.6 billion in losses due to weather and 
climate-related extreme events between 1980 
and  2024  (see  Annex 10).  This  calls  for 
risk  management  and  climate 
effective 
the  national 
coverage.  While 
insurance 
Extraordinary 
scheme, 
managed  by  the  Consorcio  de  Compensación 
de  Seguros,  reduces  the  protection  gap,  its 
long-term  financial  sustainability  should  be 
ensured.  To  address  remaining  vulnerabilities, 
further  development  of  Spain’s  disaster 

Insurance 

Risk 

18 

 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

in 

identified 

the  efficiency, 

Further efforts are needed to address the 
the  2025 
challenges 
country-specific  recommendations  (CSRs) 
about  social  fairness,  employment  and 
skills policies. In 2025, Spain received a CSR 
on  the  need  to  address  child  poverty  while 
improving 
coverage  and 
adequacy  of  social 
transfers  and  social 
assistance,  and  another CSR  to  reduce  skills 
shortages  and  mismatches  by  strengthening 
dual vocational education and training, and by 
increasing  lifelong  learning,  in  particular  for 
the  low  skilled  and  improve  basic  skills  and 
address  early  school 
into 
account regional differences. 

leaving,  taking 

Spain faces a wide variety of social, skills 
and  labour  market  challenges.  Poverty,  in 
particular among children, remains the biggest 
social issue, alongside income inequalities, low 
impact  of  social  transfers  and  gaps  in  the 
social  protection  system.  Early  school  leaving, 
declining  basic  skills  and  skills  mismatches 
point to shortcomings in the effectiveness and 
inclusiveness  of  the  education  and  training 
system.  While  labour  market  gains  have  not 
benefited all population groups equally, recent 
job  creation  has  become  more  broad-based, 
including in some higher-productivity activities, 
although  lower  productivity  services  remain 
predominant. 

accessibility 

Wide  regional  gaps  in  service  provision 
and  outcomes  exist  in  all  areas  (social, 
skills). 
labour  market,  health  and 
to 
lower 
Territories  with 
healthcare, education and social infrastructure, 
as  well 
persistent 
depopulation,  struggle  to  retain  and  attract 
working-age populations. This is putting at risk 
the  future 
labour  supply  and  economic 
dynamism  of  these  regions,  as  well  as 
preventing  its  residents  from  exercising  their 
rights effectively. 

facing 

those 

as 

Addressing poverty risks and 
social vulnerabilities 

education, 

limits  prospects  and 
Child  poverty 
opportunities 
skills 
in 
development,  social  inclusion  and  future 
labour market participation. In 2025, more 
than  one  in  three  children  were  at  risk  of 
poverty or social exclusion, representing one of 
the  EU’s  highest  rates,  despite  a  minor 
reduction  compared  to  the  prior  year.  Spain 
announced the introduction of a universal child 
benefit  as  a  key  measure  to  reduce  child 
poverty,  which  remains  to  be  approved  and 
implemented.  Participation  in  early  childhood 
education  and  care 
(for  ages  0-3)  has 
expanded,  but  large  inequalities persist.  There 
is a large gap in participation between children 
at  risk  of  poverty  or  social  exclusion,  despite 
the  key  role  of  early  childhood  education  and 
care 
in  being  a  crucial  tool  to  prevent 
inequalities  from  persisting  later  in  life.  Spain 
received  a  CSR  in  2025  on  reducing  child 
poverty,  but  progress  so  far  has  been  limited 
by  persistent  issues  in  the  implementation  of 
key  policy  instruments  and  policy  choices  in 
the distribution of public expenditures. 

Overall  poverty  risks  also  remain  high, 
with marked regional and socio-economic 
disparities.  Despite  decreasing  slightly  in 
both  2024  and  2025  (reaching  a  record  low), 
more than a quarter of the population was still 
at  risk  of  poverty  and  social  exclusion,  well 
above  the  EU  average.  Spain  also  has  high 
levels  of  material  and  social  deprivation  and 
one  of 
largest  poverty  gaps. 
Persistent  regional  disparities  continue  to 
shape  poverty  risks.  Some  vulnerable  groups 
are  more  exposed  in  Spain  than  in  other  EU 
countries 
large 
families, third country nationals (TCNs), people 
with  disabilities,  Roma  and  young  people). 
Consequently,  children  in  single-parent,  large 

(single-parent  households, 

the  EU’s 

19 

 
 
low-educated  households  were  also 
or 
especially  exposed.  Finally,  more  than  a 
quarter of households at risk of poverty could 
not  afford  to  keep  their  homes  adequately 
warm  –  more  than  double  the  rate  of  other 
households. 

Graph 4.1: At-risk-of-poverty or social 
exclusion rate for children (AROPE) and its 
components (AROP, SMSD) 

At-risk-of-poverty or social exclusion rate (% of total 
population aged less than 18 years old) (AROPE). People 
who are at-risk-of-poverty (AROP) and/or suffering from 
severe material and social deprivation (SMSD) 
Source: Eurostat 

inequalities. 

social  protection 
income 

The  poverty-reducing  impact  of  social 
transfers  is  limited,  highlighting  gaps  in 
system  and 
the 
The 
persistent 
effectiveness  of  social  transfers  in  reducing 
poverty  is  among  the  lowest  in  the  EU,  with 
significant  regional  disparities.  Social  security 
and general budget expenditures insufficiently 
target  children  and  young  adults.  Insufficient 
attention  is  paid  to  how  available  public 
resources are allocated and distributed across 
different age groups and create economic and 
social 
the 
perspective  of 
inter-generational  fairness. 
Income  inequality  is  decreasing  but  remains 
one  of  the  highest  in  the  EU  and  the  tax-
benefit  system  has  a  limited  capacity  to 
narrow  income  gaps.  Coverage  and  adequacy 
levels  also  appear 
lift 
beneficiaries  out  of  poverty.  Moreover,  there 
are disparities in access, quality and eligibility 
territory.  Limited  coordination 
across 

insufficient 

challenges, 

including 

from 

the 

to 

social,  health, 

education  and 
between 
employment  services  hampers 
integrated, 
person-centred  support.  This  means  benefits 
are  often  not 
linked  to  targeted  social 
assistance  and  inclusion  services.  Insufficient 
interoperability  of  databases  and  automatic 
enrolment  mechanisms  further  reduce benefit 
takeup and delay access. 

inefficiency  and 

Structural  challenges  affecting  the  main 
poverty  alleviation  benefits  limit  their 
effectiveness.  Both  the  minimum  income 
scheme (IMV) and the child supplement (CAPI) 
have  coverage  issues,  with  high  non-takeup 
rates, 
inadequacy,  which 
reduces  their  impact  on  poverty.  Moreover, 
inflexible  and 
beneficiaries  find  the 
unpredictable.  This  is  due  to  a  variety  of 
factors, 
including  administrative  burden, 
complex  eligibility checks, and low awareness. 
The reform of the employment incentive of the 
IMV  in  2026  aims  to  tackle  some  of  these 
inefficiencies.  

IMV 

Long-term  care 
(LTC)  also  presents 
structural  issues.  Public  social  protection 
spending (as % of GDP) for LTC is around half 
of  the  EU  average.  Care  is  provided  via  a 
combination  of  public,  private  (for-profit  and 
non-profit)  and  third-sector  providers.  Spain 
has relatively limited public providers of home 
care and cash benefits. Public funding is more 
strongly  oriented  towards  residential  care, 
which partly explains its greater use, although 
it remains unaffordable for many households. 
at 
Despite 
to 
deinstitutionalisation, 
community-based 
be 
accelerated.  

aiming 
transition 
should 

reforms 
the 
solutions 

recent 

inequalities 

The  long-term  care  system  could  also 
benefit  from  a  more  efficient  allocation 
of  expenses.  Differences  between  regions  in 
terms of resources, coverage and service lead 
to 
in  access,  availability  and 
quality.  Poor  working  conditions  and  high 
turnover continue to undermine job quality and 
attractiveness.  At  the  same  time,  informality 
persists  in  the  sector,  particularly  among 
female 
careers  and  non-EU  nationals. 
Workforce pressures may heighten because of 
the expected surge in demand for LTC from an 
ageing population. 

20 

510152025303520152016201720182019202020212022202320242025% of populationESEU AROPEEU AROPEU SMSDES AROPEES AROPES SMSD 
  
Gaps  in  access  to  healthcare  persist, 
affecting  the  population’s  health,  social 
fairness and productivity. Waiting lists have 
increased  and  unmet  needs  for  mental  care 
have  doubled  since  the  pandemic.  Gaps  in 
access  to  dental  care  affect 
low-income 
groups 
in  particular.  Furthermore,  service 
availability  is  affected  by  staff  shortages. 
Spain is working to improve quality and access 
to  primary  care,  but  regional  disparities, 
exacerbated  by  staff  shortages,  remain  a 
significant  challenge.  The  nurse-to-population 
ratio  remains  low,  and  an  ageing  general 
practitioner  (GP)  workforce  combined  with 
insufficient  replacement  rates  is  likely  to 
further  exacerbate  these  shortages  in  the 
coming  years.  Projections  also  point  to  a 
shortfall  in  health  specialist  workforce.  Rural 
areas continue to suffer from lower access to 
healthcare facilities.  

care, 

Addressing  these  challenges  requires  a 
long-term approach. It should be focused on 
strengthening  training  pipelines,  expanding 
multidisciplinary  primary 
improving 
attractiveness  of  GP  careers  and  better 
integrating  advanced  practice  nurses  and 
allied  professionals.  At  the  same  time,  rising 
financial  pressures  call  for  a  more  efficient 
allocation  of  health  spending.  Rebalancing 
financing  from  hospitals  toward  outpatient 
and  co-ordinated  community-based  services, 
supported  by 
interoperable  digital  health 
systems and telemedicine would help create a 
more  accessible,  efficient  and  sustainable 
on 
health 
prevention  and  accelerating 
the  use  of 
generics  and  biosimilars would  further  reduce 
long-term costs. The impact of existing policies 
on  regional  disparities  and  their  effectiveness 
should  be  monitored  and  systematically 
evaluated ensuring that resources are directed 
toward  measures  that  demonstrably  improve 
access and service delivery. 

system.  Greater 

emphasis 

21 

Ensuring quality, inclusive and 
labour market-oriented education 
and training 

regarding 

Declining  basic  skills  and  still  significant 
early  school  leaving  limit  human  capital 
development, affecting Spain's long-term 
competitiveness.  Echoing  trends  across  the 
EU, the OECD PISA 2022 results highlighted a 
worsening  of  basic  skills  among  Spanish  15-
particularly 
year-olds, 
top 
performance 
in  mathematics  and  science, 
reducing  the  pool  of  talent  for  highly  skilled 
professions.  Early  school  leaving  fell  to  its 
lowest  level  but  remained  among  the  highest 
in the EU, with a detrimental impact on young 
people’s  employment  and  social  prospects.  In 
line  with  the  2025  CSR,  Spain  continued 
implementing  a  holistic  support  programme 
targeted  at  vulnerable  schools,  supported  by 
the  ESF+  and  included  in the  Spanish  RRP,  as 
well  as territorial  cooperation  programmes  on 
basic skills (see Annex 13). Nevertheless, there 
is  scope  to  further  strengthen  coordination 
between  the  central  government  and  the 
Autonomous  Communities,  improve  teachers' 
initial  and  continuing  education  and  working 
conditions,  and 
refine  monitoring  and 
evaluation, including through the effective use 
of data from recently introduced standardised 
assessments. 

to 

strongly 

continue 

cohesion. 

Educational 
inequalities  hamper  skills 
development  and  undermine  social  and 
territorial 
Socio-economic 
disadvantage, gender, migrant background and 
shape 
disability 
educational 
long-lasting 
trajectories,  with 
implications for social and territorial cohesion, 
labour  market  outcomes  and  productivity. 
young  people  are  nearly 
Foreign-born 
three times  more  likely  to  leave  education 
early  than  those  born  in  Spain,  and  about  a 
third of young people with disabilities exit the 
system  with  no  more  than  lower  secondary 
education. Access to quality education in rural 
and sparsely populated areas of Spain, in this 
so-called ‘Empty Spain’, still poses a challenge 
for  many  students,  while  transport  and  meal 
grants  seek  to  reduce  inequalities.  Coupled 
with various regional disparities (e.g. regarding 

 
leaving),  this  highlights  the 
early  school 
potential for further refining education funding 
mechanisms  with  a  needs-based  approach 
(see  Annex 18).  Another  priority  should  be 
expanding  the  coverage  of  preventive  and 
remedial  support  programmes  for  the  most 
disadvantaged  learners,  supported  by  early 
warning systems, while improving coordination 
among  local  education,  healthcare,  and  social 
services. 

incentivising 

participation 

Aligning  higher  education  with  labour 
market  needs,  especially  in  STEM  fields, 
and 
in 
medium-level  vocational  education  and 
training 
(VET),  remains  essential  to 
bridge skills gaps. While tertiary educational 
attainment  is  well  above  the  EU  average, 
Spain  faces  persistent  skills  mismatches  and 
high  overqualification  rates,  especially  among 
foreign-born  individuals.  At  the  same  time, 
shortages  remain  evident  in  specific  high-
demand  fields,  notably  STEM  and  ICT,  where 
labour  demand  seems  to  outpace  the  supply 
of graduates. This leads to an underutilisation 
of  human  capital,  as  the university  offer  fails 
to effectively adjust to evolving market needs 
students’ 
with 
employability.  

detrimental 

effects 

on 

Qualifications  are  highly  polarised,  with 
many  highly-educated  and  low-qualified 
adults,  but  few  with  intermediate  skills. 
This  pattern  is  also  reflected  in  medium-level 
VET.  While  current  legislation  envisages  the 
generalisation  of  dual  VET  by  2025/26, 
implementation  varies  considerably  across 
regions.  Regulatory  updates  concerning  the 
development of the elements and governance 
instruments  of  the  VET  system,  alongside  the 
expansion  of  competence  standards  further 
strengthen  transparency  and  ensure  closer 
alignment of VET provision with labour market 
needs.  

Some  progress  has  been  made,  but 
effects  are  only  likely  to  emerge  over 
time.  Spain  has  notably  continued  to  roll  out 
the  integrated  VET  system  under  the  RRP, 
including support for vocational excellence and 
teacher  training  in  the  green  and  digital 
transition.  However,  further  investing  in  STEM 
and  dual  VET,  enhancing  industry-university 

22 

links,  intensifying  the  use of  skills intelligence 
to  adapt  educational  offer,  and 
taking 
measures  to  increase  the  participation  of 
SMEs in the VET offer (see Annex 13) would be 
Spain's 
to 
important, 
competitiveness. 

boost 

also 

to 

Adult  learning  participation  also  remains 
limited  and  uneven  across  the  country, 
constraining  opportunities  for  reskilling 
and  upskilling.  According 
the  Adult 
Education Survey, 34.1% of adults participated 
in learning activities in the previous 12 months 
in 2022, below the EU  average of 39.5% and 
far from the national target of 60% by 2030. 
Participation  is  particularly  low  among  low-
qualified adults and those aged over 55. While 
more recent Labour Force Survey data indicate 
a  moderate  improvement  between  2022  and 
2024,  participation  levels  remain  insufficient 
to  meet  evolving  labour  market  demands, 
particularly  in  the  context  of  the  green  and 
digital  transitions.  Under  the  RRP,  Spain 
introduced  a  permanent  and  free  system  to 
validate  competences  acquired  through  work 
or informal learning, and the roll-out of micro-
credentials  is  improving  the  offer  of  flexible 
training. 
and 
Prioritising outreach and targeted programmes 
to older or low-skilled adults, such as through 
individual  learning  accounts,  would  further 
help bridge existing skills gaps and empower a 
broader  segment  of  the  population,  ensuring 
Spain's  workforce  is  better  equipped  to  meet 
evolving market demands. 

labour-market 

relevant 

Addressing structural challenges 
and disparities in the labour 
market 

Despite ongoing improvements, important 
gaps,  relative  to  the  EU  average,  persist 
labour  market.  Despite  further 
in  the 
the  EU,  unemployment 
convergence  with 
remains  among  the  highest  in  the  EU  and 
labour  market  outcomes  continue  to  vary 
markedly  across  population  groups  and 
regions.  These  disparities  reflect  persistent 
structural  differences 
labour 
including  sectoral  specialisation 
markets, 

regional 

in 

 
linked  to  the  concentration  of  the  most 
productive  activities  in  a  limited  number  of 
regions and uneven access to more productive 
job opportunities (see Annex 18). 

especially 

Furthermore,  structural  barriers 
limit 
labour market access for specific groups. 
There  has  been  a  significant  reduction  in  the 
share  of  young  people  not  in  employment, 
education or training. Although declining, youth 
unemployment  remains  among  the  highest  in 
the  EU.  Older  workers  also 
face  high 
long-term 
unemployment, 
unemployment.  The  gender  employment  gap 
fell  below  the  EU  average  in  2025,  but  part-
time  work  is  over  three  times  as  high  for 
the 
women 
disproportionate  impact  of  care  on  women’s 
labour  market  participation.  Non-EU  nationals 
account  for  11.2%  of  the  workforce  (EU 
face  higher 
average:  6.3%),  yet 
precariousness 
Their 
and 
unemployment  rate  is  well  above  that  of 
native  workers,  and  they  are  more  likely  to 
hold temporary and part-time contracts. 

they 
irregularity. 

than  men, 

reflecting 

Spain  is  strengthening  its  active  labour 
market  policies  (ALMPs),  but  challenges 
remain.  Despite  the  RRP  investments  (e.g.  in 
digitalising  public  employment 
services), 
ALMPs in Spain are currently underperforming 
due  to  structural  factors.  Understaffing  of 
to 
public  employment  services  continues 
significantly  hinder  ALMP  performance 
in 
Spain.  ALMPs  need 
increase  active 
employment policies vis-à-vis passive policies, 
improve the use of data, and collaborate more 
with 
ALMP 
modernisation  efforts  seem  promising  but 
require  scaling  up  and  evaluation  to  ensure 
that  resources  are  used  efficiently  and  the 
positive  impact  is  evenly  distributed  across 
regions. 

private 

sector. 

The 

the 

to 

job 

improvements, 

Despite 
quality 
remains  a  persistent  challenge,  amidst 
very  weak  productivity  growth.  In-work 
poverty  is  stagnating  at  relatively  high  rates, 
in  the  context  of  subdued  real  wage  and 
productivity  developments 
the 
potential  for  sustainable  wage  increases.  Low 
real  wage  growth,  combined  with  strong 
minimum  wage  growth,  has  compressed  the 

limit 

that 

overall wage distribution around the minimum 
wage;  without  having  a  noticeable  impact  on 
in-work  poverty.  Many  employees  experience 
atypical  working  hours  and 
job  security 
improvements.  While 
low  despite 
remains 
temporary  employment  has  decreased,  partly 
as a result of the labour market reform which 
has  been  supported  by  RRP,  precariousness 
persists in various sectors, with a high share of 
temporary 
being 
involuntary  (76.4%  in  Spain  vs  49.9%  in  the 
EU  and  45.7%  in  Spain  vs  17.8%  in  the  EU, 
respectively),  high  shares  of  atypical  working 
hours and low job security.  

part-time  work 

and 

A  significant  rise  in  sick  leave  over  the 
past few years has had a sizeable impact 
on 
the  economy.  The  percentage  of 
employed  people  on  temporary  sick  leaves 
rose,  reaching  4.4%  in  2024,  a  trend  seen 
across  age  groups  and  regions,  with  an 
economic  cost  of  over  EUR 15  bn in  2023  - 
1%  of  GDP  (see  Annex 15).  Better  preventing 
risks  of  sick  leave,  by  improving  workplace 
health  and  safety,  well-being,  and  overall  job 
quality,  and  support  for  older  workers,  could 
curb  this  trend.  Additionally,  stronger  primary 
care  with  multidisciplinary  teams  could  help 
address  both  physical  and  mental  health 
Integrating  mental  health  services, 
needs. 
early 
issues,  and 
connections  with  occupational  health  could 
support  timely  return  to  work,  while  digital 
tools  and  flexible  consultations  may  improve 
responsiveness and continuity of care. 

identification  of  health 

Job  creation  remains  concentrated  in 
several 
service 
lower-productivity 
activities,  raising  concerns  about  the 
competitiveness of the Spanish economy. 
Employment growth has been characterised by 
a  strong  concentration  of  new  jobs  in  low-
productivity sectors. Despite the positive signal 
of job creation in more productive sectors (e.g. 
scientific  and  administrative  activities  and 
industry),  low-productivity  sectors  account  for 
more  than  the  82%  of  new  jobs  created  (see 
Annex 11). Low productivity limits the potential 
for sustainable wage increases. 

These  findings  are  consistent  with  the 
second-stage  analysis  in  line  with  the 
EU’s  social  convergence  framework.  The 

23 

 
analysis  points  to  challenges  in  the  labour 
market,  skills  and  social  dimension,  but  does 
not  point 
to  overall  social  convergence 
challenges  for  Spain,  also  in  light  of  the 
measures implemented or planned (9). 

(9)  European Commission, SWD(2026) 122. The analysis 
relies on all the available quantitative and qualitative 
evidence and the policy response undertaken and 
planned. 

24 

 
 
KEY FINDINGS 

In  areas  covered  by  existing  country-
specific  recommendations,  Spain  would 
benefit from: 

•  speeding  up  coordinated  efforts  at  all 
levels  of  the  administration  to  reduce 
bureaucratic  hurdles,  in  particular  for 
SMEs and the retail sector; 

•  reducing 

regulatory 

fragmentation 
across regions that create barriers to the 
EU single market; 

• 

R&D 

intensity 

and 
increasing 
strengthening 
industry-academia 
collaboration  to  raise  private  R&D 
investment; 

•  raising  public  R&D 

investment  to 
1.25%  of  GDP  by  2030  with  well-
designed  tax  incentives  and  streamlined 
grants  to  boost  high-value  sectors  and 
increase private co-funding; 

•  reforming  incentives  and  governance 
in  universities  and  public  research  to 
prioritise 
innovation  and  research-
business  collaboration,  and  supporting 
knowledge intermediaries; 

•  developing  sectoral  hubs  (e.g.  on  AI, 
biotech)  to  accelerate  market  uptake 
of 
and 
applying systemic policy evaluation; 

breakthroughs 

research 

•  promoting  upward  social  convergence 
through job quality and addressing in-
work  poverty.  Further  progress  depends 
labour  market 
on  modernising  active 
policies,  enhancing  labour  productivity  and 
creating  jobs  in  high-productivity  sectors, 
and addressing disparities through targeted 
and  coordinated  policy  actions  at  regional 
level; 

•  promoting  human  capital  development 
by raising the labour-market relevance 
of skills to reduce skills mismatches by 
aligning  adult  learning,  higher  education, 
and  vocational  education  and  training 
(including  dual  VET)  with  labour  market 
needs, particularly in STEM; 

•  reducing  educational  inequalities  and 

improving access across regions; 

•  addressing  persistent  gaps  in  basic 
skills and early school leaving, as well 
territorial  and  socio-economic 
as 
disparities, 
social 
strengthen 
to 
cohesion and competitiveness; 

•  expanding 

the  housing 

stock  –
especially  affordable  and 
social 
housing in high-demand areas, such as 
major  cities  and  tourism-intensive 
areas.  To  do  this,  Spain  could:  remove 
administrative  bottlenecks,  ease 
land 
availability  and  streamline  permitting  to 
accelerate development; repurpose existing 
building  stock  while  boosting  construction 
productivity;  expand  social  housing  for 
purchase  and  rental,  preserve  its  social 
purpose  upon  ownership  transfer,  and 
improve  its  financial  sustainability  through 
business  models  less  reliant  on  public 
funding; 

•  reducing  poverty  -  especially  child 
poverty  -  including  by  rebalancing  social 
expenditures  across  generations,  and 
improving the design of social transfers, in 
relation to coverage, take up, efficiency and 
adequacy,  particularly  for  families  with 
children; 

•  simplifying  and 

improving  the  tax 
system  efficiency,  and  implementing 
spending  reviews,  to  maintain  fiscal 
sustainability while preserving growth; 

25 

 
 
supplementary  pension 
incentivising indirect retail investment; 

schemes  and 

•  expanding long-term and primary care 
capacity  and  reducing  waiting  times 
through  improved  efficiency  and  tackling 
workforce 
regional 
disparities; 

shortages 

and 

•  addressing rapid depopulation in some 
areas  by 
fostering  more  diversified 
economic  activities,  promoting  up-skilling 
in  social 
and  re-skilling  and 
infrastructure and services. 

investing 

•  better  monitoring  tax  expenditures, 
limiting  reduced  VAT  rates  while 
adopting  compensatory  measures  to 
protect  low-income  households  and 
gradually  raising  environmental  taxes 
to support the green transition; 

•  Increasing  defence  expenditure  and 
in 
taking  more  decisive  action 
implementing  past  spending  reviews’ 
recommendations, including in areas such 
as  pharmaceuticals  prescriptions,  hospital 
expenditure or waste management; 

• 

electricity 

improving the resilience and  flexibility 
including 
of 
interconnections,  while  addressing  storage 
and renewable energy bottlenecks; 

grids, 

•  stepping  up  climate  adaptation  and 
mitigation  policies,  improving  water 
management,  and  adapting  critical 
infrastructure; 

•  strengthening 

risk  management, 
particularly  through  further  developing  the 
disaster financing framework; 

• 

• 

improving  governance  and  regional 
coordination to better address growing 
natural hazard risks; 

justice 
system 
improving 
the 
performance  by 
ensuring  adequate 
staffing,  harmonised  digitalisation  across 
regions  and  full  interoperability  of  case 
management  systems  to  boost  efficiency, 
quality and the business environment. 

In other areas, Spain would benefit from: 

•  boosting  energy  efficiency  in  public 
and  especially  private  dwellings  to 
address energy poverty and affordability; 

•  supporting 

industry  decarbonisation, 
transport  electrification,  and  strategic 
projects,  to  extract,  process  and  recycle 
critical raw materials; 

• 

improving access to finance – especially 
venture capital - including by strengthening 

26 

 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

A1.  CSR implementation 

Fiscal 

A2.  Fiscal developments and debt sustainability 

A3.  Taxation 

Productivity 

A4. 

Innovation to business 

A5.  Single market and industry 

A6.  Savings, investment and access to finance 

A7.  Effective institutional framework 

Sustainability 

A8. 

Industry decarbonisation, circularity and climate mitigation 

A9.  Affordable energy transition 

A10.  Climate adaptation, preparedness and environment 

Fairness 

A11.  Labour market 

A12.  Social policies 

A13.  Education and skills 

A14.  Social scoreboard 

A15.  Health and health systems 

A16.  Housing 

Horizontal 

A17.  Sustainable development goals 

A18.  Competitive regions 

A19.  Transport 

LIST OF TABLES 

A1.1. 
A2.1. 
A2.2. 
A2.3. 
A2.4. 
A3.1. 

CSR implementation and Commission assessment 
Projected change in ageing-related expenditure in 2025-2040 and 2025-2070 
Fiscal governance database indicators and public accounting maturity 
Supplementary pension schemes - Scope for expansion 
Implementation of reforms and investment underpinning the extension 
Taxation Indicators 

29 

31 

35 

35 

41 

45 

45 

51 

62 

68 

73 

73 

82 

88 

95 

95 

99 

103 

108 

109 

113 

119 

119 

121 

129 

31 
38 
38 
38 
40 
42 

 
 
 
Key Innovation Indicators 
Single Market and Industry 
Savings and Investments Union summary diagnostic 
Financial sector indicators 
Spain. Selected indicators on better regulation practices for primary legislation 
Digital Decade key performance indicators: availability of digital public services 
Key clean industry and climate mitigation indicators: Spain 

A4.1. 
A5.1. 
A6.1. 
A6.2. 
A7.1. 
A7.2. 
A8.1. 
A10.1.  Key Adaptation Indicators 
A14.1.  Social Scoreboard for Spain 
A15.1.  Key health indicators 
A18.1.  Main development trends, challenges and the concentration of resources. 
A18.2.  Key regional indicators (at NUTS 2 level) for Spain 

LIST OF GRAPHS 

Composition of non-financial companies' funding 
Capital markets and financial intermediaries 
Composition of households' financial assets 
Trust in the justice system, regional / local authorities and in government 

Public investment evolution and breakdown (%of GDP) 
Primary spending evolution and compositional change 
Tax revenue by economic function in 2024, ES (outer ring) and EU-27 (inner ring) 
Tax wedge for single and second earners as a % of total labour costs, 2025 
VAT gap indicators 
Evolution of R&D intensity (2014-2024) (1) 

A2.1. 
A2.2. 
A3.1. 
A3.2. 
A3.3. 
A4.1. 
A5.1.  Manufacturing industry production: total and selected sector, index (2021=100), 2015-2024 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2.  Most time-consuming aspects of service delivery 
A8.1. 
A9.1. 
A9.2. 
A9.3. 
A11.1.  Employment rate by age, nationality and gender 
A11.2.  Productivity in Spain and the EU (GVA/Employment) and proportion of jobs created (%) by NACE groups 
A12.1. 
Impact of social benefits transfers (excluding pensions) on poverty reduction by NUTS2 region in 2025 
A15.1.  Life expectancy at birth, years 
A15.2.  Out-of-pocket payments: share in healthcare spending and categories, 2023 
A16.1.  House prices, rents and price-to-income evolution in ES and EU27 since 2005 
A16.2.  House supply indicators in ES since 2005 
A16.3.  Housing supply selected indicators 
A17.1.  Progress towards the SDGs in Spain 
A18.1.  Labour productivity growth (2015 - 2024) and labour productivity (2024), Spain (NUTS 2 regions) 

Greenhouse gas emissions in the effort sharing sectors, 2005, 2023, and 2024 
Electricity and gas prices for household and non-household consumers, first half of 2025 
Low-carbon electricity generation vs. electricity wholesale prices, 2025 
Spain’s installed renewable capacity vs electricity generation mix 

LIST OF MAPS 

A18.1.  GDP per head compared with the EU average 
A18.2.  Average annual population change at NUTS 3 level (2015 - 2024) 
A18.3.  Energy-intensive industries 2021: Country Study Spain 
A18.4.  Differences in time for obtaining building permits by Spanish city 
A19.1.  Spain's road safety map 

30 

50 
61 
62 
67 
69 
70 
80 
94 
108 
110 
123 
128 

35 
36 
41 
43 
44 
46 
58 
62 
63 
64 
68 
69 
75 
82 
83 
85 
95 
96 
101 
109 
111 
113 
115 
118 
119 
122 

121 
125 
125 
127 
132 

 
 
 
 
 
 
ANNEX 1: CSR IMPLEMENTATION  

Table A1.1:  CSR implementation and Commission assessment 

(Continued on the next page) 

31 

Spain faces challenges in a wide range of policy areas, as identified in the country-specific recommendations (CSRs). Spain was recommended, among other things, to review and simplify the tax system, simplify regulation, increase judicial efficiency, improve water management and energy storage, increase housing supply and improve basic skills and address early school leaving.    The Commission has assessed the degree of implementation of the 2025 CSRs considering the policy action taken by Spain to date*. To do so, the Commission has taken into account the information provided by Spain in its Annual Progress Report as well as other information sources. This annex provides summary information on the policy actions taken or planned by Spain for each CSR. More detailed information on these actions is included in the relevant chapters and other annexes of the report. *CSR 2 is not assessed in CeSaR. 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, 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. Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  1.1 Reinforce overall defence and security spending and readiness while ensuring debt sustainability in line with the European Council conclusions of 6 March 2025. • Total general government defence expenditure in 2026 is projected at 1.2% of GDP, corresponding to an increase of 0.3 ppt. compared to 2024. • Spain has been implementing the Industrial and Technological Plan for Security and Defence, focused on the modernization of armed force equipment and the development of new technologies.   • Total general government defence expenditure in 2027 is projected at 1.4% of GDP, corresponding to an increase of 0.5 ppt. compared to 2024.  • Spain is expected to keep on implementing the Industrial and Technological Plan for Security and Defence.  Substantial progress 1.2 Adhere to the maximum growth rates of net expenditure recommended by the Council on 21 January 2025.  On 13 April 2026, Spain has requested the activation of the National Escape Clause (NEC). Cumulated deviation in 2025 amounted to 0.1% of GDP but is fully explained by the NEC flexibility (0.1 pps of GDP). Cumulated deviation in 2026 projected at 0.7% of GDP and is only partially explained by the NEC flexibility (0.3 pps. of GDP).     Substantial progress 1.3 Implement the set of reforms and investments underpinning the extended adjustment period as recommended by the Council on 21 January 2025. See table A.2.4 in Annex 2 of the Country Report.   Substantial progress 1.4. Further strengthening fiscal sustainability by reviewing and simplifying the tax system Since the issuance of the 2025 CSR no additional measure has been taken since December 2024 or credibly announced to review or simplify the tax system.  Limited Progress  
 
 
 
     
 
Table (continued) 

(Continued on the next page) 

32 

1.5 including by shifting part of the tax burden from labour towards environmental, consumption and immovable property taxation, to support economic growth and employment, cohesion and the green and digital transition Since the issuance of the CSR, no measure has been taken to shift part of the tax burden from labour towards environmental, consumption and immovable property taxation.  No Progress 3.1. Simplify regulation, improve regulatory tools, and reduce administrative burden as well as regulatory fragmentation across regions "Régimen 20” provides a framework for collaboration among the national, regional, and local levels of Spanish administration to identify and address barriers faced by businesses. At the latest Sectoral Conference (December 2024) seven initial barriers were chosen, and efforts were made to address these in 2025. Its consensus-based, bottom-up approach requiring agreement among all parties, may limit its ability to target the most consequential barriers. Previous top-down streamlining efforts were deemed unconstitutional.   Limited Progress 3.2. Increase judicial efficiency by streamlining judicial proceedings   Under the RRF, Spain has reformed, organisational, and procedural aspects of the justice system. However, structural deficits in human resources prevent these reforms from achieving their intended results.  Some Progress 3.3. and further digitalizing the justice system in all regions  Under the RRF, Spain has reformed digital aspects of the justice system, notably through Royal Decree-Law 6/2023 of 19 December 2023. In addition to this, the Judicial Interoperability Hub was established, the central government signed agreements with various regions in 2025, and IT tools have improved the efficiency of the work of the Council of Transparency and Good Governance. However, continued interoperability of regional digital justice systems is needed.  Limited Progress 3.4. Facilitate business creation, innovation and expansion   Laws, which aim to address simplifying regulation and reducing administrative burden for businesses are being implemented as part of the Spanish recovery and resilience plan. This includes the Start-ups Law, Law on Business Creation and Growth, and the reform of the Insolvency Law, which were enacted in 2022.  Limited Progress 3.5. Support R&I investments The Science, Technology and Innovation Act, informal networks such as the Red IDI, Plan for Evaluation of the Ministry of Science, Innovation and Universities, the set-up of structures for evidence-based policy making and science advice mechanisms (e.g. ONAC, Oficina C). Complementary Plans, PERTES, all topic-related investments in the RRP Limited Progress  3.6. Stronger science-business linkages The Science Law and the University law are currently being implemented by Spain. However, secondary legislation is still pending to be adopted.  Limited Progress 4.1 Improve water management to better manage adaptation to current and future effects of climate change by strengthening coordination across all levels of government and administrative bodies Spain created a water observatory to monitor but does not have governance rights.  Some Progress  
 
 
     
 
Table (continued) 

(Continued on the next page) 

33 

4.2 By scaling up solutions for drought and flood risk reduction and sustainable water management in agriculture, by increasing water efficiency and expanding infrastructure investments, and by supporting the application of nature-based solutions Some measures financed with national funds. Some with EU funds such as:  • C3.I1 and C3.I12 in ES RRP (approx. EUR 1.2bn). Investments in irrigation are also done with national funds. • C5.I1 – 208 water and wastewater infrastructures • C5.I2 – restoration of riverbanks and protection against flood risks. • C5.I4 – restoration of coastal ecosystems  • Similar investments are also done with national funds i.e. wastewater infrastructure that could not fit the RRF timeframe There are some measures on flood and drought management being implemented. Wastewater infrastructure projects that could not fit the RRF timeframe. Some Progress 4.3 Invest in energy storage, electricity transmission and distribution and in cross-border electricity interconnections. • New interconnection project with PT is now being finalised (Ponte de Lima, 2026). • New law adopted allowing more investments into the grid by raising investment caps for DSO and TSO (RDL 7/2026). • RRP implementation (PERTE EHRA, PERTE and reforms and investments under measures C8.R3 and C31.I1 to C31.I6) • Update of the grid transmission plan and adoption of urgent measures (RD 997/2025) for electricity system. New storage capacities awarded (FEDER).  Development plan of the electricity transmission network in preparation.   Limited Progress 5.1 Increase the housing supply by completing the reform of the land law, reducing permitting processing times, eliminating administrative bottlenecks • Creation of Casa 47, a new state-owned housing company set to replace SEPES • Transfer of SAREB Assets to the Public Housing Stock • Launch of New Housing PERTE  • National Building Renovation Plan • Approval of the State Housing Plan 2026–2030 Limited Progress 5.2. and preventing labour shortages in the construction sector • Fast-track training initiatives by the Construction Labour Foundation  Limited Progress 5.3 Strengthen the provision of social and affordable housing • 2025 Extension of the public housing company CASA47 (SEPES); • 2025 Tax incentives for stabilizing prices in the rental market (limited measures) Some measures announced but not implemented: i.e. higher taxes for (i) big tenants (ii) tourist apartments (iii) purchase of non-EU citizens not residing in Spain Draft State Housing Plan 2026–2030 (pending, EUR 7.000 million) Limited Progress 6.1 Address child poverty and improving efficiency, coverage and adequacy of social transfers and social assistance • Adopted legislation to extend birth and care leave; • Adopted legislation amending the compatibility of the IMV with income from employment and self-employment; • Adopted legislation on nutrition in schools; • Approved sustainable development strategy.  Limited Progress  
 
 
     
 
Table (continued) 

Source: Spain's reporting and Commission assessment 

34 

6.2 Reduce skills shortages and mismatches by strengthening dual VET and by increasing lifelong learning Continued rollout of the dual VET reform (including in the MTFSP), and RRP-supported VET modernisation (modular qualifications, updated occupational standards, reskilling/upskilling training activities, also in digitalisation (C20.I1) and conversion to bilingual VET offers (C20.I3))  Lifelong learning measures under the RRP: permanent system for validation/accreditation of skills acquired through work and informal learning (C20.I1) • Skills Intelligence Strategy for Higher Education is being developed with Technical Support Instrument • Skills forecasting mechanism developed in 2025 but no details on implementation yet. • Protocol with the Chamber of Commerce to train company tutors in mentoring, to support firm participation in dual VET. • Roll out of a strengthened career-guidance strategy (incl. ~100 VET guidance units) to reduce VET drop-out and improve education-to-job matching. Limited Progress 6.3 Improve basic skills and address early school leaving, taking into account regional disparities Continued implementation of the programme for guidance, advancement and educational enrichment “PROA+” (part of the RRP and renewed with ESF+ funds until 2028) • “Strategic Plan for Inclusive Education” announced to promote a coherent approach to equity challenges (release expected in 2026) • Draft bill to limit teaching hours and class sizes. Limited Progress   
 
   
 
FISCAL 
ANNEX 2: FISCAL DEVELOPMENTS AND DEBT SUSTAINABILITY 

This annex discusses selected topics in public 
finance  and  developments  on 
fiscal-
structural  CSRs  addressed  to  Spain  in  July 
2025.  These  include  a  call  to  reinforce  overall 
defence  and  security  spending  and  readiness, 
while  implementing  a  fiscal  strategy  in  line  with 
the Council Recommendation of 21 January 2025. 
Spain  was  also  recommended  to  ensure  further 
strengthen fiscal sustainability through a review of 
the  tax  system  (see  Annex  3)  in  line  with  the 
European Council conclusions of 6 March 2025.  

direct  taxation  and  social  security  contributions, 
despite  expenditure  pressures,  with  expenditure 
expected  to  increase  over  the  forecast  horizon 
from  45.3%  of  GDP  in  2025  to  45.5%  of  GDP  in 
2027,  yet  still  remaining  below  the  EU  average. 
The  debt-to-GDP  ratio  narrowed  to  100.7%  in 
2025,  thanks  to  nominal  GDP  growth  outpacing 
the  cost  of  debt  servicing.  Driven  by  the  deficit 
reduction,  the  ratio  is  set  to  keep  decreasing  in 
2026  and  move  below  100%  for  the  first  time 
since 2019. 

On  21  July  2025,  the  Council  adopted  the 
Recommendation  endorsing  Spain’s  medium 
term  fiscal  structural  plan  (10).  The  plan 
includes an extended fiscal adjustment over seven 
years,  underpinned  by  a  set  of  reforms  and 
investment (11). 

Developments in government deficit, 
debt and public expenditure(12) 

Spain’s  government  deficit  amounted  to 
2.4%  of  GDP  and  the  government  debt-to-
GDP ratio amounted to 100.7% at the end of 
2025.  Based  on  the  Commission  Spring  2026 
Forecast, Spain’s government deficit is projected to 
level off at 2.4% of GDP in 2026, due to energy-
related  measures,  and  fall  to  2.0%  of  GDP  in 
2027.  The  2025  deficit  decreased  due  to  strong 
revenues,  particularly  from  direct  taxation,  the 
phase-out of the energy-related measures and the 
lower 
flood-related 
measures, although partly offset by an increase in 
interest  payments  and  defence  expenditure.  The 
improvement  of  the  general  government  balance 
is  set  to  be  supported  by  higher  revenues  from 

the  one-off 

impact  of 

investment, 

Rising  public  investment  is  improving  the 
quality  of  expenditure  in  Spain.  Contrary  to 
previous  shocks  that  led  to  significant  cuts  in 
public 
investment  was 
public 
preserved during the pandemic and is expected to 
reach 3.2% of GDP in 2026, up from 2.1% in 2019 
investment,  which 
(see  Graph  A2.1).  Public 
accounts  for  10.7%  of  total  investment,  benefits 
from  the  boost  provided  by  the  Next  Generation 
funds and grew by 14.1% in 2025 also helped by 
the  growth  in  gross  fixed  capital  formation  in 
defence,  accumulating  an 
increase  of  up  to 
125.4% compared with investment in 2019. Since 
the  pandemic,  and  helped  by  the  RRF,  public 
investment has focused on boosting the green and 
digital  transitions.  Public  investment  is  set  to 
slightly  decline  in  2027  due  to  the  lower  support 
from the RRF. However, Spain is projected to spend 
more on nationally financed investment than it did 
prior to the COVID-19 pandemic. 

Graph A2.1: Public investment evolution and 
breakdown (%of GDP) 

(10)  https://economy-

finance.ec.europa.eu/document/download/cfdec323-f0c2-
4e2d-adb3-
e2f847aceba4_en?filename=MTFSP_2025_ES.pdf&prefLan
g=it 

(11) Compliance by Spain with the maximum growth rates of net 
expenditure recommended by the Council is assessed in 
COM(2026)200. 

(12) Figures underpinning fiscal surveillance (net expenditure 
growth) are provided in the Fiscal Statistical Tables 
(SWD(2026)200) providing background data relevant for the 
assessment of the budgetary policies of the Member States. 

Source: European Commission 2026 Spring Forecast 

35 

0.00.51.01.52.02.53.03.5201920202021202220232024202520262027% of GDPDefenceRRF grants and other EU fundsOther nationally-financed 
 
 
 
   
 
 
While  expenditure  with  a  higher  impact  on 
GDP had remained broadly stable over three 
decades, it has slightly increased since 2019. 
This  may  be  related  to  the  impact  of  the  RRF, 
facilitating  a  more  quality-based  fiscal  strategy. 
Zooming in on the composition of spending, social 
protection  accounts  for  the  largest  share  of  total 
expenditure  (above  40%),  followed  by  health, 
general  public  services  and  economic  affair,  each 
accounting for at or above 10% of total spending.  
Since  2019,  other  economic  spending  has 
increased below 1 pp of total spending (See Graph 
A2.2).  Spending  on  transport,  communication, 
housing, defence, R&D  and environment has risen 
more  modestly,  with the  rise  in  defence  spending 
reflecting 
recent  security  developments.  By 
contrast,  spending  on  education  and  health  has 
declined.    This  trend  deserves  attention,  as  this 
category  is  generally  considered  growth-friendly 
spending category. 

Graph A2.2: Primary spending evolution and 
compositional change 

tax 

social 

security 

revenues 

to  36.8%, clearly  below 

contributions) 
compulsory 
the  EU 
amounted 
average of 39.5%. Total 
are 
projected  to  increase  to  37.8%  of  GDP  in  2025 
and  then  to  38.2%  of  GDP  in  2026  according  to 
the  Spring  2026  Forecast  (13).  While  there  is 
growing reliance on labour taxation, revenues from 
consumption and environmental taxes remain low. 
Notably,  Spain  makes  wide  use  of  reduced  rates 
and exemptions for VAT (see Annex 3). 

Cost of ageing 

in  Spain 

Total  age-related  spending 
is 
projected to rise by around 3 pps. of GDP by 
2040, to around 27% of GDP, and by 4.5 pps. 
by  2070  (see  Table  A2.1).  The  overall  increase 
is mainly  the  result  of  a projected  rise  in pension 
spending,  with 
from 
healthcare  and  long-term  care.  As  a  result,  Spain 
would  be  among  the  Member  States  with  the 
highest spending on age-related items in 2070.  

contributions 

smaller 

Gross  public  pension  spending  as  a  share  of 
GDP is projected to grow by 2.5 pps by 2040. 
By  2070,  public  pension  outlays  would  rise  by 
3 pps. of GDP, to almost 17% of GDP, the second 
highest of all Member States and compared to an 
EU average of 12%. 

Supplementary pension schemes can enhance 
the  resilience  of  the  pension  system  by 
diversifying  retirement  income  sources.  In 
Spain, however, uptake remains moderate: private 
pension 
comparatively 
underdeveloped  (see  Annex  6),  while  participation 
the  working-age 
covered  around  30%  of 
population.(14)  This  coincides  with  rising  medium-
term  public  pension  spending  pressures  and  a 
projected  decrease  in  the  replacement  rate  by 

remain 

assets 

Source:  Eurostat 
Note: Based on economic literature, the categories considered 
to have higher growth impact include education, R&D, health, 
transport and communication (See Barbiero and Cournede 
(2013), Gemmel et al. (2016), Lupu et al (2018), Cepparulo 
and Mourre (2020) and OECD (2025)).   

Spain  has tax  revenues  as  a  share  of  GDP 
that  are  below  the  EU  average,  which 
includes low revenues from consumption and 
environmental  taxes.  In  2024 Spain’s  total  tax 
revenues  as  a  percentage  of  GDP  (including 

36 

(13)  Data from the AMECO database (https://economy-
finance.ec.europa.eu/economic-research-and-
databases/economic-databases/ameco-database_en) 

(14)  Source: OECD Pension Market in Focus 2025. The highest 

participation rate in at least one supplementary pension plan 
is reported.   

510152035404550200720082009201020112012201320142015201620172018201920202021202220232024a) Evolution (% of GDP)Primary expenditureSpending with higher impact on GDP (rhs)-0.6-0.4-0.20.00.20.40.60.8EducationPublicorderCultureHealthGeneralservicesSocialprotectionInterestspendingEnvironmentDefenceR&DHousingCommunicationTransportOther economicb) Compositional change 2024-2019 (% of total spending) 
   
 
5.2 pps. between 2025 and 2040 (Table A2.1 and 
A2.2).(15)  

including 

increases 

long-term 

in  public  healthcare 
Expected 
expenditure, 
care,  
contribute  to  fiscal  risks.  Public  healthcare 
expenditure  is  projected  at  5.9%  of  GDP  in  2025 
(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. Public expenditure on long-term care 
is projected to be 0.8% of GDP in 2025 (below the 
EU  average  of  1.7%)  and  is  expected  to  increase 
by  0.2  pps  of  GDP  by  2040  and  by  a  further  0.6 
pps of GDP by 2070. 

National fiscal frameworks 

for 

its  first  decade  of  existence,  the 
In 
Independent 
Fiscal 
Authority 
Responsibility (AIReF) has quickly established 
itself  as  a  recognised  independent  fiscal 
institution  with  a  broad  mandate.  It  is  well 
staffed,  reflecting 
its  resource-intensive  tasks 
stemming  partly  from  the  decentralised  structure 
of  Spain.  However,  restricting  recruitment  mainly 
to  civil  servants  narrows  its  talent  pool  and 
independence. 
It  has  also  experienced  some 
difficulties regarding access to information, partly 
due  to  the  absence  of  a  Memorandum  of 
Understanding  with  the  Ministries  of  Finance  and 
dialogue  with 
Economy. 
the 
the  parliament  could  be 
government  and 
its 
improved.  Recently,  AIReF  has 
external  communication efforts. Based on its own 
initiative,  AIReF  has  been  subject  to  independent 
external reviews.  

Furthermore, 

increased 

Spending  reviews  are  among  the  most 
institutionally  sophisticated  and  AIReF  holds 
a central role. AIReF was mandated to review all 
regions  and 
levels  of  government 
municipalities and past comprehensive or sectoral 
reviews  have  produced  quantified 
spending 
recommendations.  There 
is  scope  for  further 
these 
action 
recommendations,  particularly  in  the  areas  of 
hospital 
prescription 

pharmaceuticals 

implementation 

including 

and 

the 

of 

in 

expenditure  and  municipal  waste  management. 
More recently, a dedicated unit was created in the 
Ministry of Finance to monitor the implementation 
of  the  recommendations of  the  spending  reviews. 
The main challenge to ensure that the government 
translates  AIReF’s  findings  into  actual  budget 
decisions 
fiscal 
decentralisation.  A 
resources  and 
capacities  needed  to  manage  risks  posed  by 
climate  change  was  done  by  the  Climate  Change 
Office in a 2025 TSI project. 

further  complicated  by 

review  of 

is 

In 

level. 

transportation 

There  are  areas  of  improvement  in  the 
management of public investment across the 
full  investment  cycle.  Strategic  planning  of 
investments  takes  place  mostly  at  sectoral  and 
transportation,  detailed 
sub-sectoral 
investment planning is carried out by each means 
of  transportation  (roads,  railways,  etc.),  while  an 
integrated planning across at least several means 
is  more  efficient.  Neither 
of 
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. (16) Capital budgeting is done mainly on an 
annual  basis  and  on  a  general  basis  there  are  no 
longer-term  capital  expenditure  ceilings  to  ensure 
capital  availability  beyond  the  budget  year.  The 
Sustainable  Mobility  and  Transport  Financing  Act, 
under Component 1 of the recovery and resilience 
improving  planning,  appraisal, 
plan,  aims  at 
prioritisation  and  budgeting  of  public  investment. 
(17) 

in 

The  treatment  of  disaster-related  costs 
remains  under  further  development  despite 
improvements 
climate 
integrating 
objectives 
in  the  fiscal  framework.  The 
Ministry  of  Finance  applies  green  budget  tagging 
to  budgetary  programmes,  while  AIReF  has 
advanced  analysis  of  climate-related  fiscal  risks. 
Its  2025  long-term  sustainability  opinion  finds 
that  physical  climate  risks  would  weaken  growth, 
revenues and the fiscal balance while raising debt, 
whereas an orderly transition could improve long-

(16)  OECD (2020), Supporting Better Decision-Making in 

Transport Infrastructure in Spain: Infrastructure Governance 
Review, OECD Publishing, Paris, 
https://doi.org/10.1787/310e365e-en 

(15)  The (gross) replacement rate refers, depending on data 

(17)  Many of the new features of the new law address AIReF’s 

availability, to both public and private pensions. It is based 
on projections from the 2024 Ageing Report.  

recommendations in the context of their Spending Review of 
Transport Infrastructure of 2019/2020. 

37 

 
 
 
Table A2.1:  Projected change in ageing-related expenditure in 2025-2040 and 2025-2070 

Source: 2024 Ageing Report (EC/EPC). 

term fiscal outcomes despite short-term costs. Its 
2025 Opinion on Fiscal  Risks also provides a first 
structured  estimate  of  environmental  fiscal  costs 
at  EUR  47.2bn  over  2005-2023,  including  EUR 
11.4  billion  from  climatological,  hydrological, 
meteorological  and  geophysical  events.  However, 
the  treatment  of  disaster-related  fiscal  costs  and 
liabilities  remains  under  further  development, 
despite  Spain’s  exposure  to  climate-  related 
shocks,  as  illustrated  by  the  autumn  2024  DANA 
and its significant budgetary impact.  

Implementation of the reforms and 
investment underpinning the 
extension of the adjustment period  

call 

for 
for  Spain  also 
The  CSRs 
implementing  the  reforms  and  investment 
underpinning 
the 
adjustment  period.  This  set  is  composed  of 
commitments 
commitments 
extending  previously  existing  RRP  measures,  as 
well  as  some  additional  commitments  of  reforms 

extension 

the  RRP, 

from 

the 

of 

Table A2.2:  Fiscal governance database indicators and public accounting maturity 

(1) “The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at country level based 
on i) the legal basis, 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) level of detail. A higher score is associated with higher rule and MTBF strength.  
The score for public accounting reflects the degree of maturity in relation to the International Public Sector Accounting Standards 
(IPSAS). Countries with an accounting maturity of 70% or more in relation to IPSAS are deemed to apply accrual accounting. For 
more information, see the report on public accounting in the EU (COM(2025)746 and accompanying Staff Working Document 
SWD(2025)396)” 
Source: Fiscal Governance Database, European Commission  

Table A2.3:  Supplementary pension schemes - Scope for expansion 

Source: European Commission. 

38 

ES24.42.50.80.2-0.72.827.3ESEU24.30.50.30.4-0.30.925.2EUES24.43.01.20.9-0.54.529.0ESEU24.30.20.60.8-0.31.325.6EUageing-related expenditure change in 2025-2040 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotalageing-related expenditure change in 2025-2070 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotalAssets in 2024 (% GDP)Participation in 2024 (% working-age population)ES10.8-5.229.5ESEU32.4-2.855.9EUGross replacement rate at retirement: (pps change 2025-2040) 2024SpainEU AverageCountry Fiscal Rule Strength Index (C-FRSI)17,2714,81Medium-Term Budgetary Framework Index (MTBFI)0,950,722025 Public accounting maturity of general government81%65% 
 
 
 
     
 
 
      
 
 
   
 
and investment.  

Based on the information provided by Spain in its 
latest  2026  Annual  Progress  Report  and  reflected 
in  Table  A2.4 
the  Commission’s 
assessment,  progress  in  implementing  most  key 
steps  due  by  Q1  2026  have  been  duly 
implemented. 

following 

In the area of taxation, the tax reform linked 
to  the  RRP  milestone  388  is  still  being 
assessed.  The  additional  tax  reform  step  aimed 
at  delivering  a  further  permanent  increase  in 
revenues by Q4 2025 is deemed completed, taking 
into  account  the  continuation  of  the  unchanged 

personal  income  tax  structure  over  the  relevant 
period. By contrast, the implementation of the tax 
benefits reform related to RRP milestone 386 has 
been postponed.   

In  several  other  areas,  the  key  steps  due  in 
2025  have  been  completed  and  two  steps 
related  to  the  digital  transformation  of 
education have been postponed. The remaining 
steps  will  be  assessed  by  the  Commission  in 
future Annual Progress Reports. At the same time, 
reforms previously assessed as completed remain 
in place. 

39 

 
 
Table A2.4:  Implementation of reforms and investment underpinning the extension 

Notes: The progress of each backward-looking key step (i.e., those scheduled for completion by 30 April 2026) is either classified as 
‘completed’ or factual information is provided. The status of forward-looking key steps in 2026 not yet completed remains blank and 
those due after December 2026 do not appear in the table, as these will be assessed by the Commission in future Country Reports. 
* These key steps correspond to milestones 400, 376, 190, 191, 102, 103, 104, 105, 289 and 254, and targets 106 and 107 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 386, 388 and 290, and target 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. 
***This key step is assessed on the basis of the Annual Progress Report by the Ministry of Finance. At this stage, and taking into 
account the continuation of the unchanged PIT structure over the relevant period, it is deemed completed. 
Source: Spain's 2026 Annual Progress Report and the Commission's assessment. 

40 

Delivery of milestone 388 of Spain’s RRP, permanently increasing government revenues by 0.3 % of GDP.Q3 2023Ongoing assessment**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 2025Completed ***Tax Benefits Reform Delivery of milestone 386, permanently increasing government revenues by at least 0.1 % of GDP. Q4 2025Will be assessed under the last RRF payment**Approval 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 2026Law 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 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 6 000 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 schools and the digital training of  70 000 teachers Q4 2025Will be assessed under the last RRF payment**Provision of connected digital devices in public and publicly subsidised schools to bridge the digital divide, and equip a minimum of 240 000 classroomsQ4 2025Will be assessed under the last RRF payment**Approval in (multi)sectoral conference(s) of a sectoral impact assessment (in cooperation with Autonomous Communities and City Councils), which defines priority areas needing standardisation and simplification of procedures across regions and local authorities.Q4 2025CompletedPublication 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 2026CompletedElectronic InvoiceEntry into force of a royal decree establishing the technical and information requirements of the system.Q4 2026Measures 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 2025Agreements with the National Social Security Institute were signed by all Autonomous Communities, except the foral regions for competence-related reasons, for 2025–2028. Agreements with mutual societies have also been signed in the Balearic Islands, Asturias, Catalonia, Ceuta and Melilla, while others are pending.Simplification of the system for the homologation of diplomasEntry into force of legislation detailing streamlined processes for the recognition of qualifications of foreign-born population.Q4 2025A Ministerial Order (date of effect: 23 October 2024) has been adopted and put in place, setting instructions for the management of homologation and equivalence procedures for foreign university qualifications.Reform 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 2025CompletedAssessment 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 *Spending ReviewsMeasureKey stepsRecommended implementation dateCOM assessment 2026Tax ReformBetter regulation and business climateRegulatory framework for the promotion of renewable generationDigital Transformation of EducationDeployment of Scheme 20Project Vienna 
 
 
 
   
 
ANNEX 3: TAXATION 

This  annex  provides  an 
indicator-based 
overview  of  Spain’s  tax  system.  It  includes 
information  on  the  tax  mix,  on  competitiveness 
and fairness aspects of the tax system, and on tax 
collection and compliance. In the area of taxation, 
the  2025  CSRs  for  Spain  highlighted  the  need  to 
strengthen  fiscal  sustainability  by  reviewing  and 
simplifying  the  tax  system.  This  includes  shifting 
part  of  the  tax  burden  from  labour  towards 
environmental, 
immovable 
property  taxation.  The  CSRs  also  recommend 
implementing the set of reforms and investments 
underpinning  the  extended  adjustment  period  for 
Spain’s  medium-term 
plan 
(MTFSP), which in the area of taxation are focused 
on increasing government revenues.  

consumption  and 

fiscal-structural 

its  traditional 

Spain  maintains 
low  tax 
revenue  ratio  as  compared  to  EU  averages. 
Table A3.1  shows  that  Spain’s  tax  revenues  as  a 
percentage  of  GDP  were,  at  36.8%  in  2024, 
2.6 percentage points (pps) below the EU average. 
The  gap  with 
the  EU  average  decreased 
significantly  between  2011  (7.2 pps)  and  2021 
(2.7 pps)  but  has  stalled  recently.  Labour  taxes 
accounted  for  a  slightly  lower  share  of  Spanish 
GDP than  the  EU  average  in  2024,  although  their 
weight  in  the  tax  mix  was  slightly  above  the  EU 
average (51.8% vs 51.5%)  (Graph A3.1).  Likewise, 
the  weight  of  capital  taxes  in  Spain’s  tax  mix 
(23.5%)  is  also  above  the  EU  average  (21.6%), 
helped by Spain’s unique wealth taxation. 

Reliance  on  labour  taxation  is  growing.  The 
average share of labour taxes in total Spanish tax 
revenues increased from 48.7% in the 2015-2019 
period  to  51.8%  in  the  2020-2024  period.  The 
main driver behind this trend has been the gradual 
increase  in  the  implicit  tax  rate  of  labour  (from 
33.3%  in  2015-2019  to  35.8%  in  2020-2024), 
propelled  by  continued  rises  in  social-security 
rates  and the  non-indexation  of  personal-income-
tax  brackets  since  2021.  A  strong  labour  market 
has also played a  remarkable  role. Social  security 
contributions  show  a  growing  trend,  from  12.2% 
of GDP in 2019 to 12.7% in 2024.  

from 

consumption 

and 
Revenues 
environmental  taxes  remain  low  in  Spain. 
Taxation  of  consumption  in  Spain  is  below  EU 
levels,  both  in  terms  of  GDP  (9.1%  in  Spain  in 
2024 vs 10.6% in the EU on average) and in terms 
of total taxation (24.7% in Spain and 26.8% in the 
EU  on  average).  Spain  has  one  of  the  highest 
actionable  VAT  gaps  in  the  EU,  resulting  in  the 

lowest implicit tax rate on consumption (13.6% in 
2024,  2.9  pps  below  the  EU  average).  Revenues 
from  environmental  taxes  increased  slightly  in 
2024  to  reach  1.6%  of  GDP,  although  remain 
below  the  EU  average  of  2.1%.  Looking  in  detail, 
Spain  is  below  the  EU  average  in  transport 
(excluding fuel) and energy taxes (1.3% and 0.2% 
of  GDP,  compared  to  1.6%  and  0.4%  in  the  EU), 
and  is  above  the  EU  average  in  pollution  and 
(0.14%  of  GDP  vs  0.08%). 
resource 
Revenues  from  property  taxes 
in  Spain  are 
relatively  high  as  a  percentage  of  both  GDP  and 
total  tax  revenues.  However,  these  property  taxes 
are  less  efficiently  structured  vis-à-vis  the  EU, 
where  recurrent  taxes  on  property  play  a  greater 
role.  The  declining  trend  in  revenues  as  share  of 
GDP  does  not  reflect  the  fast  growth  of  housing 
prices, pointing at outdated cadastral values. 

taxes 

Graph A3.1: Tax revenue by economic function in 
2024, ES (outer ring) and EU-27 (inner ring) 

Source: Taxation Trends Data, DG TAXUD 

(RRP) 

resilience  plan 

The  2025  CSRs  for  Spain  and  the  recovery 
focus  on 
and 
strengthening  its  fiscal  sustainability.  The 
difficulties of the Spanish Parliament to adopt new 
legislation  since  2023  has  impeded  Spain  deliver 
substantial  reforms  of its tax mix in  line  with  the 
requirements  of  recent  CSRs (18).  Moreover,  the 
incomplete  implementation  of  a  reform  package 
(including  increasing  diesel  taxes),  which  was  due 
to  permanently  increase  tax  revenues  by  at  least 
0.3% of GDP by Q3-2023, led to suspension of a 

(18)  However, the phasing-out of temporary reductions in the VAT 
rate for certain goods and services (including electricity, basic 
food, seed oils and pasta) and the recent implementation of 
the  waste  levy  in  townhalls  with  population  over  5 000 
residents (resulting from Law 7/2022 in transposition of EU 
Directive  2018/51),  should  lead  to  some  increases  in 
revenues  from  consumption  and environmental  taxes  in  the 
short-term. 

41 

51.526.821.651.824.723.5Taxes on labourTaxes on consumptionTaxes on capital 
 
     
 
 
 
Table A3.1:  Taxation Indicators 

(1) Forward-looking effective tax rate (KPMG).  
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2024. EU-27 refers to the median value. For more data on tax revenues as well as the methodology 
applied, see the Data on Taxation Trends webpage. 
Source: European Commission, OECD, ISORA. 

included 

the  commitments 

EUR 475 million  payment  from  the  RRP (19).  As 
part  of 
the 
adjustment  period  of  the  2025  MTFSP  that  feed 
into  the  2025  CSRs,  this  reform  is  due  to  be 
by 
complemented 
that 
permanently 
revenues  by  an 
increase 
additional 0.1% of GDP by Q4-2028 (20). 

further  measures 

tax 

in 

tax 

system 

provides 

Despite  a  high  effective  corporate  tax  rate, 
Spain’s 
several 
instruments to support business investments. 
The  effective  average  tax  rate  for  large  non-
financial corporations amounted to 25.7%, 6.4 pps 
over the EU average and the second highest in the 
EU  in  2024.  There  are  specific  regimes  to  foster 
investment,  such  as  a  business  angels’  regime, 
with a 50% tax liability reduction for investments 
in holdings of new enterprises, and advantages for 
emerging  enterprises,  which  are  taxed  at  a 
reduced  rate  of  15%  during  the  first  four  tax 
years.  There  is  also  a  –  recently  enhanced  - 
capitalisation  reserve  to  address  the  debt  bias 
through the reduction of the corporate tax base in 
an  amount  equal  to  15%  of  the  increase  of  own 
funds  in  the  tax  year.  The  Spanish  corporate 

(19)  See Commission Implementing Decision of 31 July 2025. 

(20)  See Council Recommendation of 21 January 2025. 

income  tax  (CIT)  also  includes  a  generous  R&D 
regime  and  a patent  box based  on  tax  reductions 
linked to research activities. 

regardless  of 

the  dividends 

in  R&D  activities 

However,  spending 
is 
comparatively  low,  particularly  from  private 
operators  (see  Annex 4).  The  Spanish  CIT  also 
offers  a  special  capital  risk  regime:  exemption  of 
95%  of 
the 
shareholding  level  and,  exclusive  for  regulated 
venture  capital  entities,  an  exemption  of  99%  of 
the capital gains from the transfer of shares after 
the  second  and  up  to  the  fifteenth  years  of 
maintenance of the holding. To support the green 
accelerated 
also 
transition, 
depreciation  (up  to  full  expensing)  for  energy 
facilities  using  renewable  energy,  as  well  as  for 
electric 
associated 
and 
infrastructure. 

vehicles 

allows 

Spain 

their 

Personal  income  taxation  (PIT)  also  includes 
elements  to  support  competitiveness.  The 
non-taxation of the employee’s remuneration used 
for 
retraining  may 
training  or 
contribute to upskilling of workers, while the non-
taxation  of  statutory  minimum  wage  may  reduce 
labour costs in labour-intensive sectors. 

the  update, 

Income inequality in Spain remains high, and 
limited 
the 

tax-benefit  system  shows 

42 

2019202220232024202520192022202320242025Tax structureTotal taxes (including compulsory actual social contributions) (% of GDP)34.536.836.536.839.939.739.039.4Taxes on labour (% of GDP)17.418.718.919.020.620.119.920.3of which, social security contributions (SSC, % of GDP)12.212.512.612.713.012.712.713.0Taxes on consumption (% of GDP)9.39.59.09.111.210.910.510.6of which, value added taxes (VAT, % of GDP)6.56.86.46.47.17.47.17.1Taxes on capital (% of GDP)7.88.78.68.68.18.78.58.5Personal income taxes (PIT, % of GDP)7.99.09.09.19.69.49.39.6Corporate income taxes (CIT, % of GDP)2.12.72.93.02.63.23.23.1Total property taxes (% of GDP)2.62.72.52.42.22.11.91.8Recurrent taxes on immovable property (% of GDP)1.11.11.00.91.21.00.90.9Environmental taxes (% of GDP)1.81.51.51.62.62.12.12.1Effective carbon rate in EUR per tonne of CO2 equivalentsnana71.1nanana84.8naTax wedge at 50% of average wage (single person) (*)27.928.327.928.829.732.431.631.531.531.6Tax wedge at 100% of average wage (single person) (*)38.139.139.439.840.140.139.739.939.940.0Corporate income tax - effective average tax rates (1) (*)25.725.725.725.720.019.219.019.3Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)7.27.66.86.97.88.07.97.8Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)8.37.57.1na31.832.630.7naVAT gap (% of VAT total tax liability, VTTL) (**)7.84.17.69.710.57.38.2naProgressivity & fairnessTax administration & complianceBy tax baseSome tax typesEU-27Spain 
 
 
     
 
redistributive  capacity.  The  tax-and-benefit 
system  reduced  the  Gini  coefficient  by  6.9 pps  in 
2024,  below  the  EU  average  of  7.8 pps  (21).  One 
factor adding to this situation are non-refundable 
PIT credits which benefit medium- to high-income 
households the most. Overall, Spain presents high 
income inequalities and levels of poverty, including 
child  poverty  rates  (see  Annex 14).  Families  with 
children,  particularly  single-parent  families,  are 
particularly exposed to poverty. 

Graph A3.2: Tax wedge for single and second 
earners as a % of total labour costs, 2025 

Note: The second earner tax wedge shows a household’s tax 
wedge resulting from the wage that a second earner taking 
up a job at 67% of the average wage receives. It does not 
show the total tax wedge of the household. The household is 
assumed to have a first earner at 100% of the average wage 
and no children. For the methodology of the tax wedge for 
second earners, see OECD (2024), Taxing Wages 2024. 
Source: European Commission 

labour 

tax  burden 

Spain’s 
is  more 
progressive  than  the  EU  average.  Graph A3.2 
shows  that  the  labour-tax  wedge (22)  for  Spain  in 
2025  was  lower  than  the  EU  average  for  single 

(21)  The  Gini  coefficient  measures  the  extent  to  which  the 
distribution  of  income  within  a  country  deviates  from  a 
perfectly  equal  distribution.  A  coefficient  of  0  expresses 
perfect equality where everyone has the same income, while 
a coefficient of 100 expresses full inequality where only one 
person has all the income. 

(22)  The  tax  wedge  is  an  indicator  of  the  tax  burden  on  labour 
that  can  be  assessed  at  various  levels  of  earnings.  It  is 
defined as the sum of personal income taxes, employee and 
employer  social-security  contributions  and  other  mandatory 
contributions,  expressed  as  a  percentage  of  total  labour 
costs  (composed  of  the  net  wage,  personal  income  tax, 
social 
contributions,  and  other  mandatory 
contributions).  Tax  wedge  data  in  the  2026  country  reports 
are calculated by the Joint Research Centre of the European 
Commission and based on the EUROMOD model, while in the 
past  country  reports  they  were  based  on  the  OECD  tax  and 
benefit  model.  While  the  underlying  methodology  is  very 
similar, differences in the assumptions can lead to different 
results between both models. 

security 

43 

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,  whose  spouses  earn  the  average  wage, 
faced  a  higher  tax  wedge  in  Spain  than  single 
earners  at  the  same  wage  level.  While  this 
difference  is  comparable  to  the  EU  average,  it 
should be kept in mind that both the tax wedge for 
second  earners  and  the  tax  wedge  for  single 
persons at 67% of the average wage were higher 
for Spain than for the EU average. 

is 
Monitoring  of  tax  expenditures  (TEs) 
fragmented  and  has  been  discontinued  at 
central government level since 2022 (23). Until 
2022  Spain  used  to  provide  an  annual  projection 
on  TEs  as  part  of  its  annual  draft  budget,  in 
compliance  with  a 
constitutional  mandate. 
Regional  administrations  still  prepare  their  own 
monitoring  reports,  but  the  aggregate  number  of 
TEs  at  country  level  is  unknown.  The  latest  TE 
report from the central government estimated tax 
expenditures for 2023 at EUR 45.3 bn, or 23.9% of 
the 
tax 
expenditures. TEs in the area of VAT amounted to 
EUR 25.7 bn  in  2023,  i.e.,  56.7%  of  the  total  TE. 
VAT  exemptions  were  estimated  at  EUR 10.3 bn 
and  reduced  VAT  rates  at  EUR 15.4 bn.  TEs in  the 
area of PIT were estimated at EUR 11.2 bn (24.7% 
of  the  total),  and  TEs  in  the  area  of  CIT  at 
EUR 5.7 bn  (12.6%).  The  remaining  TEs  amounted 
to EUR 2.7 bn (5.6%), including excise duties, non-
resident taxes, tax on insurance’s premium, etc. 

revenues  without 

budgeted 

tax 

In 2023, Spain had the largest VAT policy gap 
in the EU. It amounted to 59.1% of notional ideal 
revenue, compared to an EU median of 46.4%. As 
shown  in  Graph  A3.3,  it  was  explained  by  one  of 
the  highest  VAT  rate  gaps  (at  16.5%  of  notional 
ideal  revenue,  5.9 pps  above  the  EU  median)  and 
the  highest  national  policy-driven  VAT  exemption 
gap  (at  18.7%  of  notional  ideal  revenue,  almost 
double  the  EU  median).  This  is  influenced  by  the 
application  of  indirect  taxes  other  than  VAT  in 
Canary  Islands,  Ceuta  and  Melilla,  which  partially 
compensate for the forgone VAT revenue in these 
territories.  Among  categories  where  preferential 
VAT  rates  apply,  restaurants  and  accommodation 
services stand out for their large budgetary impact 

(23)  See Spain – Country Fiche, in European Commission (2025), 

Mind the Gap Report. 

29.736.440.144.840.22025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - ESSingle earner - EU averageSecond earner -  ESSecond earner -  EU average 
     
 
 
amid very limited redistributive effect (24). Contrary 
to  many  Member  States,  Spain  also  applies 
preferential  VAT  rates  to  admission  to  sport  and 
cultural  events.  According  to  the  International 
Monetary  Fund (25),  there 
is  scope  to  raise 
revenues  by  1.5%  of  GDP  while  enhancing 
economic  efficiency  by  broadening  the  VAT  base, 
limiting exemptions, and harmonising rates across 
goods and services. 

Graph A3.3: VAT gap indicators 

The rate gap and the national policy-driven exemption gap are 
two dimensions of the actionable VAT policy gap; they are 
measured as percentage of notional ideal revenues. 
Compliance gap is measured as a percentage of VAT total tax 
liability. EU refers to median values. 
Source: European Commission, Directorate-General for 
Taxation and Customs Union, VAT gap in the EU - 2025 report.  

ongoing  TEs  reform  under  the  RRP  is  also  part  of 
the  commitments  included  in  the  adjustment 
period of the 2025 MTFSP that fed into the 2025 
CSRs, aiming to permanently increase government 
revenues by at least 0.1% of GDP. 

recent 

Despite 
increases,  Spain’s  VAT 
compliance  gap  remains  below  the  EU 
median.  It  increased  to  7.6%  of  VAT  total  tax 
liability in 2023, still 0.6 pps below the EU median. 
Preliminary estimates of 2024 for Spain point to a 
further 
increase  to  almost  10%.  Spain  has 
traditionally performed well in this indicator on the 
back  of  the  efforts  of  the  tax  administration  to 
combat  fraud,  facilitate  compliance  and  digitalise 
its  tools  and  procedures.  Spain’s  workstream  on 
monitoring of compliance gaps has so far focused 
on the area of VAT and, to a lesser extent, PIT. For 
PIT 
it  follows  a  top-down  approach,  though 
estimates  are  not  publicly  disclosed.  Spain  does 
not currently produce gap estimates on CIT. 

The  Spanish  tax  administration  is  devoting 
digital  tools  to  ease  tax  compliance  and 
reduce  associated  costs.  In  particular,  the  BUC 
Project (Single  Tax Knowledge Base) disseminates 
administrative case law and interpretations to help 
taxpayers  meet  their  tax  obligations.  The  2024-
2027  strategic  plan  prioritised  the  deployment  of 
artificial  intelligence  to  assist  taxpayers;  and  the 
Virtual  VAT  Assistant  helps  taxpayers  obtain  the 
information  to  meet  their  VAT 
relevant  tax 
obligations. 

to 

assess 

approach 

Despite some recent evaluations, there is no 
the 
systematic 
effectiveness of TEs in Spain. As part of a cycle 
of  spending  reviews,  in  July  2020,  AIReF  (Spain’s 
independent  authority  for  fiscal  responsibility) 
published a report reviewing and evaluating a set 
of 
of 
EUR 34.2 billion  of  TEs,  representing  around  57% 
of  total  TEs  estimated  in  the  year  of  reference 
(2018).  Some  of  its  recommendations  following 
this  evaluation  are  still  relevant (26).  Spain’s 

suitability 

analysed 

TEs. 

the 

It 

the 

helps 

Digitalisation 

Spain’s  tax  administration  shows  good 
results in digitalisation. Advanced IT tools used 
by 
tax  administration  help  manage 
compliance,  prevent  fraud  and  assist  taxpayers 
efficiently. 
increase 
transparency,  streamline  compliance  and  better 
control  tax  collection.  It  also  allows  the  tax 
administration  to  generate  pre-filled  tax  returns, 
crosscheck declarations, detect  fraud, and provide 
taxpayers with guidance, personalised information 
and  assistance  programmes  aimed  at  simplifying 
compliance,  such  as  free  online  filing  tools,  pre-
filled tax returns or in person assistance. At 7.1%, 

(24)  European Commission (2026), Fiscal Costs and Redistributive 

Effects of Reduced VAT Rates: A Detailed Analysis by 
Product and Population Groups. 

(25)  International  Monetary  Fund  (2025),  Staff  Report  of  the 

2025 Article IV Consultation on Spain. 

(26)  Such recommendations include: gradually abolishing the joint 
taxation regime in the PIT; harmonising and coordinating  all 
existing  PIT  incentives  to  support  labour  supply;  gradually 

revising  the  reduced  VAT  rates  to  improve  the  distributive 
efficiency  of  the  tax  for  those  goods  currently  taxed  at 
reduced  rates  that  are  mainly  consumed  by  high-income 
earners;  and  equalising  the  taxation  of  diesel  with  the 
taxation of gasoline. 

44 

0%2%4%6%8%10%12%14%16%18%20%Rate gapNational policy-driven exemptiongapCompliance gapESEU 
     
 
 
 
outstanding  tax  arrears  were  well  below  the  EU 
average at the end of 2023 (30.7%). 

45 

 
PRODUCTIVITY 
ANNEX 4: INNOVATION TO BUSINESS  

to 

boost 

Innovation 

successfully 

Scoreboard (29), 

Spain’s  research  and  science  ecosystem, 
shows  progress,  but  still  faces  significant 
challenges 
its 
innovation  performance.  Over  the  past  decade, 
Spain’s  R&D  intensity  has  steadily  increased, 
reaching  1.50%  of  GDP  in  2024  (27).  However,  it 
remains well below the EU average of 2.24% and 
the national target of 2.12% (28). According to the 
European 
Spain 
remains  a  ‘moderate  innovator’  at  92.7%  of  the 
EU average, with significant regional disparities in 
innovation  performance.  Innovation  potential  is 
hindered  by  stagnating  private  R&D  investments, 
low  public  R&D  investment  and  inefficiencies  in 
public support for business innovation, and by the 
country’s  inability  to  strengthen  science-business 
linkages and translate its scientific excellence into 
innovation. Spain has remained in this position for 
over  a  decade,  highlighting  the  need  for  targeted 
improvement 
its  productivity  and 
competitiveness  through  innovation  and  a  long-
term  strategy  to  increase  R&D  investments  and 
improve  its  science  and  innovation  ecosystem. 
Spain continues to make progress in the adoption 
of digital technologies by SMEs and the uptake of 
advanced 
achieving 
technologies.  However, 
stronger  digital  uptake  will  rely  on  further  efforts 
in this field. 

to  boost 

Excellent science 

The  Spanish  science  system  is  progressing, 
but reaching national targets will depend on 
further  efforts  in  this  field.  Public  R&D 
expenditure has slowly improved to 0.66% of GDP 
in  2024  but  still  lags  behind  the  EU  average 
(0.72%)  and  is  far  from  the  national  target  of 

(27)  2025  Eurostat.  R&D  intensity  is  defined  as  gross  domestic 
expenditure on R&D as a percentage of GDP (see Table A4.1) 

(28)  The Spanish science, technology and innovation strategy for 
2021-2027  (EECTI  2021-27)  sets  the  target  for  total  R&D 
intensity for 2027. 

(29)  European 

European 

Commission, 

Innovation 
2025 
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 and for Spanish regions in 
the Regional Innovation Scoreboard 2025.  

1.25% (30).  Moreover,  regional  disparities  persist. 
Five  regions  are  classified  as  ‘strong  innovators’, 
with Madrid,  Catalonia,  Navarre  and  the  Basque 
Country  joined  for  the  first  time  by  Valencia (31), 
while  most  regions  are  ‘moderate  innovators’,  led 
by  Galicia  and  Aragon.  The  regions  with  low  R&D 
investment  continue  to  exhibit  low  innovation 
performance,  emphasising  the  regional  gaps  (see 
Annex  19).  Scientific  publications  within  the  top 
10%  most-cited  scientific  publications  worldwide 
have  remained  stable  at  around  8.5%,  and 
international  co-publications  have  reached  51.9% 
of total publications. Both figures are below the EU 
average 
(see  Table  A4.1).  European  funding 
programmes  such  as  the  recovery  and  resilience 
plan 
Regional 
the 
(RRP) 
Development 
provided 
significant  support  for  Spanish  research  and 
innovation (R&I). RRP support has represented over 
50%  of  the  funds  for  R&I (32),  with  further 
investment  and  reforms  needed  to  boost  its 
scientific performance. Spain could go beyond the 
research 
consolidation  of 
ecosystem and boost its performance in this area 
through stable measures that mobilise, coordinate 
and steer increased public support and investment 
for  R&D  and  that  endure  over  a  long  time, 
especially after 2026, post-RRP.  

European 
have 

its  science  and 

and 
Fund 

(ERDF) 

for 

potential 

improving 

Spain’s  research  and  innovation  governance 
its 
shows 
effectiveness  and  efficiency.  The  Spanish  R&I 
governance  system  has  shared  responsibility 
between 
regional 
central  government  and 
authorities. It is characterised by a vast network of 
funding 
public 
and 
programmes  at  both  national  and 
regional 
levels (33). However, the fragmentation and overlap 

institutions 

research 

(30)  Spain  sets  a  target  for  R&D  public  expenditure  to  reach 
1.25%  of  GDP  in  2030  (Law  on  Science,  Technology  and 
Innovation  (Reform  Act  17/2022  sept  2022).  This  reform 
was  included  to  underpin  the  extension  of  the  fiscal 
adjustment  period  (Council  Recommendation  endorsing  the 
national  medium-term  fiscal-structural  plan  of  Spain 
(14Jan2025). 

(31)  Regional Innovation Scoreboard 2025: profiles of innovation 

performance of regions in Spain.  

(32)  NextGen  Monitor 

la 
financiación pública de la I+D+I: Presupuestos Generales del 
Estado PGE (COSCE 2026).  

(Cotec  2026)  and  Análisis  de 

(33)  EECTI (2021-27): Analysis of the Spanish system of science, 

technology and innovation and of its environment.  

46 

 
 
 
 
 
 
 
of  R&I 
initiatives  have  persisted  over  time, 
resulting in misalignment, lack of coordination and 
slow  decision-making (34).  Complex  administrative 
and  reporting  requirements  overburden  recipients 
of 
the 
funding  schemes  and  slow  down 
implementation  of  R&I  activities,  especially  for 
innovative firms seeking public support for R&I (35). 
Positive  steps  forward  in  this  respect  have  come 
from  the  Science,  Technology  and  Innovation  Act, 
the  Red  IDI  informal  network,  and  the  evaluation 
plan  of  the  Ministry  of  Science,  Innovation  and 
Universities (36).  In  addition,  Spain  has  established 
structures  for  evidence-based  policymaking  and 
science  advice  mechanisms  (e.g.  ONAC,  Oficina 
C) (37).  However,  all  these  initiatives  would  be 
better  accompanied  by  a  stronger  science 
ecosystem  that  is  more  efficient  and  effective, 
with  increased  investment  (81.8%  of  respondents 
to  a  national  survey  demand  more  public 
investment  in  science  and  technology) (38).  R&I 
stakeholders  (researchers,  SMEs,  etc.)  claim  that 
the  current  frameworks  related  to  coordination 
and  administrative  complexity  have  not  fully 
tackled  the  ongoing  fragmentation  and  lack  of 
efficiency (39).  The  successful  linkage  between 
reforms  and 
investments  has  been  clearly 
demonstrated,  with  the  implementation  of  R&I 
policies 
effective 
investments (40)  and  the  evaluation  of  measures 
playing  an  important  role  in  improving  efficiency 
In  order  for  Spain’s  R&I 
and  effectiveness. 
and 
innovation 
boost 
ecosystem 

contributing 

to  more 

to 

(34)  Informe  Fundación  CYD,  2024  and  2025,  Cruz-Castro  and 
Sanz-Menéndez,  2022,  in  Europeanisation  of  Public  Policies 
in Spain.  

(35)  Foro  de  Empresas 

Industria  e 
Innovación (IND+I) , April 2023, Propuestas para políticas de 
innovación en España 2023-2027,. 

Innovadoras 

(FEI)  and 

(36)  Law  on  Science,  Technology  and  Innovation  (Reform  Act 
17/2022  sept  2022);  R&D&I  Policy  Network  (Red  IDI);  and 
Evaluation  Plan  of  the  Ministry  of  Science,  Innovation  and 
Universities (2021-2027).   

(37)  ONAC  is  responsible  for  strengthening  the  role  of  scientific 
knowledge  in  the  decision-making  of  the  government  and 
ministries.  Office  C  offers  scientific  evidence  to  Parliament 
and  stimulates  dialogue  between  the  scientific  community 
and parliamentary officials.  

(38)  FECYT 2025, Public Perception of Science and Technology in 

Spain presentation of results in June 2025.  

(39)  OECD, 2025, Economic Survey Spain; Cotec, 2024, Balance y 
propuestas  de  mejora  al  PRTR;  FEI  and  IND+I,  2023, 
Propuestas  para  políticas  de  innovación  en  España  2023-
2027. 

(40)  European Commission, 2025, Study on the R&I Measures in 

competitiveness, it would benefit from a long-term 
coordinated  R&I  governance, 
strategy  with 
including  both  targeted  reforms  and  increased 
investments  (see  Graph  A4.1  on  developments  in 
R&D  intensity,  which  includes  the  projections 
needed to reach Spain’s national targets).    

Graph A4.1: Evolution of R&D intensity (2014-
2024) (1) 

(1) Includes national targets 
Source: DG R&I based on Eurostat 

Business innovation 

Business  innovation  remains  weak  and  is 
characterised  by  low  private  investment  in 
R&D,  which  is  relatively  concentrated  in  a 
smaller  number  of  innovative  firms.  Private 
investment,  although  making  progress, 
R&D 
reached a modest level of 0.84% of GDP in 2024, 
still  well  below  the  EU  average  of  1.49%.  The 
number  of  firms  carrying  out  R&D  activities  has 
been  decreasing  in  recent  years,  pointing  to  a 
stronger  concentration  of  R&I  activities  in  fewer 
companies (41).  Innovation  outputs  are  weak  in 
Spain: in 2022, patent applications filed under the 
Patent  Cooperation  Treaty  per  billion  of  GDP  (in 
purchasing  power  standards/PPS  EUR)  stood  at 
1.2%,  well  below  the  EU  average  of  2.8%  (Table 
A4.1). Spain would benefit from participating in the 
unitary patent system as it offers key advantages 
in 
boosting 
innovation 
competitiveness  (42).  Although  Spanish  companies 
increased their spending on innovative activities by 
13% between 2022 and 2024, innovation intensity 
represents 0.93% of companies' total revenue and 

promoting 

and 

(41)  Evolución de la I+D (Cotec 2025).  
(42)  Spain has not signed the Unitary Patent Court Agreement or 

the Recovery and Resilience Facility.  

the enhanced cooperation framework.  

47 

0.000.501.001.502.002.5020142015201620172018201920202021202220232024202520272030EU27SpainSpain PrivateSpain Public2.12%1.25% 
 
   
 
has  been  witnessing  a  downward  trend  since  in 
2020 (43).  

in 

low 

Spain’s weak innovation capacity stems from 
a  business  structure  that  focuses  on  low 
technology sectors. Spain’s business structure is 
highly fragmented, consisting mainly of small and 
medium-sized  enterprises 
technology 
sectors such as services (tourism, retail,  financial) 
and  agri-food.  The  country  has  experienced  low 
productivity  growth  for  several  decades (44)  (see 
Annex 5). In the global innovation index (GII), Spain 
ranks  18th  in  Europe  (and  29th  in  the  world) (45). 
The GII shows that Spain’s main weakness was in 
the  institutional  dimension.  This  includes  aspects 
such  as  operational  stability  for  businesses, 
government effectiveness, regulatory environment, 
policy  stability  and  entrepreneurship  policies.  In 
contrast, Spain shows strengths in aspects related 
to  infrastructure.  These  include  information  and 
communication technology access and ICT use, as 
well  as  government  online  services  and  general 
infrastructure. Business expenditure on R&D in the 
ICT  sector  as  a  percentage  of 
total  R&D 
expenditure  is  17.99%  (EU  average:  17.94%) (46). 
According 
Industrial  R&D 
the  2025  EU 
Scoreboard (47),  in  the  EU-800  ranking  there  are 
26  Spanish  companies  investing  EUR  6.7  billion 
altogether, which is 2.7% of the total EU-800. The 
three  top  Spanish  R&D  investors,  accounting  for 
over 60% total investments, are services-oriented 
and are from the banking sector (EUR 2.1 billion), 
software 
and 
telecommunications (EUR 646 million). 

(EUR 1.3 

services 

billion) 

to 

Spain’s  public  support  to  business  R&D  has 
increased,  although  bureaucratic  hurdles 
remain.  Direct  and  indirect  support  mechanisms 
have  witnessed  some  growth  since  2017  (see 
Table  A4.1).  However,  studies  show  a  lack  of  use 
due  to  difficulties  caused  by  heavy  bureaucracy 

(43)  Encuesta sobre innovación en las empresas (Cotec 2025) 
based on data from INE (2025). Innovation intensity is 
measured by the ratio of total R&D (internal and external) 
costs plus other innovation costs compared to a firm’s total 
revenue.  

(44)  OECD,  2025,  Economic  Survey  Spain,  and  OECD,  2024. 

Reviving Broadly Shared Productivity Growth in Spain.  

(45)  Global Innovation Index 2025. 

take-up  of 

for firms (48). Assessing these issues could ensure 
these 
simplification  and  better 
schemes. Spain would also benefit by improving its 
policy mix to support innovation, especially among 
include  reforms,  but  also 
SMEs.  This  would 
indirect 
investments 
increased 
measures to leverage private R&D. 

direct 

and 

to  advance 

Uptake  of  digital  technologies  by  firms  is 
steadily  increasing,  and  Spain  is  making 
strong  efforts 
its  digital 
technologies  and  infrastructure.  The  country 
performs  above  the  EU  average  for  its  level  of 
basic digital intensity for SMEs, reaching 75.4% in 
2025.  The  uptake  of  AI  by  enterprises  remains  in 
line  with  the  EU  average,  standing  at  20%.  Cloud 
lags  behind  the  EU 
adoption  by  enterprises 
average  (38% vs  47%),  although  the  use  of  data 
analytics  stands  considerably  above  the  EU 
average  (47%  vs  40%).  To  support  the  further 
adoption and development of digital technologies, 
Spain  is  introducing  new  measures  and  adapting 
existing  ones.  Spain  has  developed  reforms  and 
investments  under  its  RRP,  including  the  Digital 
Spain  Agenda.  Further  boosts  to  innovation  could 
come from continuing efforts on the digitalisation 
of firms in particular, encouraging the adoption of 
advanced technologies. 

by 

This 

scientific 

linkages  need 

Science-business 
further 
improvement.  Science-business  collaboration, 
public-private 
measured 
co-publications, reached 7.2% of the total number 
of  publications  in  2024, below  the  EU  average  of 
7.6%. 
co-publication 
public-private 
collaboration,  however,  remains  concentrated  in  a 
small  number  of  universities,  highlighting 
significant  institutional  and  regional  imbalances. 
Public  expenditure  on  R&D  financed  by  business 
enterprises  (national)  as  a  percentage  of  total 
public  expenditure  on  R&D  stands  at  5.7%  (EU 
average: 7.5%) (49). Studies have shown that Spain 
has 
and 
structural, 
framework  weaknesses  that  are  unfavourable  for 
stimulating  business-academic  collaboration (50). 
The recommendations made by an in-depth OECD 

significant 

regulatory 

(48)  OECD,  2025,  Economic  Survey  Spain;  FEI  and  IND+I  (April 

2023) and Informe Cotec, October 2024.  

(49)  See Eurostat.   

(46)  Eurostat. Latest data 2023; EU average is an estimation.  

(47)  European  Commission:  Joint  Research  Centre,  2025,  The 

2025 EU Industrial R&D Investment Scoreboard.  

(50)  Informe Fundacion CYD 2025. Chapter 3 and OECD STI Policy 
Papers.  Improving  knowledge  Transfer  and  collaboration 
between science and business in Spain.  

48 

 
 
 
study  (51)  have  not  been  fully  addressed.  These 
include  improving  the  level  of  professionalisation 
of technology transfer and knowledge valorisation 
intermediaries,  introducing  measures  to  better 
support  private  R&D  investment,  and  improving 
the governance of public research organisations to 
make  them  more  performance-based.  In  recent 
years Spain has developed some measures in this 
field, 
the  complementary  plan  for 
transfer (52).  However,  no  further 
technology 
measure has been announced following the 2025 
CSR  on  supporting  and  strengthening  science-
business linkages.  

including 

Entrepreneurial dynamism 

Spain  has  a  dynamic  start-up  scene  but 
struggles  to  convert  early-stage  strength 
into  sustainable  scale-up  growth  due  to 
structural  financing,  governance  issues  and 
regulation. Spain has been successful in building 
a  modern  start-up  ecosystem,  with  over  6 200 
start-ups.  That  figure  grew  by  29.7%  in  the  past 
year,  reaching  14th  place  in  the  Global  Startup 
Ecosystem  Index  2025 (53).  Spain  has  a  strong 
seed-stage ecosystem but a severe lack of growth 
capital.  This  makes  it  difficult  for  start-ups  to 
transition  into  scale-ups,  with  only  ~15–20%  of 
investors 
ventures, 
on 
contributing  to  a  gap  in  late-stage  financing (54). 
According  to  a  recent  report  by  the  OECD,  the 
Spanish  entrepreneurship  and  start-up  ecosystem 
performs well in terms of markets and leadership, 
but  shows  weakness  in  networks,  talent  and 
knowledge.  Measures  highlighted  as  necessary  in 
the  report  were  the  need  to  improve  start-ups’ 
networks, 
knowledge 
into 
cooperation  and  conversion  of  research 

capabilities, 

focusing 

transfer 

scaling 

(51)  OECD, 2021. Improving knowledge Transfer and 

collaboration between science and business in Spain. OECD 
Science, Technology and Industry Policy Papers.   

(52)  Others  include  the  knowledge  transfer  and  collaboration 
plan,  approved  in  December  2022,  and  the  pending  update 
Minister  Morant  announced.  The  plan  for  talent  attraction 
and  the  strategic  projects  for  economic  recovery  and 
transformation (PERTE) include partial measures.  

and 

leading 

smaller 

affecting 

increased 

often 
regulatory 

to 
frameworks, 

commercial innovation (55). In addition, the volume 
in  Spain  are 
and  complexity  of  regulations 
in  recent  years, 
reported  to  have 
particularly 
newer 
businesses.  Spanish  firms  highlighted  business 
regulations  as  a  major  obstacle  to  investment 
compared  with  the  EU  average  (55%  vs  34%), 
while for labour market regulations the figure was 
49% (EU average: 27%) (56).  Innovation support is 
also  dispersed  across  ministries  and  autonomous 
overlaps, 
communities, 
inconsistent 
and 
coordination  challenges  across  programmes.  The 
introduction  of  the  Start-up  Law  in  2022  was  an 
important  milestone 
in  pushing  the  start-up 
agenda  further  and  aligning  the  efforts  of  public 
institutions  and  private  stakeholders  to  catch  up 
with  stronger  European  start-up  hubs.  However, 
Spain’s major hubs, such as Madrid and Barcelona, 
face  challenges  in  achieving  global  scale  and 
from 
critical  mass 
becoming  internationally  competitive.  Additional 
improvements could strengthen certain aspects of 
the  entrepreneurial  ecosystem,  for  example  by 
reducing  regulatory  differences  between  regions, 
improving  insolvency  frameworks,  and  optimising 
fiscal  policies,  in  line  with  the  CSR2025  on 
facilitating  business  creation, 
innovation  and 
expansion.  

local  scale-ups 

limiting 

Difficulties in accessing financial support for 
R&I,  in  particular  for  SMEs,  continue  to 
hamper innovation in Spain. Venture capital as 
a percentage of GDP slightly decreased to 0.06 in 
2024,  down  from  the  year  before,  and  start-up 
stage funding stands at only 0.03. Both figures are 
the same as the EU average (see Table A4.1) (see 
Annex 6). 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 (57).  Studies  claim  that  the  current 
support  measures  (e.g.  tax  incentives)  need  to 
improve and include other actions such as training 
in  tools  and  methodology,  together  with  advice 
and management of R&D projects to help develop 
R&D  capabilities  beyond  the  execution  of  R&D 

(55)  OECD, 2026, Entrepreneurial Ecosystem Diagnostics of Spain, 

OECD Studies on SMEs and Entrepreneurship. 

(56)  European Investment Bank, 2025, EIB Investment Survey 

(53)  Startupblink,  2025,  Global  Startup  Ecosystem  Index.  See 

2025: Spain overview. 

Spain fiche.  

(57)  Cotec,  2024,  Plan  de  Recuperación,  Transformación  y 

(54)  Tech Scaleup Spain 2025 Report - Mind the Bridge. 

Resiliencia: Balance y propuestas de mejora. 

49 

 
 
 
on 

for 

the 

progress 

social  economy  also 

creation  as  a  mandatory  university  subject. 
strategy’s 
However, 
implementation,  including  education  measures,  is 
unclear,  as  no  reporting  or  action  plan  has  been 
made  available.  Spain’s  2023–2027  national 
frames 
strategy 
entrepreneurship  education  within  the  objectives 
of  innovation,  sustainability  and  social  cohesion, 
encouraging  cooperation  between  education  and 
the  economic  sector.  Some  regional  initiatives  – 
such  as  Aprendiendo  a  emprender:  Crea  tu  propia 
cooperativa in the Madrid Community and EMPRÉN 
in  the  Valencian  Community  –  provide  structured 
experiences  connecting  schools  with  businesses. 
Under  these  schemes,  students  create  and  run 
enterprises  and  receive  mentoring,  supported  by 
teacher  training.  In  general,  however,  practical 
entrepreneurial  experiences  are  still  mostly 
extracurricular.  Entrepreneurship  is  not  defined  as 
a 
for 
teachers  or  as  a  compulsory  component  of  initial 
teacher 
training 
opportunities  are  provided  in  some  autonomous 
communities. 

standalone  professional 

competence 

continuous 

training, 

but 

projects (58).  In  addition,  firms  demand  better 
coordination  of  the  EU,  national  and  regional 
support  frameworks  to  increase  the  effectiveness 
of public-private collaboration (59). 

A  suitable  talent  pool  and  skills  for  the 
innovation ecosystem remain a challenge for 
Spain.  Graduates  in  the  field  of  computing  were 
6.8  per  thousand  of  the  population  aged  25-34, 
which  is  above  the  EU  average  of  3.8.  New 
graduates in science and engineering reached 16.9 
per  thousand  of  the  population  aged  25-34  in 
2024, also just above the EU average of 16.8. (see 
Table  A4.1)  (see  Annex  13).  However,  businesses 
cite  the  lack  of  skilled  staff  as  a  significant 
obstacle  to  investment  (58%  Spain,  vs  52%  EU 
average) (60)  and 
researchers’  employed  by 
business 
thousand  active 
population) below EU average of 5.9 in 2024. This 
suggests  gaps  in  specific  segments  of  the  talent 
pool,  particularly  in  certain  technical  fields.  In 
response,  RRP  includes  measures  to  tackle  skills 
shortages  for  digital  and  ICT,  alongside  other 
policies targeting skills development, digitalisation 
and  vocational  training.  The  success  of  these 
measures will need to be assessed over time.  

reached  3.1 

(per 

is 

monitoring 

In  Spain,  entrepreneurship  education 
is 
levels  and 
embedded  across  education 
promoted  in  several  strategies,  although 
systematic 
lacking. 
Entrepreneurial  skills  are  developed  across  the 
primary  and  secondary  curricula,  including 
in 
vocational  education  and  training,  as  part  of 
Spain’s skills-based education framework. At lower 
and  upper  secondary  levels,  entrepreneurship  can 
also  be  delivered  through  specific  subjects  or 
modules,  depending  on  curricular  decisions  taken 
by the autonomous communities. Although there is 
no  single  national  strategy  on  entrepreneurship 
education,  the  broader  2030 
‘Entrepreneurial 
Nation’  strategy  (España  Nación  Emprendedora) 
underscores  that  education  is  one  of  its  central 
pillars, putting forward goals such as greater focus 
on  STEAM  (science,  technology,  engineering,  arts 
and mathematics), practice-based learning and the 
introduction  of  entrepreneurship  and  business 

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

(59)  EY Insights. 2024.  

(60)  European Investment Banks 2025, EIB Investment Survey 

2025: Spain overview. 

50 

 
 
 
 
 
 
 
 
Table A4.1:  Key Innovation Indicators 

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

51 

R&D intensity (gross domestic expenditure on R&D as % of GDP)1.351.211.401.401.491.50:2.243.44Public expenditure on R&D as % of GDP0.650.570.610.610.650.66:0.720.64Scientific publications of the country within the top 10% most-cited publications worldwide as % of total publications of the country 9.459.038.868.52:::9.4412.31Researchers (FTEs) employed by public sector (Gov+HEI) per thousand active population3.903.404.004.104.404.50:4.30:International co-publications as % of total number of publications39.8047.2449.3149.4950.8551.92:57.24:Business enterprise expenditure on R&D (BERD) as % of GDP0.700.640.780.790.840.84:1.492.69Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP0.350.290.360.330.35::0.470.30Researchers employed by business per thousand active population2.002.002.502.803.003.10:5.9:Patent applications filed under the Patent Cooperation Treaty per billion GDP (in PPS €)1.761.651.661.23:::2.812.20Employment share of high-growth enterprises measured in employment (%):::0.850.65*::0.87:SMEs with at least a basic level of digital intensity% SMEs (EU Digital Decade target by 2030: 90%)::::60.53:75.3571.39:Data analytics adoption% enterprises (EU Digital Decade target by 2030: 75%)::::38.0140.9447.0739.85:Cloud adoption% enterprises (EU Digital Decade target by 2030: 75%)::::27.2533.1037.9246.69:Artificial intelligence adoption % enterprises (EU Digital Decade target by 2030: 75%)::::9.1811.3120.2719.95:Public-private scientific co-publications as % of total number of publications5.286.026.296.846.887.21:7.62:Public expenditure on R&D financed by business enterprises (national) as % of GDP0.050.030.040.040.04::0.060.02Total public-sector support for BERD as % of GDP:0.230.250.25::0.21:R&D tax incentives: foregone revenues as % of GDP:0.130.140.14::0.100.16BERD financed by the public sector (national and abroad) as % of GDP 0.130.080.100.110.11:0.11:Venture capital (market statistics) as % of GDP (calculated as a 3-year moving average)0.020.030.050.080.070.06:0.06:Seed stage funding share (% of GDP)0.000.000.000.000.000.00:0.01:Start-up stage funding share (% of GDP)0.010.020.030.030.030.03:0.03:Later stage funding share (as % of GDP)0.010.010.020.040.040.02:0.03:New graduates in science & engineering per thousand population aged 25-349.8615.8215.4516.3016.2916.93:16.82:Graduates in the field of computing per thousand population aged 25-342.082.923.645.305.946.81:3.84:Innovative talentR&D investment & researchers employed in businessesInnovation outputsDigitalisation of businessesAcademia-business collaboration Public support for business innovationFinancing innovationScience and innovative ecosystemsSpain2010201520202022202320242025EU average (1)USHeadline indicator 
 
 
 
 
   
 
ANNEX 5: SINGLE MARKET AND INDUSTRY 

is  key 

for  untapping 

Building  on  Spain’s  current  economic growth 
scenario  to  further  introduce  and  complete 
reforms  and 
the  necessary  structural 
investment 
its 
Spain’s  2025 
competitiveness  potential. 
country‑specific  recommendations  highlighted  the 
need  to  simplify  regulation,  improve  regulatory 
tools and reduce administrative burden as well as 
regulatory fragmentation across regions. They also 
pointed at facilitating business creation, innovation 
and  expansion,  supporting  R&I  investments  and 
stronger  science-business  linkages  (CSR.2025.3). 
In  recent  years,  Spain  has  taken  some  steps  to 
reduce administrative burdens, address regulatory 
regional market fragmentation, and to improve its 
business  environment,  notably  through  reforms 
linked  to  the  recovery  and 
and 
resilience  plan (RRP)  and commitments  within  the 
medium-term  fiscal-structural  plan  (MTFSP)  (61). 
This  includes  the  adoption  of  the  Start-ups  Law 
and the Law on Business Creation and Growth, as 
well 
regulatory 
to 
fragmentation across regions in the context of the 
20th Regime.  

investment 

address 

efforts 

as 

regional 

Yet,  Spanish  firms  continue  to  face  several 
challenges that hinder their competitiveness. 
These obstacles include issues related to business 
regulation  and  administrative  burdens  (including 
regulatory 
permitting), 
market 
fragmentation, 
limited  access  to  non-banking 
finance  (see  Annex  6),  as  well  as  barriers  on 
entrepreneurship,  scaling-up  and  innovation  (see 
Annex  4).  Moreover,  Spain  faces  significant 
challenges  in  aligning  with  EU  single  market 
regulatory 
directives,  has  a  high 
restrictiveness  in  the  retail  sector,  and  does  not 
participate  in  the  unitary  patent  system.  Spain’s 
net-zero  industry  would  benefit  from  improving 
coordination,  facilitating  the  permitting  process 
and  reducing  its  dependencies  to  support  scaling 
up. Ensuring access to the electricity grid, together 
with  low  and  stable  energy  prices,  is  key  for  the 
the 
development  of  net-zero  projects  and 
decarbonisation  of  energy-intensive  industries,  as 
well  as 
transport.  Spain’s  energy-intensive 
industries need to have monitoring for their levels 
of exposure, distress and coping ability in response 
to  sudden  declines  in  activity.  Finally,  the  Law  on 

level  of 

Industry  and  Strategic  Autonomy 
approval.  

is  pending 

Business dynamics 

The  Spanish  economy  is  characterised  by  a 
less 
large  share  of  SMEs,  which  are 
productive  than  large  firms.  SMEs  contributed 
to 60.9% of Spain’s gross value  added (GVA)  and 
67.1% of employment (62) in 2024. However, their 
productivity  is  significantly  lower  compared  to 
large  firms.  Large  firms,  which  make  up  only 
0.16%  of  businesses  in  Spain,  are  twice  as 
productive  as  micro  firms  (63).  However,  medium-
sized  companies  are  experiencing  significant 
increases  in  productivity  and  profitability,  and 
since  COVID-19  there  is  a  general  increase  in 
productivity of small companies across all sectors. 
Moreover,  there  are  signs  that  the  average 
company size is increasing.  

in  Spain 

is  a 
Low  business  dynamism 
symptom  of  existing  barriers  to  business 
growth. Spain’s business birth rate was 9.11% in 
2023, which together with a death rate of 7.61%, 
gives a total  business churn rate of 16.91%, with 
some  differences  across  regions.  Illes  Baleares, 
Canarias  and  Comunidad  Valenciana  present  the 
highest  rates,  while  Galicia,  Castilla  y  León  and 
Rioja  the  lowest  (64).  This  places  Spain’s  business 
dynamism  below  the  EU  average  churn  rate  of 
18.97%  (EU  birth  rate  10.46%;  EU  death  rate 
8.51%) (65). The 2022 reform of the Insolvency or 
Bankruptcy  Law,  included  in  the  Spanish  RRP  and 
MTFSP,  is  being  implemented  to  ease  bankruptcy 
filing  and  improve  business  dynamism.  Moreover, 
post-entry  growth  is  significantly  lower  than  in 
peer 
in  non-financial 
services, reflecting challenges in scaling up, and at 
the  same  time  the  share  of  start-ups  has  fallen 
behind peer countries in recent years (66). 

countries,  particularly 

(62)  EC, 2025 SME country fact sheet – Spain. 

(63)  OECD, OECD Economic Surveys: Spain 2025 | OECD. 

(64)  INE, Demografía armonizada de empresas 2023. 

(61)  Medium-term fiscal-structural plan. Council Recommendation 
of 21 January 2025 endorsing the national medium-term 
fiscal-structural plan of Spain 

(65)  Eurostat, [bd_size] Business demography by size class and 

NACE Rev. 2 activity. 

(66)  OECD, OECD Economic Surveys: Spain 2025 | OECD. 

52 

 
 
 
 
 
 
its 

(including 

Structural barriers prevent small firms from 
scaling up. These include administrative burdens, 
limited  access  to  non-banking  finance, 
lower 
technologies,  weaker 
adoption  of  advanced 
innovation  capacity 
regulatory 
including 
environment)  and  skills  shortages, 
managerial  skills.  Furthermore,  limited  networks 
and collaboration across firms hamper knowledge 
diffusion and market integration. Altogether, these 
factors, alongside a relatively risk-averse business 
culture,  are  important  bottlenecks  to  generate 
productive start-ups and scale-ups in Spain (67) (68) 
(CSR 2025.3 and CSR 2025.6). The implementation 
of  the  2022  Law  on  Start-ups  and  Law  on 
Business  Creation  and  Growth,  as  part  of  the 
Spanish  RRP,  aim  to  address  parts  of  these 
structural  barriers.  Through  the  Technical  Support 
Instrument,  Spain  is  receiving  support  to  assess 
the  impact  of  the  Start-ups  Law.  The  project  will 
support  the  development of  a  tailored  framework 
for  evaluating  public  policies  aimed  at  supporting 
innovative entrepreneurship. 

total 

Labour  productivity  and 
factor 
productivity  have  largely  stagnated.  In  2024, 
the  labour  productivity  level  in  Spain  reached 
96.4%  of  the  EU  average,  marking  its  peak  since 
2020. However, projections show that it may start 
losing  ground  relative  to  the  EU  average  in  the 
coming years, reaching 94.8% in 2027. There is no 
one  major  factor  to  single  out  as  the  root  cause 
for  Spain’s  productivity  stagnation,  as  firm 
productivity  tendencies  vary  across  firm  size  and 
sector. Spain's sluggish productivity growth is also 
partly  attributed  to  weak  total  factor  productivity 
In  July  2024,  Spain 
(TFP)  performance 
established  the  Spanish  Productivity  Council  (70) 
under  the  Ministry  of  Economy,  Trade  and 
Enterprise  (MINECO).  Its  mission  is  to  provide 
diagnosis  and  analysis  on  the  evolution  of 
productivity  and 
their 
distributive 
in  Spain,  within  the 
framework  of  the  euro  area  and  the  European 
Union, as well as public policies with an impact on 
these dimensions.  

competitiveness  and 

implications 

(69). 

(67)  OECD, OECD Economic Surveys: Spain 2025 | OECD. 

(68)  European Commission Startups, scaleups and 

entrepreneurship - July 2025 - - Eurobarometer survey. 

(69)  European Commission. 

(70)  Spanish Productivity Council - Consejo de la Productividad de 

Increasing and allocating private investment 
more  efficiently  could  help  Spain  leverage 
current  economic  growth  and 
increase 
productivity.  Private  investment  in  Spain  has 
remained  stagnant  for  the  last  three  years  at 
13.1%  of  GDP,  although  this  figure  is  still  above 
EU  average  (12.6%)  (71).    The  Spanish  economy 
could benefit from channelling private investment 
into  highly  productive  and  innovative  sectors  and 
areas such as intangible assets, especially patents, 
or  the  digital  sector,  to  consolidate  the  ongoing 
economic  growth.  Overall,  investment  in  research 
and innovation remain very low (CSR 2025.3) (See 
also Annex 4 Innovation to business). Furthermore, 
public investment represented 2.7% of the GDP in 
2024,  coming  down  0.3  percentage  points  from 
2023.  This  places  Spain  one  percentage  point 
below the EU average of 3.9% (72). 

Spain  continues  to  attract  foreign  direct 
investment  (FDI),  although  it remains behind 
Europe’s leading FDI destinations. FDI in Spain 
increased  by  15%  in  2024,  contrasting  a  5% 
annual  decrease  in  Europe,  which  reached  its 
lowest  FDI  levels  in  nine  years.  This  increase  in 
Spain  corresponds  to  351  projects,  placing  Spain 
4th in Europe. Factors contributing to this rise in FDI 
include  solid  economic  performance,  affordable 
labour  costs. 
energy  prices  and  competitive 
Meanwhile, 
economic 
instability  and  commercial  tariff  increases  have 
Europe. 
disincentivised 
Nevertheless,  despite  experiencing  significant 
annual  decreases,  France  (-14%,  1025  projects), 
the  United  Kingdom  (-13%,  853)  and  Germany  (-
17%,  608)  remained  the  top  FDI  destinations  in 
Europe in 2024 (73).  

geopolitical 

investment 

tensions, 

across 

Investment  Bank 

Uncertainty  about  the  future,  business 
regulation  (including  permitting)  and  labour 
market  regulation  are  considered  the  main 
investment  obstacles.  According  to  the  2025 
European 
Investment 
to 
Survey, 
investment  as  reported  by  Spanish  firms  are:  (1) 
uncertainty about the future (ES 84% vs EU 83%), 
(2)  business  regulation  (ES  82%  vs  69%),  (3) 
availability of staff with the right skills (ES 82% vs 
EU  79%),  and  (4)  labour  market  regulations  (ES 

(EIB) 
long-term  obstacles 

the  main 

(71)  Eurostat. 

(72)  Eurostat. 

España.  

(73)  EY Attractiveness Survey – Spain, 2025. 

53 

 
 
 
79%  vs  EU  64%)  (74).  As  regards  labour  market 
regulation, 49% of Spanish firms deemed it to be 
a  major  obstacle,  well  above  the  EU  average  of 
27%.  A  higher  percentage  of  SMEs  perceive 
regulations to be an obstacle than do large firms.   

Business environment 

to 

firms 

benefit 

could 
the 

from 
Spanish 
improvements 
regulatory  and 
administrative  framework.  According  to  the 
2025  EIB  Investment  Survey  (75),  a  majority  of 
firms stated that business regulations represented 
an obstacle to investment (82% vs 69% in the EU). 
Looking  closer,  55%  of  Spanish  businesses  report 
it as a major obstacle to investment, compared to 
the EU average of 34%. A slightly higher share of 
regulation  obstacles 
SMEs 
compared to large firms (CSR 2025.3). 

report  business 

Access  to  alternative  financing  is  key  to 
enhance  entrepreneurship  and  innovation.  In 
Spain, 52% of firms considered constrained access 
to  finance  as  an  obstacle  to  investment.  Among 
SMEs,  55%  considered it an  obstacle  versus  49% 
of large companies (76). The main obstacles faced 
by SMEs to access financing are (1) financing price 
(interest  rates  and  other  costs),  (2)  lack  of 
requested  guarantees  and  (3)  lack  of  knowledge 
by  financial  institutions  about  the  business  (77). 
These  obstacles  are  particularly  prominent  for 
financing  entrepreneurship  and  innovation  due  to 
higher risk profiles that banks struggle to properly 
assess.  Although  Spanish  companies  of  all  sizes 
benefit  from  lower  interest  rates  on  bank  loans 
than  the  Eurozone  average,  they  would  benefit 
from  further  promotion  and  development  of 
to  alternative  financing,  notably  for 
access 
financing  entrepreneurship  and  innovation  (See 
CSR 2025.3) (See Annex 6). 

Late  payments  remain  a  challenge  for 
Spanish  SMEs  in  B2B  transactions.  In  2025, 

(74)  European Investment Bank, 2025, EIB investment survey – 

Spain.  

(75)  European Investment Bank, 2025, EIB investment survey – 

Spain. 

(76)  European Investment Bank, 2025, EIB investment survey – 

Spain. 

(77)  OECD, OECD Economic Surveys: Spain 2025 | OECD. 

by 

driven 

customers, 

business-to-business  (B2B)  payment  delays  in 
Spain  averaged  17.88  days,  and  government-to-
business  (G2B)  delays  averaged  14.72  days,  both 
slightly  above  the  EU  averages  of  17.44  days  for 
B2B  and  13.63  days  for  G2B.  Despite  this,  the 
share of SMEs experiencing late payments is lower 
than the EU average, with 34.21% affected in B2B 
transactions, and 12.26% in G2B transactions (78). 
Nevertheless,  60%  of  Spanish  SMEs  flag  late 
payments as a major problem (79). Liquidity issues 
economic 
among 
uncertainties,  as  well  as  delays 
in  payment 
processes and disputes over invoices are the main 
causes  of  late  payments  in  Spain  (80).  In  G2B 
transactions  however,  the  Spanish  authorities  are 
now  paying  within  30  days  (below  the  deadline 
levels  of  the 
laid  down 
administration,  except  for  a  few  municipalities, 
according  to  official  data.  Since  early  2026,  the 
Spanish  government  has  enforced  e-invoicing  as 
part of the Law on Business Creation and Growth, 
included in the Spanish RRP and the MTFSP, which 
should  help  monitor  and  combat  late  payments. 
Moreover,  the  Spanish  Ministry  of  Industry  and 
Tourism  established  the  State  Observatory  of 
Private Late Payments in 2025. The Observatory’s 
core  activities 
late  payment 
include  tracking 
practices,  drafting  an  annual  report,  promoting 
best  practices  and  disclosing  non-compliant 
companies that exceed payment deadlines (81). 

law)  at  all 

in  EU 

the 

is  at 

forefront 

Spain 
regarding 
connectivity  infrastructure.  In  2025,  Spain’s 
coverage  of  Very  High-Capacity  Networks  (VHCN) 
and  fibre  to  the  premises  (FTTP)  reached  95.9%, 
marking  a  sustained  growth  and  bringing  the 
country  to  the  level  of  the  best  connectivity 
performers in the EU. Overall 5G coverage stood at 
in  the  3.4-3.8  GHz  band, 
99%  and  89.9% 
5G 
considered 
performance. This  progress  in  the  deployment  of 
gigabit  networks  has  been  supported  for  a  good 
extent  by  the  implementation  of  the  RRP  through 
the  UNICO  programmes,  which  have  accelerated 

advanced 

strategic 

for 

(78)  Intrum, 2025, European Payment Report 2025 | Intrum. 

(79)  European Commission Startups, scaleups and 

entrepreneurship - July 2025 - - Eurobarometer survey. 

(80)  EU Payment Observatory: Annual Report 2025, Observatory 
Analysis - Internal Market, Industry, Entrepreneurship and 
SMEs 

(81)  EU Payment Observatory: Annual Report 2025, Observatory 
Analysis - Internal Market, Industry, Entrepreneurship and 
SMEs 

54 

 
 
 
the  deployment  of  gigabit  networks  and  the 
development of stand-alone 5G services. 

By international standards, Spain has a very 
well-developed  transport  infrastructure,  for 
maritime, road and rail transport. It is ranked 
13th, together with France, Japan and Taiwan, out 
of  the  139  countries  covered  by  the  World  Bank 
Logistic  Performance  Index  (82).  According  to  the 
2025  EIB  investment  survey (83),  51%  of  Spanish 
businesses  considered  the  state  of  transport 
infrastructure  an  obstacle  to  investment  (vs  45% 
in  the  EU).  Maintenance  and  overall  sustainability 
of infrastructure is a key aspect to attract further 
investments  and  ensure  safe  and  efficient 
passenger travel and goods transport. 

Single Market and barriers  

Spain  has  an  open  and  diversified  economy. 
Spain had an exports-to-GDP ratio of about 24.1% 
in 2024, and 63% of Spanish firms are engaged in 
international  trade  (84).  In  2024,  the  three  most 
important export sectors of Spain were equipment 
goods  (19.4%  of  total  exports),  food,  drinks  and 
tobacco  (18.7%)  and  chemical  products  (16.3%). 
The  automotive  sector  also  stands  out  as  the 
fourth  most  exporting  sector  with  13.8%  of  total 
exports. France was Spain’s largest trading partner 
(10.8%  of  Spain’s  total  trade),  followed  by 
Germany  (10.2%),  China  (8.9%),  Italy  (7.6%)  and 
the US (5.8%). Overall, the EU is the main trading 
partner of Spain (52.9% of Spain’s total trade) (85).    

Spain’s trade participation in the EU’s single 
market remains notably low. In 2025, its intra-
EU trade was 14% in goods and 5.5% in services 
(as  a  ratio  of  trade  volumes  to  GDP).  This  is 
significantly lower than the EU averages of 18.2% 
for goods and 7.6% for services (86). This indicates 
an opportunity for Spanish businesses to increase 
their  participation  in  the  EU’s  single  market  and 
boost  economic  growth,  competitiveness  and 

(82)  World Bank Logistic Performance Index 2023 | Logistics 

Performance Index (LPI) 

(83)  European  Investment  Bank,  2025,  EIB  investment  survey  – 

Spain. 

(84)  European Investment Bank, 2025, EIB investment survey. 
(85)  MINECO, Diciembre 2024, Informe Mensual de Comercio 

Exterior 

(86)  Eurostat 

55 

prosperity.  Several  factors  can  explain  this  low 
integration rate, including low productivity growth, 
the  small  size  of  Spanish  companies,  skills 
shortages,  the  minor  role  of  innovation  and 
technological  capital,  trust  in  institutions,  and  the 
large  size  of  the  Spanish  domestic  market  (87). 
However,  EU  trade  integration  offers  Spanish 
businesses  opportunities  for  growth,  particularly 
SMEs, as Spanish firms benefit from lower barriers 
to  entry  and  expansion  trade  than  the  OECD 
average, 
trade  and 
economic exchange (88). 

international 

facilitating 

Spain  continues  to  face  barriers  linked  to 
regulatory fragmentation and administrative 
burdens  especially  across  the  autonomous 
communities.  Differences  in  regulations,  permits 
and administrative procedures across autonomous 
communities  can  increase  compliance  costs  and 
create  obstacles  for  companies  operating  across 
regions or entering the Spanish market from other 
Member States. One example of this practice is the 
Catalan 
(Act 5/2017)  on  sugar 
sweetened  beverages  that  introduces  an  excise 
type  levy  on  some  drinks  sold  in  Catalonia.  Other 
refer  to  obligations  to  label  products  in  the 
relevant  regional  language  in  addition  to  Spanish 
or  diverging  reporting  requirements  in  the  Posted 
Workers Directive (89). 

regional 

tax 

Sector-specific  regulatory  requirements  also 
affect  the  free  movement  of  goods  and 
services. Businesses report that national rules on 
packaging  and  waste  management, 
including 
mandatory  sorting  labels  for  packaging  under 
Spain’s  packaging  legislation,  require  firms  to 
adapt product labelling specifically for the Spanish 
market,  creating  additional  compliance  costs  for 
companies operating across borders (90).  

Spanish  SMEs  face  several  Single  Market 
barriers when wishing to scale up in other EU 
countries  (91).  Compared  to  the  EU  average,  the 
three  main  barriers  are:  (1)  taxation  and  VAT  (ES 

(87)  OECD, Spain_PMR country note.pdf 

(88)  OECD, Spain_PMR country note.pdf 

(89)  Eurocommerce, Single Market Barriers Overview, 17.05.2024 

(90)  European Round Table for Industry (ERT), Single Market 
Compendium of Obstacles, 21 May 2025, Single Market 
Compendium of Obstacles. 

(91)  Part of the barriers highlighted in the 2025 Single Market 

Strategy (“Terrible 10”), Single market strategy. 

 
 
 
41% vs EU 30%), (2) permitting and authorisations 
(ES  29%  vs  EU  28%),  and  (3)  territorial  supply 
constraints  (ES  29%  vs  EU  16%).  Another  barrier 
that  stands  out  in  Spain  is  “market  access  for 
goods, such as mutual recognition” (ES 26% vs EU 
15%) (92). 

Spain faces significant challenges in aligning 
with  EU  Single  Market directives  (93).  It  ranks 
last among the EU27 in transposing directives into 
national law, with 2.6% of all directives not being 
transposed  on  time,  compared  with  both  the  1% 
target set by the EU Council and the EU average of 
1.1%.  It  also  ranks  above  the  EU  average  on  the 
percentage  of  all  directives  being  transposed 
incorrectly  (ES  1.4%  vs  EU  1.1%).    Spain  ranks 
among  the  lowest  in  terms  of  average  delay  in 
transposing  directives  of  16.1  months  (vs  EU  9.7 
months);  as  well  as  in  the  average  duration  of 
infringement  proceedings  (ES  55.8  months  vs  EU 
44.5  months).  It  ranks  last  in  the  number  of 
pending infringements (ES 48 vs EU 25).  In 2025, 
Spain  resolved  93.9%  of  the  SOLVIT  cases  it 
handled  as  lead  centre,  which  is  above  the  EU 
average of 84.6% (94). Moreover, it is important to 
single  out  that  new  legislation  should  follow  the 
simplification  principle  at  all  times  to  avoid 
creating  a  much  larger  amount  of  administrative 
burden than the one that is being reduced.  

surveillance 

investigations 

Compliance  of  products circulating  in  the 
Single Market (95) is key to ensuring a level-
playing  field  for  law-abiding  companies  and 
the  safety  of  consumers. In Spain,  the  number 
of  market 
has 
increased  compared  with  2019.  In  2025,  national 
authorities  reported  in  the  EU  system  for  market 
surveillance  (ICSMS)  a  total  of 33.6 investigations 
per one million inhabitants, which is lower than the 
of 
EU median 
number 
The 
notifications remains limited 
in  absolute  terms, 
which  may  also  be  the  result  of  insufficient  IT 
national interoperability to the ICSMS system. The 

136.2. 

of 

(92)  European Commission Startups, scaleups and 

entrepreneurship - July 2025 - - Eurobarometer survey. 

(93)  Part of the barriers highlighted in the 2025 Single Market 

Strategy (“Terrible 10”), Single market strategy. 

(94)  European 

Commission,  2025, 

and 
Competitiveness  Scoreboard,  Country  data:  Spain  |  Single 
Market and Competitiveness Scoreboard 

Single  Market 

(95)  Part of the barriers highlighted in the Single market 

strategy (‘Terrible Ten’) and the 2026 Annual Single Market 
and Competitiveness Report. 

upcoming  revision  of  the  Market  Surveillance 
fully 
Regulation  will  upgrade 
interoperable EU digital platform.  

ICSMS 

to  a 

Spain’s  competitiveness  may  be  undermined 
by  the  country’s  repeated  non-compliance 
with  the  legal  obligations  under  the  Single 
Market  Transparency  Directive,  resulting  in 
new  unjustified  regulatory  barriers  to  the 
free movement  of  goods  and  services in  the 
Single  Market.  Regulatory  fragmentation  within 
the  Single  Market  results  in  a  less  predictable 
investors  and 
environment 
consumers  alike,  with  adverse  effects  on 
productivity. 
Increased  attention  by  Spain  to 
fostering  better  compliance  with  Single  Market 
rules  will  reduce  the  risk  for  competitiveness  for 
businesses  in  Spain  and  the  Single  Market  as  a 
whole. 

for  businesses, 

reinforcing 

investment 

in 
For  Spain, 
standardisation  is  key  to  building  a  robust 
and  future-proof  system.  As  technological 
transformation  gathers  pace,  the  performance  of 
the European Standardisation System increasingly 
depends on the ability of National Standardisation 
Bodies  to  mobilise  a  wide  and  diverse  network  of 
experts  –  in  traditional  sectors  as  well  as  new, 
critical ones, such as AI and quantum. Spain would 
therefore  benefit  from  strengthening  its  support 
for  the  Spanish  Association  for  Standardization 
(UNE)  to  sustain  the  continued  participation  of  a 
critical  mass  of  stakeholders  and 
technical 
specialists in standardisation activities.  

trade 

restrictiveness 

Regulatory  restrictiveness  remains  low  in 
services,  but  is  one  of  the  highest  in  retail 
(96).  Services 
in  Spain 
remains  low  (0.042  in  2025)  and  well  below  the 
EU  average  (0.050)  The  index  has  remained 
unchanged  compared  to  2024  (97).  However,  the 
retail  restrictiveness  indicator  (RRI)  score  (98)  was 
2.92  in  2022,  exceeded  the  EU  median  of  1.70. 
Restrictions  were  particularly  high  as  regards  the 
establishment  of  shops,  where  Spain  scored  3.13 
(significantly  higher than  the  EU  median  of  1.82), 
due  to  complex  and  burdensome  authorisation 

(96)  Part of the barriers highlighted in the 2025 Single Market 

Strategy (“Terrible 10”), Single market strategy. 

(97)  OECD, 2026, Services Trade Restrictiveness Index: Spain  

(98)  European Commission, Retail Restrictiveness Indicator – 

Spain, Microsoft Power BI 

56 

 
 
 
procedures  as  well  as  the  time  taken  to  publish 
decisions.  As  regards  operational  restrictions, 
Spain scored 2.60 (also significantly above 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 
OECD’s Product Market Regulation (PMR)  indicator 
(99) which highlights Spain’s retail market as highly 
restrictive.  

and 

ensuring 

in  retail  but  also 

This  administrative 
complexity  affects 
business establishment and service provision 
in  some  sectors.  Licensing  and  authorisation 
procedures  —  namely 
in 
construction  —  can  be  lengthy  and  burdensome, 
creating additional obstacles for market entry and 
(100).  Streamlining  administrative 
investment 
procedures 
consistent 
implementation of Single Market rules would help 
improve  the  business  environment  and  support 
retail 
competition.  Further 
regulations  –  through  sectoral  conferences  – 
would  help  to  reduce  restrictions  and  provide 
simplification  of  the  retail  regulatory  frameworks 
of  the  Autonomous  Communities  and  support  the 
competitiveness of retail in Spain. Also, restriction 
to  retail  sales  of  medicines  could  be  reduced  to 
increase  competition  and  benefit  consumers. 
Moreover,  incorrect  transposition  of  EU  directives, 
regulatory  fragmentation  across  regions  and  the 
labelling  and  packaging  regulations,  among  other 
regulations,  hinder  the  Spanish  retail  sector’s 
competitiveness, especially for SMEs. 

convergence  of 

Spain  is  more  competition-friendly  than  the 
in  terms  of  regulating 
OECD  average 
professions.  However,  the  notary  profession 
could benefit from reduced barriers to competition, 
as it ranks 25 out of the 43 countries according to 
the OECD (101). Similarly, civil engineers and 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 (102). 

regulatory 

conferences  between 

Spain  has  introduced  the  ‘20th  Regime’  to 
regional  market 
address 
fragmentation 
Autonomous 
across 
Communities  (CCAA)  (103),  which  is  a  major 
Single  Market  barrier  in  Spain  (CSR  2025.3). 
To  ensure  this  measure  is  aligned  with  Spain’s 
constitutional  decentralisation,  it  will  consist  of 
sectoral 
the  national 
government,  CCAA  and  local  authorities,  where 
they  will  identify,  discuss  and  agree  on  how  to 
tackle  market  fragmentation  barriers.  Currently,  7 
barriers  have  been  identified.  This  is  a  measure 
included  in  the  MTFSP.  Also,  there  are  ongoing 
conversations  with  Portugal 
to  establish  a 
“Portuguese-Spanish  Strategic  Forum  to  Boost 
Competitiveness”.  However,  there  is  the  risk  of 
partial progress in the measure’s objective, in that 
most  likely  only  non-politically  sensitive  barriers 
for  CCAA  will  be  tackled.  Essentially,  barriers 
related  to  lack  of  coordination  will  be  tackled, 
while those related to regional preference will not. 
Thus, the success of this new instrument relies on 
political  willingness  for  cooperation  among  the 
different administration levels.  

improve 

Recent  RRP  reforms  are  expected  to  help 
Spain 
its  public  procurement 
environment.  In  Spain,  34%  of  total  public 
tenders  were  based  on  single  bids  (EU  median 
27%),  and  10%  were  based  direct  awards  (EU 
median  7%)  in  2025.  Under  the  RRP,  further 
interconnection  and  data  exchange  between  all 
national  public  procurement  platforms  at  both 
central  and  regional  levels  has  been  recently 
introduced, enabling the retrieval of both open and 
improve 
aggregated  data  fields.  This  should 
transparency,  data  quality  and  traceability  across 
contracting  authorities,  but  there  is  room  for 
further  efforts  to  complete  and  standardise  the 
information published across regional platforms so 
that  key  indicators  (such  as  competition,  time-to-
award  and  contract  modifications)  can  be 
monitored more reliably. 

Public procurement can be key for scaling-up 
SMEs.  In  2025,  59.7%  of  public  procurement 
to  SMEs,  which 
contracts  were  awarded 

(99)  OECD, Spain_PMR country note.pdf 

(100) Eurocommerce, Single Market Barriers Overview, 17.05.2024 

(101) OECD, Spain_PMR country note.pdf 

(102) European Commission Restrictiveness Indicator (EURI): 

Regulated Professions Database. EC, Communication on 

updating the reform recommendations for regulation in 
professional services, COM(2021) 385. 9/7/2021; 

(103) “Comunidades Autónomas” (CCAA) (autonomous 

communities or regions) are the NUTS 3 administrative 
division of Spain. 

57 

 
 
 
 
to  twenty  separate  procurement  services 
in 
operation  (109),  economic  operators  must  use 
several  systems  to  access  all  public  procurement 
procedures,  creating  complexity  and  barriers  to 
participation.  This  fragmentation  underscores  the 
need  to introduce interoperability  and  common 
standards. The once-only principle is only partially 
implemented  at  national  level  (see  Annex  7),  and 
buyers  across  the  EU  still  lack  digital  access  to 
relevant  evidence.  In  addition  to  the  existing  data 
monitoring,  Spanish  national  authorities  are 
establishing a public procurement data strategy on 
the  objectives  and  management  of  public 
procurement  processes.  Integrating  a  dedicated 
public  procurement  data  collection  and  analysis 
service within the government would support data-
driven oversight of the procurement lifecycle (110). 

Spain  remains  outside  the  Unitary  Patent 
(UP)  system.  Unlike  25  other  Member  States, 
Spain does not participate in enhanced cooperation 
on unitary patent protection. Joining this would be 
the first step towards possible integration into the 
unitary  patent  system.  This  non-participation  has 
two  consequences:  firstly,  Spanish  and  non-
Spanish  companies  remain  burdened  by  the 
significant  administrative 
costs  of  national 
validation  and  maintenance  fees  to  obtain  patent 
protection  in  Spain.  Secondly,  enforcing  European 
patents  in  Spain  can  only  take  place  before 
national  courts,  without  benefiting  from  the 
advantages  offered  by  the  UPC  as  regards 
centralised  litigation.  For  all  these  reasons,  by 
refraining  from  joining  the  unitary  patent  system 
Spain  may  be 
in  terms  of 
innovation  support,  than  the  Member  States 
already  participating  in  the  system.  Finally,  the 
fact that several Member States do not participate 
in  the  unitary  patent  system  weakens  the  single 
market, making the EU less attractive for inventors 
and innovative entities. 

less  attractive, 

represented 23.26% of the total amount (104). It is 
difficult  for  SMEs  to  deal  with  required  timings, 
volume  and  technical  complexity.  Small  local 
administrations  face  difficulties  in  applying  social 
and  environmental  criteria.  Stronger  professional 
support  and  clear  guidance  would  help  smaller 
authorities  apply 
social  and  environmental 
considerations,  while  safeguarding  competition 
and legal certainty. 

in 

think 

interest 

Businesses’  views  on  corruption  risks  in 
public  procurement  are  above  the  EU 
(see  also  Annex  7  Effective 
average 
Institutional  Framework).  In  Spain,  77%  of 
companies  (EU  average:  58%)  consider  tailor-
made  specifications  for  particular  companies  in 
public  procurement  procedures,  and  75%  (EU 
average:  53%)  conflicts  of 
the 
evaluation  of  bids,  “very”  or  “fairly  widespread” 
practice.  Among  companies  that  have  experience 
in  a  public  procurement 
in  and  participated 
procedure,  40% 
that  corruption  has 
prevented them from winning a public tender or a 
public  procurement  contract 
(EU 
average:  25%)  (105).  61%  of  businesses  perceive 
the 
the  public 
procurement  review  body  (Central  Administrative 
Court  of  Contract  Appeals)  as  “very”  or  “fairly 
good”  when  it  is  reviewing  public  procurement 
cases  (106).  Public  procurement,  political  party 
financing, infrastructure projects and public service 
contracts are key sectors at high-risk of corruption 
(107).  An  annual  report  on  supervision  of  public 
procurement  notes  alleged  irregularities  in  the 
award  of  the  contract,  alleged  corrupt  practices, 
complaints related to the execution of the contract 
and issues regarding use of sub-contracting as the 
main  causes  of  complaints  in  public  procurement 
(108). 

independence  of 

in  practice 

level  of 

Spain’s  fragmented  eProcurement  landscape 
and data quality issues highlight the need for 
interoperable  systems,  common  standards, 
and  stronger  data  governance. Given  Spain’s 
decentralised eProcurement landscape, with twelve 

(104) Portal de la Transparencia de la Administración General del 

Estado – Estadísticas de contratos de PYMEs 

(105) Flash Eurobarometer 557, p.133. 

(109) As reported in the eProcurement matrix. 

(106) Justice Scoreboard (2025), p. 53; Flash Eurobarometer 555, 

p. 39. 

(107) Rule of Law Report- Country Chapter Spain (2025), p. 13. 

(108) Rule of Law Report- Country Chapter Spain (2025), p. 13. 

(110) European Court of Auditors, Special Report 28/2023: Public 
Procurement in the EU. Less competition for contracts 
awarded for works, goods and services in the 10 years up to 
2021, 2023, Special report 28/2023: Public procurement in 
the EU 

58 

 
 
 
Industry and economic security  

too  high  and  volatile,  which  hampers 

as 
investment planning and production output. 

have 

levels.  By 

industries 

Energy-intensive 
been 
struggling  to  recover  from  the  pandemic 
crisis.  As  of  2024,  manufacturing  production  in 
energy-intensive  industries 
in  Spain  has  only 
increased  by  2%  since  2021  and  is  still  slightly 
industry,  the 
below  pre-COVID-19 
manufacturing  of  basic  metals  is  the  sector  that 
suffered  the  most  in  the  pandemic  and  has  not 
been  able  to  recover,  accumulating  a  loss  of 
19.2% since its peak in 2018 (-13.5% since 2021) 
(see graph A2.2). However, manufacturing of wood 
is  the  sector  which  has  made  the  biggest  losses 
since  the  end  of  the  pandemic  in  2021  (-16.4%) 
(111).  Moreover,  the  Spanish  regions  of  Cantabria, 
Navarra,  Basque  Country  and  Asturias  have  been 
identified  as  exposed,  in  distress  and  having  low 
ability to cope with the decline of the basic metals 
industry  (112).  No  other  observed  energy-intensive 
industry has been able to fully recover since 2021. 
This  persistent  weakness  points 
to  broader 
including  pressures  on 
structural  challenges, 
industrial  competitiveness, 
regional 
divergence,  and  potential  implications  for  Spain’s 
growth outlook and strategic position in key value 
chains.  As  regards  the  share  of  energy  from 
renewable  sources,  it  increased  from  21.2%  in 
2020  to  25.4%  in  2024,  just  above  the  EU 
average of 25.2%. 

risks  of 

Low and stable energy prices are key for the 
development  of  energy-intensive  industry 
and  its  decarbonisation.  Electricity  prices  in 
Spain have increased by 9.1% in the last year and 
remain at EUR/kWh 0.1394 by the end of the first 
half  of  2025;  still  below  the  EU  average  of 
EUR/kWh  0.1547,  which  increased  only  by  0.3% 
(113) (See annex 9). High energy costs compared to 
non-EU  countries,  weak  demand  and  global 
competition  put  pressure  on  energy-intensive 
industries.  Despite  these  prices  being  significantly 
lower than the ones experienced in the 2022-2023 
energy  crisis,  industry  still  regards  current  prices 

(111) Eurostat. [sts_inpr_a] Production in industry - annual data 

(112) European Commission, 2025, Mapping the impact of 

industrial decline on European regions - Internal Market, 
Industry, Entrepreneurship and SMEs 

(113) Eurostat. [nrg_pc_205] Electricity prices for non-household 

consumers - bi-annual data (from 2007 onwards) 

Graph A5.1: Manufacturing industry production: 
total and selected sector, index (2021=100), 
2015-2024 

Source: Eurostat 

its 

Spain’s net-zero industry would benefit from 
optimising 
competitive  advantages. 
Spain’s three largest industrial net-zero sectors by 
value  are  wind  power,  with  a  production 
amounting  to  EUR  8.4  billion  (9%  of  total  EU 
production), EUR 2.5 billion (3% of EU  production) 
for  grid  technologies,  and  EUR  1.8  billion  (2%  of 
EU  production)  for  solar  PV  and  thermal.  Spain 
excels  in  exporting  offshore  wind  components, 
such as gears and gearing, with a high growth rate 
and  a 
(RCA) 
surpassing  China  and  the  USA.  Spain  is  also 
competitive 
technology 
exporting 
components,  with  an  RCA  index  indicating  greater 
competitiveness than China and the USA (114).  

comparative 

revealed 

index 

grid 

in 

Net-zero  manufacturing 
requires  better 
coordination  and  reducing  its  dependencies 
to  scale-up.  The  net-zero  manufacturing 
ecosystem  in  Spain  is  fragmented,  with  limited 
collaboration 
research 
institutions,  corporates,  and  government  bodies. 
Additionally,  the  weak  transfer  of  knowledge  and 
research  from  universities  and  public  research 

startups, 

between 

(114) European Commission and ECORYS, 2025, The net-zero 

manufacturing industry landscape across the Member States. 
Annex 2, Country fiches - Publications Office of the EU. 

59 

75808590951001051102015201620172018201920202021202220232024ManufacturingManufacture of wood and of products of wood and cork, except furniture;manufacture of articles of straw and plaiting materialsManufacture of paper and paper productsManufacture of chemicals and chemical productsManufacture of rubber and plastic productsManufacture of other non-metallic mineral productsManufacture of basic metals 
 
       
 
capabilities 

tech  manufacturing 

centres  to  the  private  sector  limits  innovation.  A 
stronger, more coordinated approach is needed to 
integrate  different  stakeholders  and  enhance  the 
cleantech value chain. Improved coordination could 
facilitate  innovation,  investment  and  scaling  of 
(CSR 
clean 
2025.3).  This  also  entails  better  cooperation 
among the numerous existing clusters and cluster 
organisations 
in  Spain,  which  are  unevenly 
distributed  throughout  the  country  (most  are  in 
Catalonia) (115). Moreover, supply chain risks are a 
potential  bottleneck  since  Spanish  industry  is 
highly  dependent  on  imports,  with  39.8%  of 
materials used being imported (almost double the 
EU  average  of  22.4%)  (116).  Specifically  for  net-
zero  technologies,  data  shows  a  high  extra-EU 
import  dependency  for  batteries  (77%),  wind 
power 
(42%)  and  grid 
technologies  (40%).  Import  dependencies  for  rare 
earth  metals  like  manganese  and  electronics 
particularly affect net-zero technologies and could 
be  an  additional  cost  and  barrier  to  scaling  up 
Spanish  manufacturing  (117).  Moreover,  higher 
materials 
reduce 
further 
circularity  would 
dependencies (ES 7.4% vs EU 12.2%) (118). 

(55%),  solar  power 

Guaranteed  access  to  the  electricity  grid  is 
essential  for  net-zero  projects  development. 
A  major  challenge  for  industry  in  developing 
projects  and  transitioning  towards  net  zero  is  the 
inability  of  the  electricity  grid  to  supply  the 
existing  demand.  Thus,  many  projects  are 
disregarded,  especially  many  energy-intensive 
industry  projects.  Spain  is  currently  undergoing  a 
full revision of its regulation on electricity grids to 
solve  the  existing  bottleneck,  meet  demand  and 
reduce  energy  prices.  Given  the  impossibility  of 
decoupling  energy  from  industry,  energy  policy 
should  be  developed  taking  into  consideration 
industrial policy. (See Annex 9). 

Permitting is one of the biggest bottlenecks, 
especially  for  advancing  in  decarbonisation. 
It  pushes  back  a  significant  number  of  industrial 
projects,  together  with  the  insufficient  access  to 
for  parallel  permitting 
the  grid.  Allowing 

(115) European Cluster Collaboration Platform, ECCP, Country 

Factsheet Spain, ECCP Factsheet Spain 

(116) Eurostat, [cei_gsr030] Material import dependency. 

(117) European Commission and ECORYS, 2025, The net-zero 

manufacturing industry landscape across the Member States. 
Annex 2, Country fiches - Publications Office of the EU. 

(118) Eurostat, Circular material use rate[cei_srm030]. 

60 

procedures,  instead  of  consecutive;  as  well  as  to 
prevent  duplicity  among  administrations  (due  to 
market  fragmentation)  and  better  coordination 
between  ministries,  especially  on 
industrial 
matters, would help  reduce this bottleneck, where 
larger  than 
waiting  costs  frequently  become 
incentives. This challenge is particularly prominent 
in  alternative  energy  sources,  i.e.  hydrogen  and 
biomethane; 
permitting 
procedures  it  will  be  hard  to  ensure  sufficient 
demand  for  these  projects.  Also,  there  are  no 
existing or planned regulatory sandboxes for NZIA 
projects. 

efficient 

without 

facilitating 

Spain  is  working  on  a  forthcoming  Royal 
Decree  to 
implement  the  Critical  Raw 
Materials  Act  (CRMA)  and  the  Net-Zero 
Industry  Act  (NZIA).  It  should  help  strengthen 
the  collaboration  framework  between  different 
levels of administration in implementing industrial 
policy  and  net-zero  projects.  The  decree  will 
establish  single  contact  points  in  each  CCAA  for 
projects  located  on  their  territory,  responsible  for 
coordinating  and 
the  permitting 
process;  a  national  coordination  role  for  the 
ministry  of  industry  when  projects  fall  under 
central  government  competence  or  span  more 
than  one  region;  and  the  creation  of  two 
raw 
critical 
Coordination  Commissions 
materials 
technologies), 
and 
composed  of  representatives  from  the  central 
government,  the  CCAA  and  local  authorities,  to 
monitor  implementation  and  share  best  practices. 
These mechanisms intend to provide a harmonised 
governance  model 
and 
decarbonisation  projects  across  Spain.  The 
framework  could  be  further  improved  by  using 
these  commissions  as  permanent  platforms  to 
identify administrative bottlenecks, exchange data, 
and  propose  procedural  simplifications.  So  far,  at 
least  14  strategic  projects  have  been  identified 
and  4  CCAA  have  shown  interest  in  establishing 
net-zero  acceleration  valleys,  most  notably 
Navarra. 

(for 
net-zero 

industrial 

for 

for 

in 

With  these  reforms,  Spain  is  making  sound 
progress 
implementing  the  Net-Zero 
Industry  Act.  It  has  successfully  designated  a 
single point of contact in each CCAA and created a 
dedicated website, which is crucial for streamlining 
communication 
among 
stakeholders. Furthermore, Spain has established a 
national  contact  point  to  administer  applications, 
facilitating the advancement of Net-Zero Strategic 
Projects.  So  far,  Spain  has  no  confirmed  Net-Zero 

coordination 

and 

 
 
Strategic  Projects.  Nevertheless,  there 
is  the 
possibility  to  submit  applications,  reflecting  its 
proactive  approach  to  advancing  initiatives  that 
align with net-zero goals. Although there has been 
no  specific  indication  of  a  designated  Net-Zero 
in 
interest 
Acceleration  Valley,  the  country's 
promoting  net-zero  activities 
is  evident,  with 
already four different potential areas that could be 
designated,  which  can  help  attract 
further 
strategic projects. 

Critical  raw  materials  are  essential  for  the 
green  and  digital  transitions.    Spain  shows 
strong  capabilities  to  boost  recycling,  circular 
economy initiatives, and diversifying supply. These 
are key elements to reduce dependency on critical 
raw materials in line with CRMA. Simplified permits 
on  prospective  mine  sites  could  further  boost  the 
business  case  for  smaller  sites  in  the  country, 
aligned  with  the  RESourceEU  plan.  This  is  also  in 
view  of the existing  strategic projects  selected  by 
the  Commission  in  March  2025  (119).  The  Spanish 
territory 
includes  7  strategic  projects:  4  for 
extraction,  2  for  extraction  and  processing  and  1 
for  recycling  and  they  are  mostly  located  in  the 
southern  provinces  (i.e.  Badajoz,  Huelva,  Sevilla, 
Cáceres, Ciudad Real) and Orense. The critical raw 
materials include tungsten, lithium, cobalt, copper, 
platinum group metals and nickel (battery grade). 

Spain’s  industrial  ecosystem  would  highly 
benefit  from  the  approval  of  the  Law  on 
Industry  and  Strategic  Autonomy.  Given  the 
impossibility  to  approve  it  in  parliament  before 
August  31st,  2026,  this  reform  has  been  removed 
from the RRP. The current law is from 1992 and it 
has become outdated. 

(119) Commission Decision C (2025) 1904 final, published on 25 

March 2025 

61 

 
 
Table A5.1:  Single Market and Industry 

Source: (1) Eurostat, (2) EIB Investment Survey, (3) EIF SME Access to Finance Index, (4) Intrum Payment Report, (5) SAFE survey, 
(6) OECD, (7) data up to 2024: Single Market and Competitiveness Scoreboard, 2025: Commission calculation based on TED data, 
accessible at the Public Procurement Data Space (PPDS) (*) the value represented here under EU average is the median, (8) Single 
Market and Competitiveness Scoreboard, (9) European Commission calculations. 

62 

POLICY AREA20212022202320242025EU-27 average92.694.396.496.495.9100.013.313.113.113.1-12.62.72.73.02.7-3.9Business environment and simplification64.153.047.860.455.034.00.850.810.580.69-0.430.160.130.130.66-0.1912.516.315.217.617.917.411.222.016.915.714.713.6from private entities in the previous or current quarter---41.534.247.1from public entities in the previous or current quarter---14.412.315.918.821.220.119.519.640.70.0420.0420.0420.0420.0420.0502727323334271210981062.22.51.31.82.6111.31.31.21.41.179.4985.48886.493.984.64946444248250.12370.22110.15810.13530.13940.146231.332.531.3--32.720.621.825.025.4-25.239.542.342.039.8-22.49.19.68.27.4-12.2SpainINDICATOR NAMEBusiness environment and investmentProductivity and investmentLabour productivity (GDP per hour worked in PPP terms), % of EU271Business investment (share of GDP)1Public investment (share of GDP)1Impact of regulation on long-term investment, % of firms reporting business regulation as a major obstacle2SME liquidityEIF Access to Finance for SMEs index - loans3EIF Access to Finance for SMEs index - equity3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment4Payment gap - public sector, difference in days between offered and actual payment4Share of SMEs experiencing late payments, %5Industry and economic securitySingle Market IntegrationEU trade integration, average(intra-EU imports + intra EU exports)/GDP, %1EEA Services Trade Restrictiveness index6Public procurementSingle bids, % of total contractors7*Direct awards, % of negotiated procedures7*ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, resolution rate per country, %8Number of pending infringement proceedings8Energy-intensive industriesElectricity prices for non-household consumers1Electrification (electricity as a share of total energy consumption in industry)1Share of energy from renewable sources (renewable energy generation as a share of overall energy consumption)1Critical raw materialsMaterial import dependency, %1Circular material use rate1Operational cleantech manufacturing capacity in 20259 - Solar PV (c: cell, w: wafer, M:module), GW0.563 (m) - Electrolyzer, GW0.700 - Heat pump assembly 0.22 - Battery, GW- 
 
     
 
ANNEX 6: SAVINGS, INVESTMENT AND ACCESS TO FINANCE 

Table A6.1:  Savings and Investments Union summary diagnostic 

Source: OECD (pensions), Eurostat (households' financial wealth), FISMA CMU dashboard (VC and PE), national sources (capital 
taxation). End-2024. 

Spain could benefit from further progress on 
the  policy  goals  of  the  Savings  and 
Investment  Union  (see  Table  A6.1).  The  funding 
model  for  Spanish  non-financial  corporations 
(NFCs)  is  mainly  bank-oriented  and  less  capital 
market-intensive 
than  EU  peers.  Household 
savings  in  Spain  are  held  mainly  in  deposits  and 
real  estate,  fuelled  by  the  sharp  increase  in 
housing prices in recent years. The introduction of 
the  Savings  and  Investments  Accounts  in  Spain 
could  incentivise  the  reallocation  of  household 
savings by reducing the tax burden and increasing 
transparency  and  ease  of  use  for  households. 
Capital  markets  remain  comparatively  small  in 
terms  of  capitalisation  and  volumes  traded. 
invested 
Spanish  households’ 
conservatively,  as  financial  instruments  form  only 
a  small  part  of  their  wealth.  On  a  positive  note, 
Spanish  households  allocate  a  greater  share  of 
their  wealth  to  investment  funds  than  the  EU 
average.  The  investment  portfolio  of  domestic 
institutional investors is focused on debt securities 
investment-fund  shares.  Spain’s  venture-
and 
capital  and  growth-capital  markets  are  not  yet 
developed enough to meet all the financing needs 
of 
innovative  firms,  especially  of  companies 
seeking to scale up. Spain’s recovery and resilience 
plan  (RRP)  includes  measures  to  support  start-up 
financing and capital market development. 

savings  are 

Business landscape and company 
funding 

moved  towards  a  more  balanced  financing 
structure.  Compared  with  the  EU  average,  micro 
enterprises play a stronger role in the structure of 
the  Spanish  economy,  at  the  expense  of  small, 
medium  and  large  companies  (120).  In  2008, 
aggregate  corporate  funding  was  composed  of 
63% debt and 37% equity. By 2024, the split had 
become nearly even – 53% debt and 47% equity – 
largely  driven  by  the  ‘other  equity’  category 
comprising  equity  such  as  limited  liability  shares 
(see Graph A6.1).  

Graph A6.1: Composition of non-financial 
companies' funding 

Source: Eurostat. End-2024. 

Despite  a  slowdown  in  revenue  growth  in 
2024,  Spanish  firms  continued  to  improve 
their  financial  and  balance  sheet  positions. 
As  of  2024,  NFCs  relied  slightly  less  on  loans 
(57.9%  of  total  liabilities)  than  the  EU  average 
(62.7%)  and  significantly  less  on  market-based 

After  the  financial  crisis,  and  over  the  past 
15  years,  Spanish  companies  have  gradually 

(120) See Annex 5 for more details.  

63 

050100150200250ESEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equityMain featuresRelative EU positioningAssets at 11.3% of GDP (32.3% in the EU)10-year real return of 0.6 (1.4% in the EU)The moderate pension assets yield a low real return. EUR 61 925 per capita (EUR 85 090 in the EU)o/w 6.2% in listed shares and bonds (7.6% in the EU)o/w 17.1% in investment funds (11.0% in the EU)o/w 5.8% in life insurance (13.4% in the EU)o/w 6.5% in  pension claims (13.6% in the EU)A comparatively high share of households' financial assets is invested in investment funds, with relatively limited exposure to listed shares and bonds, pension schemes and life insurance.VC at 0.057% of GDP (0.064% in the EU)PE at 0.489% of GDP (0.487% in the EU)Relatively high venture capital and private equity investments.Capital gains taxed at progressive rates between 19% and 30%, corporate income tax of 25%. UCITS funds have a beneficial tax regime of the unrealised gains for transfers between funds, which does not apply to ETFs and ELTIFs.No preferential tax treatment for equity investments, asymmetric tax treatment of unrealised gains across fund categories.1-34-1011-1718-2425-27Colours indicate the country's relative ranking based on five groups, ranging from the three best to the three worst performers. The relative ranking as regards an SIU diagnostic topic derives from a consistent cross-country comparison, the starting point of which is the average of the underlying main features.TopicAsset-backed pension schemesHouseholds' financial assetsVenture capital (VC)Private equity (PE)Capital taxation 
 
 
     
 
 
 
 
     
 
instruments  such  as  listed  shares  (22.0%  vs 
43.9%)  and  bonds  (8.2%  vs  10.8%).  Trade  credit 
also accounted for a smaller share in Spain (4.9% 
vs. 8.7%). Spanish firms made greater use of other 
equity  (76.4%  vs.  47.8%).  This  points  to  a  more 
bank-oriented  and  less  capital  market-intensive 
funding model for NFCs than their EU peers. 

Size and structure of the financial 
sector 

The  Spanish  economy  stands  out  as  one  of 
the  capital  markets  in the  EU  with  potential 
for further growth. The market capitalisation of 
listed  equity  in  Spain  was  equivalent  to  49%  of 
GDP at the end of 2024 (see Graph A6.2), which is 
well below the EU average. At the same time, NFCs 
accounted  for  71%  of  that  capitalisation,  which 
implies  that  the  stock  market  in  Spain  is  largely 
geared towards funding the non-financial segment 
of  the  real  economy.  The  outstanding  volume  of 
debt securities was equivalent to 138% of GDP at 
end-2024,  which  is  in  line  with  the  EU  average. 
Bonds  issued  by  the  government  and  monetary 
financial  institutions  (MFIs)  accounted  for  almost 
66% and 21% of the total. 

Graph A6.2: Capital markets and financial 
intermediaries 

Source: Source: ECB, EIOPA, AMECO. End-2024. 

Although  the  financial  sector 
in  Spain 
remains  dominated  by  credit  institutions, 
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 195% of GDP in 2024, which remains 
below the EU average of 253%. The insurance and 

64 

play  a 

pension  fund  sectors  (with  total  assets  of  almost 
21% of GDP and 11% of GDP respectively at end-
2024) 
non-bank 
intermediation (see Graph A6.2). Investment funds 
also  play  a  role,  even  though  their  total  assets 
dropped by around 2 percentage points to almost 
28% of GDP between 2021 and 2024. 

lesser 

role 

in 

In  2025,  the  capital  market  financing  of 
Spanish firms increased further, with several 
new  listings  on  the  Spanish  stock  exchange 
(BME).  Three  new  companies  listed  on  the  BME 
Main  Market  in  2025  (HBX  Group,  Izertis,  and 
Cirsa),  and  14  new  companies  joined  the  growth 
markets, BME Growth and BME Scaleup. Currently, 
companies  listed  on  the  BME  Growth  Market  that 
surpass  a  EUR 1billion  market  capitalisation  for  a 
period  of  six  months  are  obliged  to  transfer  to  a 
regulated  market,  which  may  lead  to  additional 
costs  and  administrative  burden.  The  market 
stock  exchanges 
capitalisation  of  Spanish 
increased  by  64.5%  in  2025,  to  just  above 
EUR 1 500  billion,  driven  by  strong  economic 
fundamentals,  robust  corporate  earnings,  and 
good performance in banking and defence. Capital 
market financing by companies increased again in 
2025 to EUR 10.9 billion, marking a four-year high. 
The  supervisory  authorities  have been  working  on 
initiatives  together  with  the  private  sector  to 
promote  capital  market development, such as the 
new BME Easy Access procedure that gives issuers 
18 months to meet free-float requirements.  

Households’ participation in capital 
markets 

In  2024,  the  financial  asset  portfolio  of 
Spanish households remained quite different 
from  the  EU  average,  reflecting  both 
structural  and  institutional  factors.  Spanish 
households  hold  a  large  share  of  their  wealth  in 
housing.  In  2023,  real-estate  assets  represented 
about  64%  of  net  household  wealth,  significantly 
more  than  in  several  EU  peer  countries.  Spanish 
households  had  significantly  lower  exposure  to 
insurance and pension funds than the EU average 
(EUR 7 900  vs  an  EU  average  of  EUR 23 700  per 
capita, or 24.1% of GDP vs an EU average of 59% 
of  GDP),  underscoring  the  relatively  modest 
development  of  long-term  savings  instruments  in 
Spain 
(see  Graph  A6.3).  Spanish  households 
allocated  a  greater  share  of  their  wealth  to 

Non-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIsPension fundsInsurance corporationsInvestment funds050100150200250   Listed equity               Bonds                        Assets by sector% of GDP 
     
investment  funds  than  the  EU  average,  both  per 
capita (EUR 10 600 vs EUR 9 400) and as a share 
of  GDP  (32.3%  vs  23.4%).  They  also  had  higher 
holdings of ‘other equity’ (often stakes in SMEs or 
family-owned  businesses)  at  41.2%  of  GDP,  well 
above the EU average of 24.2%.  

Graph A6.3: Composition of households' financial 
assets 

19%  of  respondents  in  Spain  display  a  high  level 
of financial literacy, 54% a medium level, and the 
remaining 27% a low level,  compared with an EU 
average  of  26%  for  high  literacy,  50%  for 
medium, and 24% for low. Spain also scores below 
the  EU  average  for  the  use  of  digital  financial 
investment  advice 
services  and  trust 
in  the 
received.  According  to  the 
latest  Survey  of 
Financial Competences (ECF) among adults by the 
Bank  of  Spain  (123),  only  19%  of  the  respondents 
answered  all  questions  correctly,  with  significant 
regional variations in performance. As for children 
in school age, the PISA 2022 results show that 15-
year-olds  in  Spain  perform  at  levels  lower  but 
close  to  the  OEDC  average.  Spain  shows  no 
significant gender gap, while the main challenge is 
the  regional  gap.  In  2008  a  financial  education 
strategy  was  launched  to  improve  the  financial 
knowledge of the public. 

Source: Eurostat. End-2024. 

The banking sector: resilience and 
financing of the economy 

There  is  space  to  further  increase  the  level 
of  direct  and  indirect  retail  investment  in 
Spain. The Spanish authorities are working on the 
introduction of a Savings and Investments Account 
in  Spain  and  the  ‘Finance  Europe’  label.  The 
account is expected to constitute an improvement 
on  the  current  regime,  under  which  savings  and 
investment income is taxed at progressive income 
tax  rates  ranging  between  19%  and  30%. 
Developing  a  simple,  standardised  Savings  and 
Investments  Account  (121)  could  add  value  by 
streamlining 
retail 
investments and increasing transparency and ease 
of  use  for  households.  The  changes  in  rules  for 
Spain’s  pillar  3  pensions,  in  particular  the  sharp 
reduction in tax  relief for individual  pension plans 
(from  EUR  8 000  in  2020  to  EUR  2 000  in  2021 
and then to EUR 1 500 per year since 2022), have 
had a limiting effect on the capital market and on 
retail 
recent 
measures  to  boost  occupational  (pillar  2)  plans, 
this pillar remains underdeveloped. 

confidence.  Despite 

treatment  of 

investors’ 

the 

tax 

The  Spanish  banking  sector 
is  well-
capitalised  and  shows  good  resilience  to 
risks and is thus not constrained in its role of 
funding  the  economy.  Banking  sector  capital 
levels only slightly improved in 2025, despite very 
strong  profits  (see  Table  A6.2).  The  system-wide 
capital  ratio  stood  at  17.9% 
in  Q3  2025, 
significantly  below  the  EU  average  (at  20.2%).  In 
the  same  period,  Spanish  banks  reported  a 
consolidated common equity tier 1 (CET1) ratio of 
13.8%,  the  lowest  in  the  EU.  The  minimum 
requirement  for  own  funds  and  eligible  liabilities 
(MREL)  and  the  combined  buffer  requirement  in 
addition  to  MREL,  are  above  all  regulatory 
requirements (124). According to the 2025 EU-wide 
stress  tests  conducted  by  the  EBA  and  the  ECB 
(125),  the  participating  Spanish  institutions  fared 
better than the EU aggregate, as they experienced 
a comparatively smaller negative impact under the 
adverse  scenario.  The  aggregate  non-performing 
loan  (NPL)  ratio  declined  to  2.4%  in  Q3  2025 

Financial  literacy  levels  are  comparatively 
low in Spain. Recent surveys (122) show that only 

(121) In line with EU Recommendation 2025/2029 on increasing 
the availability of savings and investment accounts with 
simplified and advantageous tax treatment. 

(122) Monitoring the level of financial literacy in the EU, 2023. 

(123) Survey of Financial Competences, Bank of Spain. 

(124) See the European Banking Authority’s MREL Dashboard – Q2 

2025 and the Executive Resolution Authority’s Bail-in 
mechanics. 

(125) See the results of the 2025 EU-wide stress test exercise, 

August 2025. 

65 

0100200300050100ESEUESEUper capita (000 EUR) (lhs)% of GDP (rhs)Other equityUnlisted sharesListed sharesBondsInvestment fundsInsurance and pension fundsCurrency and depositsHH Debt (liability) 
   
 
 
(slightly  above  the  EU  average  of  1.9%).  Despite 
the high level of bankruptcies over the past three 
years,  the  corporate  NPL  ratio  has  been  on  a 
steady  downward  path  and  reached  3.2%  in  Q3 
2025,  below  the  EU  average.  The  banks’  asset 
quality outlook is subject to increased uncertainty 
due  to  the  current  geopolitical  conflicts  and  the 
impact on energy prices and economic growth. 

Bank  lending  to  Spanish  NFCs  has  increased 
further,  in  a  context  of  lower  interest  rates 
and  favourable  economic  developments. 
Annual  corporate  credit  growth  reached  3.9%  in 
December  2025,  up  from  0.8%  at  the  end  of 
2024.  Business  registrations  have  also  been  on 
the rise. For households, the annual growth in bank 
credit increased from 1.4% in 2024 to 4.6% at the 
end  of  2025.  The  Bank  of  Spain  is  applying  a 
phased  increase  in  the  countercyclical  capital 
buffer (CCyB) to 1% from October 2026, following 
a  revised  macroprudential  framework  that  sets  a 
positive  CCyB  rate  when  cyclical  systemic  risk  is 
considered neutral. 

The  insurance  sector  in  Spain  is  relatively 
compared  with  other  European 
small 
countries.  As  of  Q3  2025,  total  insurance-sector 
assets stood at 20.1% of GDP, which is lower than 
the EU average of 53.9%. As of Q3 2025, Spanish 
insurers’ solvency ratio of almost 239%, although 
robust  and  above  statutory  requirements,  was 
slightly  below  the  EU  average.  Gross  written 
premiums  in  2024  amounted  to  EUR  75.1  billion, 
just 1.6% lower than a year earlier, reflecting the 
overall  stability  maintained  throughout  2024. 
Approximately 38% of the premiums are obtained 
in  the  life  insurance  sector,  while  around  62% 
correspond  to  the  non-life  branch.  The 
life 
insurance  sector  experienced  a  year-on-year 
decline  in  premium  volume  amounting  to  -13.7% 
at the end of 2024, far from the annual growth of 
36%  during  2023.  This  trend  is  explained  by  the 
fall in interest rates, as the Spanish life insurance 
market  is  dominated  by  annuities  and  traditional 
savings  products  with  investment  guarantees, 
which  are  more  attractive  to  customers  when 
interest rates are high. 

Role of non-bank financial 
intermediaries 

Institutional  investors  in  Spain  have  the 
necessary  funds  to  channel  savings  into 
investment  and  support  capital  market 
development.  Given  the  country’s  strong  growth 
in  GDP  and  incomes  after  the  pandemic,  the 
financial  industry has the potential  to increase its 
assets  under  management.  However,  the  role  of 
domestic  institutional  investors  in  deepening  the 
capital market has so far remained limited. This is 
due  to  Spain’s  regulatory  framework,  which  is 
characterised  by  very  weak  tax  incentives  for 
saving  in  pension  plans  and  restrictive  fee  caps 
imposed  on  Spanish  management  companies  of 
pension  funds.  A  recent  study  (126)  showed  that 
Spanish  pension  funds  accounted  on  average  for 
only 7% of PE and VC funds raised annually over 
the  timeframe  2007-2023,  a  figure  that  falls 
substantially short of the 19% for the Baltic states 
or over 20% shares for Nordic Member States. 

in 

Spain 

insurance 

insurance  sector 

is 
sector 
The 
characterised  by  a  conservative  asset 
allocation  model.  The 
is 
focused on non-life business, the liability structure 
of  which  overall  disfavours  asset  allocation  into 
equity  and  other  long-term  and  high-yield  assets. 
Insurance  companies  in  Spain  have  government 
and  corporate  bonds  as  their  main  assets  (at 
64.7%  of  total  assets  as  of  Q3  2025,  compared 
with  36.2%  for  the  euro  area  as  a  whole)  (127). 
Investment funds account for only a small portion 
of  their  portfolio  (12%),  contrasting  notably  with 
the  broader  euro  area  trend.  Only 7.5%  of  assets 
are  held  in  equity.  This  conservative  approach 
ensures  low  risk  and  relatively  subdued,  but 
Interestingly, 
predictable  and  stable 
insurance 
in 
corporations 
government  bonds  issued  in  Spain,  but  they  tend 
to  hold  more  listed  shares  issued  abroad  than 
issued domestically. 

returns. 
primarily 

invest 

The  insurance  protection  gap  in  Spain  for 
damages  caused  by  natural  hazards  is  not 
significant.  The  Consorcio  de  Compensación  de 
Seguros, a public entity, assumes these risks from 
insured  parties 
cover  and 
them  for  damages  caused  by 
compensates 

through  direct 

(126) Closing the gaping hole in the capital market for EU start-ups 

– the role of pension funds – CEPS. 

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

66 

 
 
 
catastrophic  events.  According  to  EIOPA’s  2025 
Insurance  Protection  Gap  Dashboard,  Spain’s 
protection  gap  against 
losses  from  natural 
hazards  is  relatively  low  compared  with  most  EU 
Member  States.  Historically,  wildfires  and  floods 
have  posed  the  highest  risk  in  Spain.  The  relative 
risk  of  these  hazards  is  expected  to  increase, 
amidst rising global temperatures.  

fund 

of 
from 

investors.  For 

portfolios  and 
the 

The  net  assets  of  Spanish  investment  funds 
grew 14% year-on-year to EUR 457 billion in 
Q3  2025.  This  growth  was  driven  by  both  the 
net 
appreciation 
subscriptions 
fifth 
consecutive  year,  the  fund  category  with  the 
largest  increase  in  assets  in  2025  was  fixed-
income  funds.  The  surge  in  fixed-income  funds 
likely  reflected  attractive  interest  rates  and  an 
increased perception of equity risk due to ongoing 
geopolitical tensions and high valuations in certain 
segments of the stock market. Certain UCITS funds 
have a beneficial tax regime in Spain, which allows 
transfers  between  funds  without  having  to  pay 
taxes on the gains, which are only taxed once they 
are realised. This beneficial regime does not apply 
to  exchange  traded  funds  (ETFs)  nor  to  European 
Long-Term  Investment  Funds  (ELTIFs),  which  puts 
these  types  of  funds  at  a  tax  disadvantage 
compared  with  traditional  collective  investment 
vehicles (UCITS) (128). 

to 

shifts 

demographic 

in  Spain  remain 
Supplementary  pensions 
small  and  fail  to  deliver  a  significant  long-
term  average  real  return.  Spain’s  pension 
system  remains  largely  pay-as-you-go,  leaving  it 
and 
vulnerable 
disadvantaged  by  limited  contributions  to  equity 
investment  and 
the  development  of  capital 
markets (129). Total pension assets were equivalent 
to only 11.3% of GDP in 2024 (vs 32.3% in the EU 
and  162.0%  in  the  US).  Spain’s  public  pension 
reserve  fund,  the  Fondo  de  Reserva  de 
la 
Seguridad  Social,  was  created  in  2000  to  build 
surpluses  for  future  pension  shortfalls,  but  has 
seen significant depletion in these surpluses since 
its  inception.  However,  this  trend  is  now  being 
reversed  through  the 
Intergenerational  Equity 
the 
Mechanism 
replenishment of the fund’s assets. This sovereign 
fund  invests  primarily  in  Spanish  and  some  EU 

(MEI),  which  has 

resumed 

Member States’ government bonds to support the 
pay-as-you-go  system,  but  it  faces  challenges 
from  demographic  shifts.  Overall,  participation  in 
both occupational and private pensions in Spain is 
low.  The  domestic  private  pension  fund  industry 
invests  predominantly  in  bills  and  bonds,  which 
account  for  around  48%  of  pension  funds’  total 
assets. Equities are the second largest investment 
asset of pension funds, at 31%. Over the past 10 
years,  the  average  real  return  generated  by 
Spanish pension funds has been comparatively low 
(0.6%  vs  1.4%  in  the  EU)  largely  because  of  low 
levels of equity exposure and high bond holdings. 

for 

the 

In  recent  years,  Spain  has  substantially 
reshaped 
long-term 
incentives 
pension  savings.  Law  12/2022  explicitly  aimed 
to  boost  occupational  (pillar  2)  pension  plans, 
especially for people working in SMEs and the self-
employed. However, the size of the pillar 2 pension 
system  remains  very  small.  The  second  pilar 
currently does not foresee auto-enrolment (130). In 
parallel,  there  has  been  a  sharp  reduction  in  tax 
relief  for  individual  (pillar  3)  pension  plans,  with 
individual 
the  annual  tax-deductible 
contributions reduced from EUR 8 000 (in 2020) to 
EUR  1 500  per  year  since  2022.  Since  2020, 
private  pension  plans  have  recorded  cumulative 
net outflows of over EUR 3.5 billion, with benefits 
and  redemptions  exceeding  new  contributions 
the  beginning  of  2025, 
every  year.  Since 
rights 
vested 
redeem 
can 
participants 
corresponding  to  contributions  made  at  least  10 
years  earlier,  without  needing 
to  prove  a 
contingency.  

limit  for 

Venture capital ecosystem 

In 

The local venture-capital and growth-capital 
markets  in  Spain  are  not  yet  sufficiently 
developed to meet all the financing needs of 
innovative  firms. 
recent  years,  Spain’s 
private-equity  and  venture-capital  industry  has 
continued  to  grow,  with  many  new  vehicles  being 
launched.  The  average  value  of  annual  private-
equity 
to  nominal  GDP 
relative 
declined  after  2022,  to  0.4%  in  2024,  slightly 
below the equivalent EU average (0.5%). Venture-

investment 

(128) See the 2024 OECD Capital Market Review of Spain. 

(129) See the Country profiles by the OECD and the country fiches 
of the latest Ageing report by the European Commission. 

(130) In line with EU Recommendation 2025/2384 on pension 

tracking systems, pension dashboards and auto-enrolment. 

67 

 
 
 
Table A6.2:  Financial sector indicators 

(1) Annualised data. EU data for credit growth and pension funds refer to the EA average. 
Source: ECB, Eurostat, European Insurance and Occupational Pensions Authority, DG FISMA CMU dashboard, AMECO. 

capital  investments  in  Spain  were  equivalent  to 
0.06%  of  GDP  in  2024  (131),  fully  in  line  with  the 
average for EU peers. Private-equity and venture-
capital  activity  in  Spain  continued  to  expand  in 
2024  (132).  Funding  is  more  readily  available  to 
start-ups  at  very  early  funding  stages,  including 
from  business  angels.  The  main  obstacles  for 
Spanish  start-ups  relate  to  the  transition  from 
seed  funding  to  Series  A  and  B  funding  and  to 
executing  mid-market  transactions.  Assets  under 
management 
the  Spanish  private-equity 
industry  grew  markedly,  rising  by  20.8%  in  2024 
to  around  EUR  46  billion.  Despite  this  strong 
expansion  in  assets,  investment  activity  slowed 
noticeably over the course of the year. The sector 
closed  2024  with  total  new 
investment  of 
EUR 6.5 billion  (a  decline  of  2.6%  year-on-year), 
distributed across 725 transactions. 

in 

investors, 

Venture-capital  financing  could  be  further 
boosted  by  the  greater  participation  of 
institutional 
including  pension 
funds.  Recent  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 

(131) See also Annex 4, which uses InvestEurope data. Annex 6 

uses CMU Dashboard data. 

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  the  EU  average  (of  15%),  as  well  as  the 
shares  in  the  Baltic  states  (19%)  or  the  shares 
above 20% in Sweden, Finland and Denmark (133).  

Spain’s RRP includes measures to support the 
included 
financing  of  start-ups.  Measures 
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 that 
will give companies access to long-term financing 
and working capital for investment in the areas of 
digitalisation,  sustainability,  growth,  and  recovery. 
Any  ‘reflows’  (i.e.  interest  on  the  loan,  return  on 
equity, or principal repaid, minus associated costs) 
linked  to  the  financial 
instrument  must  be 
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, 
in 
particular equity, quasi-equity, loan, and guarantee 
instruments. 

(133) Closing the gaping hole in the capital market for EU start-ups 

(132) See the SPAINCAP Activity Report. 

– the role of pension funds – CEPS. 

68 

20182019202020212022202320242025-Q3EUTotal assets of MFIs, % of GDP218,2213,5256,2243,1216,1201,3195,4191,7246,1Common equity Tier 1 ratio12,212,513,213,313,013,213,513,816,8Total capital adequacy ratio15,415,716,817,316,517,017,517,920,2Overall NPL ratio, % of all loans3,73,12,82,92,72,72,52,41,9NPL ratio, loans to NFCs5,94,74,64,84,03,83,43,23,5NPL ratio, loans to HHs4,03,63,43,83,43,73,63,52,1Return on equity ratio18,26,7-3,510,29,911,813,714,19,6Loans to NFCs, % of GDP40,037,844,941,034,230,028,327,329,3Loans to HHs, % of GDP58,256,261,756,650,645,342,941,743,6NFC credit growth rate, %-2,0-0,88,40,80,3-3,70,83,12,5HH credit growth rate, %0,30,2-0,60,70,5-2,01,43,92,6Stock market capitalisation, % of GDP50,355,054,554,945,547,049,359,669,9Initial public offerings, % of GDP0,040,060,070,120,130,000,18-0,06Market funding ratio41,843,642,543,542,541,342,0-49,7Private equity, % of GDP0,4210,5410,5820,6100,5910,5530,489-0,487Venture capital, % of GDP0,0430,0450,0510,0750,0820,0770,057-0,064Financial literacy, composite index-----39,5--45,5Bonds, % of HHs' financial assets0,70,50,60,50,61,41,3-2,8Listed shares, % of HHs' financial assets4,84,84,14,34,24,64,9-4,8Investment funds, % of HHs' financial assets14,014,414,415,814,615,617,1-11,0Insurance/pension funds, % of HHs' financial assets15,916,015,614,712,712,912,8-27,8Total assets of insurers, % of GDP25,427,030,927,621,621,120,520,153,9Pension assets, bn EUR---173,9158,6168,7180,9-5813,8Pension assets, % of GDP---14,111,511,311,3-32,310y real return average of pension assets, %-----0,80,6-1,4Pension funds assets, ECB (% of GDP)-11,913,413,210,910,810,810,623,01-34-1011-1718-2425-27Colours indicate performance ranking among the 27 EU Member States.Banking sectorNon-banking sector 
 
 
 
   
 
ANNEX 7: EFFECTIVE INSTITUTIONAL FRAMEWORK 

trust  built  on 

institutional  framework 

An  effective 
is 
essential  for  competitiveness.  This  requires 
public 
integrity,  high-quality 
legislation,  regulatory  simplification  and  efficient 
services for people and businesses. For Spain, the 
recommendations 
specific 
2025 
highlighted  challenges 
in  further  streamlining 
judicial proceedings, digitalising the judicial system 
in all regions, simplifying regulation and improving 
regulatory tools.  

country 

better  resourced.  Following  the  law  on  the 
institutionalisation  of  public-policy  evaluation  in 
the  Administración  General  del  Estado  (General 
State  Administration)  (135)  (milestone  146  of 
Spain’s  recovery  and  resilience  plan  (RRP)).  Spain 
adopted  the  statute  of  Agencia  Estatal  de 
Evaluación  de  Políticas  Públicas  (the  state  agency 
(136) 
for 
the  evaluation  of  public  policies) 
(milestone  149  of  the  RRP),  which  is  expected  to 
play a central role in ex ante evaluation.  

Public trust 

Graph A7.1: Trust in the justice system, regional / 
local authorities and in government 

to 

for 

those 

linked 

independent  authority 

The 
fiscal 
responsibility  (AIReF)  has  set  criteria  to 
prioritise  public  expenditure  evaluation 
studies  (137).  This  will  focus  on  the  evaluations 
with  the  greatest  potential  to  improve  public 
European 
spending  and 
commitments,  such  as  the  Spanish  RRP  and  the 
medium-term  structural  fiscal  plan.  At  regional 
level,  Andalucia  has  been  at  the  forefront  of  the 
creation  of  a  new  Spanish  network  for  public-
policy  evaluation 
(Redeval),  bringing  together 
multiple  regions  and  central  government to  share 
good  practices,  build  capacity  and  promote  a 
systematic  evaluation  framework.  A  new biannual 
journal of policy evaluation (JPEVAL) has also been 
created  to  support  knowledge  production  and 
dissemination.  

(1) EU-27 since 2019; EU-28 before 
Source: European Commission, Standard Eurobarometer 
surveys 

Trust  in  Spain’s  government  institutions  is 
still  below  the  EU  average  (Graph  A7.1).  The 
lowest level is trust in the central government. On 
the  other  hand,  businesses  and  citizens  show 
strong  confidence  in  the  ability  of  government 
institutions  to  handle  their  data  securely  and 
responsibly, well above the EU average (134).  

Quality of lawmaking and 
implementation 

Spain is moving towards making public-policy 
evaluation more institutionalised, visible and 

Businesses  in  Spain  face  major  obstacles  in 
terms  of  the  volume  and  complexity  of 
regulations  and  regulatory  fragmentation. 
The  government  is  working  with  key  stakeholder 
organisations  to  identify  and  reduce  unnecessary 
burdens. Ministries review simplification proposals 
annually  and  provide  detailed  responses.  For 
example,  the  Spanish  Chamber  of  Commerce  has 
generated  over  900  simplification  proposals,  of 
which  approximately  23%  were 
implemented 
within  two years (138).  Nonetheless, there is  scope 

(135) Ley 27/2022, de 20 de diciembre, de institucionalización de 
la  evaluación  de  políticas  públicas  en  la  Administración 
General  del  Estado.  (BOE-A-2022-21677,  of  22  December 
2022). 

(136) Real  Decreto  65/2026,  de  3  de  febrero,  por  el  que  se 
aprueba el Estatuto de la Agencia Estatal de Evaluación de 
Políticas Públicas (BOE-A-2026-2553, of 4 February 2026). 

(137) Resolución 1/2026, de 12 de febrero de 2026, por la que se 
establecen los criterios de priorización de los estudios de 
evaluación del gasto público 

(134) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(138) OECD, 2025, Better Regulation Practices across the European 

Union 2025, https://doi.org/10.1787/6f007516-en. 

69 

00.10.20.30.40.50.60.70.80.9AutumnSpringAutumnSpringAutumnSpringWinterSummerWinterSpringWinterSummerAutumnSpringAutumnSpringAutumnSpring202520242023202220212020201920182017Justice,  legal system EU-27Justice,  legal system ESRegional or local public authorities EU-27Regional or local public authorities ESGovernment  EU-27Government  ES 
 
     
 
 
 
 
Table A7.1:  Spain. Selected indicators on better regulation practices for primary legislation 

Source: OECD, 2025, Regulatory Policy Outlook 2025 [https://doi.org/10.1787/56b60e39-en] and Better Regulation across the 
European Union 2025.  

strengthen 

to 
mechanisms (see Annexes 5 and 18). 

regulatory 

simplification 

Public service delivery and 
digitalisation 

Spain  has  made  mixed  progress  with  the 
digitalisation  and  user  friendliness  of  its 
public  services.  49%  of  people  and  50%  of 
business are satisfied with administrative services, 
compared  to  EU  averages  of  45%  and  42% 
respectively (139). The most time-consuming aspect 
for people is the time spent waiting for response. 
Preparing documents is challenging for individuals 
and companies alike (Graph A7.2). People perceive 
public  services  to  be  slow  and  complex,  with 
autonomous 
significant 
communities.  74%  of  companies  find  that  digital 
services  save  time  and  effort  (EU  67%),  a  view 
shared  by  54%  of  people  (the  lowest  in  the  EU) 
(140). 

disparities 

between 

Spain  has  availability  of  digital  public 
services  for  citizens  and  electronic  health 
records.  In  the  case  of  business,  there  is  a 
shortfall. (see Table A7.2). As part of its RRP, Spain 
is  implementing  major  projects  (Investments  1,  2 

(139) European  Commission,  2026,  Flash  Eurobarometer  surveys 
567 and 568 on satisfaction with administrative services. 

(140) Ibid. 

70 

and 3 of Component 11) to further digitalise public 
services  and  make  them  more  user-friendly  for 
people and for businesses. Spain is pressing ahead 
with  initiatives  to  strengthen  the  cybersecurity  of 
(including 
its  public  services  and  companies 
Investment  6  of  Component  11).  The  country  is 
also  working  to  strengthen  digital  skills  and  ICT 
talent  through  its  national  digital  skills  plan 
(milestone  285  of  the  Spanish  RRP)  and  the  ICT 
talent attraction and retention programme. 

Graph A7.2: Most time-consuming aspects of 
service delivery 

Source: European Commission, 2026, Flash Eurobarometer 
surveys 567 and 568 on satisfaction with administrative 
services. 

Spain  is  technically  ready  to  enable  cross-
border  exchange  of  data  and  documents 
between  authorities  through  the  EU  once-
only  technical  system(141).  When  services(142) 

(141) European Commission, Once-Only Technical System 

Acceleratormeter, Ec.europa.eu. 

0%10%20%30%40%50%Time forresponsesDocumentspreparationServiceidentificationDocumentspreparationLegislationandobligationsApplicationformsPeopleBusinessesEUTools for smart legislation: Share of possible impacts assessed for all primary laws when developing legislation 0Regulators are required to identify and quantify the benefits of a new primary law0Regulators are required to identify and assess the impacts of alternative non-regulatory options1Tools for effective implementation: when developing laws, regulators are required to:Assess the level of compliance0Identify and assess potential enforcement mechanisms0Specify the methodology of measuring progress in achieving the law's goals0Oversight of better regulation: There is an external  body responsible for reviewing the quality of RIAs and of ex post evacuations 1There are publicly available assessments of the effectiveness of RIA in modifying regulatory proposals 0There are reports on the level of compliance by government department with the requirements of RIA1There are indicators on the percentage of ex post evaluations that comply with guidelines0The effectiveness of ex post evaluations in improving the regulatory stock has been assessed in the last five years0 
 
   
 
 
       
 
Table A7.2:  Digital Decade key performance indicators: availability of digital public services 

(1) Digital Decade target by 2030: 100. (2) Publishing year, data was collected in the previous year 
Source: European Commission, State of the Digital Decade report 2025 

become accessible, citizens and businesses will no 
longer have to search for their data, download and 
upload  documents  manually  across  eGovernment 
portals  in  different  Member  States.  Spain  still 
needs to identify the types of document and data 
they  need  to  exchange  through  the  system  and 
explore  ways  to  shift  from  the  exchange  of 
unstructured to structured data formats. 

Spain 

infrastructure. 

Spain's  permitting  system  is  complex,  with 
processes  spread  across  the  17  autonomous 
communities  and  8 131  municipalities. 
Besides  this  structural  fragmentation,  there  is  no 
common  digital  platform  for  construction,  energy 
or  environmental  permits,  and 
this  varies 
considerably  by 
local  authority  area.  Each 
municipality  has  its  own  construction process  and 
implements 
digital 
substantial  reforms in 2025-2026 to unify  digital 
portals, 
licencia  básica, 
Andalusia’s  accelerating  units  and  the  national 
programme,  the  España  Crece  fund.  Under  the 
Technical  Support  Instrument,  Spain  has  designed 
a  unified  framework  for  managing  digital  public 
services across local and regional administrations. 
To  improve  efficiency  and  reduce  duplication,  the 
country has produced two operating tools: a value 
calculator  for  service  prioritisation  and  a  service 
template for documentation. Services are provided 
on demand. 

such  as  Madrid’s 

Civil service 

The  Spanish  civil  service  continues  to  face 
major  challenges, 
including  an  ageing 
workforce  and  temporary  contracts.  The 

(142) Procedure types under Annex II of the 

SDGR (2018/1724/EU) and Directives 2005/36/EC, 
2006/123/EC, 2014/24/EU and 2014/25/EU. 

71 

proportion  of  civil  servants  over  50  is  49.8  %, 
above  the  EU  average  (40.2.%)  (143).  In  recent 
years, Spain has increased the recruitment of new 
civil  servants  but  temporary  employment  in  the 
public  sector  remains  a  challenge  (26.8%  in  Q4 
2025, according to the Labour Force Survey (EPA)). 
The  Spanish  government  has  agreed  to  raise  the 
salaries  of  3.5 million  public  employees  by  11% 
between  2025  and  2028,  having  ratified  a  2.5% 
increase at the end of 2025 (144). 

Spain  continues  efforts  to  professionalise 
and  upskill  its  civil  service.  The  proportion  of 
civil servants taking in adult learning has gone up 
slightly  (22.9%)  and  is  above  the  EU  average  for 
all  age  groups.  Participation  in  adult  learning 
declines  with  age:  34.5%  of  civil  servants  aged 
20–34,  compared  with  15%  among  those  aged 
55–74  (145).  The  national 
institute  of  public 
administration (INAP) has developed an ecosystem 
that outlines the skills and capabilities required for 
different roles in the Spanish civil service (146).  

Although women form an overall majority in 
the  civil  service,  equality  policies  remain  a 
work  in  progress.  The  percentage  of  women 
(51%) and men (49%) is almost at the same level 
as  the  EU  (147).  Gender  balance  in  senior  civil-

(143) European Commission, Eurostat, 2026, European Union 

Labour Force Survey, Employed persons by economic activity 
(NACE Rev. 2) (2008-2026). 

(144) El País, 2025, The Government approves the salary increase 
for civil servants of 2.5% this year and 1.5% in 2026 | 
Economy | EL PAÍS. 

(145) European Commission, Eurostat, 2026, European Union 
Labour Force Survey, Participation rate of employees in 
education and training (last 4 weeks) by NACE Rev. 2 activity 
(2008-2026). 

(146) European Commission, 2024, EUPACK 2024 Country fiche on 

competency frameworks: Spain. 

(147) European 

Institute  for  Gender  Equality,  2025,  Gender 

Statistics Database. 

EU-272023202420252025868489829191858683858883Digital public services for citizens (0 to 100)Digital public services for businesses (0 to 100)Access to electronic health records (0 to 100)Spain 
 
 
 
   
 
service  positions  is  gradually  improving.  At  the 
same  time,  a  disproportionate  number  of  women 
are  on  temporary  and  part-time  contracts  in  the 
civil  service (114  500  women  (66.3%)  vs  70  300 
men  on  temporary  contracts,  i.e.  for  less  than  a 
year (148). 

Integrity  

Corruption  is  still  seen  as  an  obstacle  to 
in  Spain,  and  reported 
doing  business 
experience of corruption also exceeds the EU 
average.  A  large  proportion  (87%)  of  companies 
consider  that  corruption  is  widespread  (EU:  63%) 
and the same proportion (87%) believe that overly 
close  links  between  business  and  politics  lead  to 
corruption  (EU:  76%).  With  53%  of  businesses 
seeing corruption as a problem (EU: 35%), this is a 
significant  barrier  to  companies  compared  to  the 
EU average (149). Sectors particularly vulnerable to 
corruption 
in  Spain  are  public  procurement, 
infrastructure projects and public-service contracts 
(150)  (see  Annex  5).  At  the  same  time,  14%  of 
companies say they have been asked or expected 
to  offer  a  gift,  a  favour  or  extra  money  for 
permits,  services  or  procurement  (EU:  10%).  In 
Spain  only  12%  (EU:  33%)  have  confidence  that 
high-level  bribery  is  effectively  sanctioned,  which 
suggests  that  there  is  low  trust  in  enforcement 
(151). 

launched  new 

Spain  has 
integrity  and 
transparency  reforms,  but  the  initiative  to 
regulate lobbying has stalled. The draft organic 
law on public integrity (152) aims to strengthen the 
fight  against  corruption,  by  setting  up  an 
independent  public-integrity  agency.  It  is  also 
intended to enhance transparency and oversight in 
public  procurement,  by  publishing  a 
list  of 
companies  prohibited  from  working  with  public 
open 
omnibus 
authorities. 

law 

An 

on 

administration  (153)  has  also  been  put  forward, 
including  measures  to  strengthen  the  prevention 
of  conflicts  of  interest  and  to  improve  access  to 
public 
law 
information.  Meanwhile,  the  draft 
regulating  lobbying  activities,  which  is  part  of 
component 11 of Spain’s RRP (milestone 432), has 
been  pending  adoption  in  Parliament  since  early 
2025  (154).  Whistleblower  protection  has  been 
further 
independent 
whistleblower  protection  authority  (AIPI)  finally 
began its work on 1 September 2025 (155).  

institutionalised  with  the 

Measures  to  improve  the  investigation  and 
prosecution  of  high-level  corruption  cases 
are  awaiting  approval.  The  reform  of  the 
criminal  procedure  code  (156),  which  seeks  to 
modernise  the  criminal  procedure,  was  tabled  in 
Parliament in autumn 2025. The draft organic law 
on public integrity proposes to amend the criminal 
code  to  extend  the  statute  of  limitations  for 
corruption  offences  from  five  to  seven  years, 
allowing more time for complex investigations.  

Justice 

There is room to improve the performance of 
the justice system, with a view to improving 
the  business  environment.  According  to  the 
2026  EU  Justice  Scoreboard,  the  time  taken  to 
reach  a  decision  in  litigious  civil  and  commercial 
cases in first-instance courts decreased from 444 
days in 2023 to 423 days in 2024. The estimated 
time  to  resolve  administrative  cases  in  first-
instance  courts  also  decreased  over  the  same 
period from 414 to 386 days. At higher instances, 
efficiency  problems  persist,  with  disposition  times 
for  civil  and  commercial  cases  at  the  Supreme 
Court  remaining  very  high,  at  750  days  in  2024. 
The  backlog  of  pending  civil,  commercial, 
administrative  and  other  cases  continued  to  rise, 
reaching  5.9  cases  per  100  inhabitants  in  2024, 

(148) Labour Force Survey (EPA), fourth quarter 2025 (Encuesta de 

Población Activa (EPA), Cuarto trimestre 2025). 

(149) European Commission, 2025, Flash Eurobarometer survey 
557 on Businesses' attitudes towards corruption in the EU. 

(150) European Commission, 2025, Rule of Law Report. 

(151) European  Commission,  2025,  Flash  Eurobarometer  survey 
557 on Businesses' attitudes towards corruption in the EU. 

(153) Ministerio Para la Transformación Digital y de la Función 
Pública, 2025, Anteproyecto de Ley de Administración 
Abierta. 

(154) Draft  law  on  transparency  and  integrity  of  the  activities  of 
interest  groups  (121/000046):  Proyectos  de  ley  -  Congreso 
de los Diputados. 

(155) Normativa aplicable - proteccioninformante.es 

(152) Gobierno de España, 2026, Anteproyecto de la Ley Orgánica 

(156) Draft  Organic  Law  on  Criminal  Procedure  (121/000074): 

de Integridad Pública. 

Búsqueda de iniciativas - Congreso de los Diputados  

72 

 
 
 
 
reduce fixed-term employment in the judiciary and 
increase staffing levels.  

which indicates mounting pressure on the system. 
In  response,  the  Organic  Law  1/2025  on  the 
Efficiency  of  Public  Justice  Service  introduced 
structural  reforms  aimed  at  streamlining  judicial 
proceedings and further advancing digitalisation in 
the  field  of  justice.  However,  national  data  for 
2025 point to shorter disposition times and fewer 
instance,  while  the 
incoming  cases  at  first 
situation  at  Supreme  Court 
remains 
challenging. 

level 

and 

digitalisation 

Uneven 
limited 
interoperability  across  regions  continue  to 
hamper  judicial  quality  and  efficiency.  Spain 
performs  very  well  in  digital  solutions  to  initiate 
and  follow  proceedings  in  civil/commercial  and 
administrative  cases  and  in  online  access  to 
published 
judgments  and  machine-readable 
judicial decision. However, digitalisation levels still 
vary across regions. This disparity exacerbates the 
limited interoperability between case management 
systems and hinder further efficiency gains. Spain 
has  adopted  a  national  strategy  under  Justicia 
2030,  agreed  with  the  regions.  Some  steps  have 
been taken with interoperability nodes that enable 
the  exchange  of  electronic  case  files  throughout 
the territory. 

to 

the 

rising 

rates  and 

Structural  staffing  challenges  in  the  justice 
sector  persist,  with  a  low  number  of  judges 
per  head  of  the  population,  caused  by 
increasing  early  retirements,  expected  high 
retirement 
litigation. 
According 
latest  officially  published 
information,  Spain  has  11.91  judges  per  100 000 
inhabitants, compared to the EU average of 22.62 
per  100 000  (157).  This  shortfall  places  a  major 
strain  on  serving 
judges  and  contributes  to 
persistent  judicial  delays,  which  in  turn  has  a 
professionals, 
on 
detrimental 
businesses  and  the  general  public  alike.  The 
strategic plan for 2026–2035 on human resources 
in  the  Judicial  Career    estimates  an  annual 
recruitment  of  367  posts  per  year  from  2026  to 
2035 (158). In addition, the Organic Law 1/2025 of 
2 January on measures to enhance the efficiency 
of the Public Justice Service, and the draft law on 
the  judicial  and  prosecutorial  careers,  aim  to 

effect 

legal 

(157) For  a  more  detailed  analysis  of  the  performance  of  the 
justice  system  in  Spain,  see  the  upcoming 2026  EU Justice 
Scoreboard and the 2025 Rule of Law Report. 

(158) Agreement of the Council for the Judiciary of 16 December 

2025, pp. 17-18. 

73 

 
 
 
SUSTAINABILITY 
ANNEX 8: INDUSTRY DECARBONISATION, CIRCULARITY AND CLIMATE MITIGATION 

Spain  has  advanced  on  decarbonising  its 
industry and it is projected to overachieve its 
efforts  sharing  target  for  2030,  but  faces 
challenges in deploying low-carbon solutions, 
on  the  circular  economy,  and  on  waste 
management.  Spain  is  promoting  the  shift  to 
industry  and  transport 
electrification 
(public transport in particular) and it is building the 
infrastructure  needed  for  the  clean 
industry 
transition. However, financing gaps and regulatory 
challenges persist in both sectors.  

in  both 

Industry decarbonisation 

Greenhouse gas emissions from industry 

has 

sector 

Spain's  manufacturing 
a 
somewhat  higher  greenhouse  gas  emission 
intensity  than  the  EU  average,  with  most 
emissions  generated  by  energy  use  rather 
than industrial processes(159). In 2024, industry 
generated  18%  of  Spain's  total  emissions,  but  its 
emissions  per  euro  of  gross  value  added  (GVA) 
juist slightly higher than the EU average, 17% (160). 
Spain  has  continued  to  reduce  emission  intensity 
since  2018.  Spain’s  energy-intensive  industries 
have  contracted,  despite  moderate  energy  prices. 
Energy-intensive  industries  generated  15.2%  of 
Spain’s total manufacturing GVA in 2024. Iron and 
steel,  cement  and  chemicals  are  the  biggest  GHG 
emitters,  with  manufacturing  of  metals  being 

(159) This Annex discusses the transition of Spain's manufacturing 
industry, specifically its energy-intensive industries, to low-
carbon and net-zero modes of production, which is key to 
preserving competitiveness on the path towards climate 
neutrality as mandated by the European Climate Law. A 
broader perspective on the current competitiveness 
challenges facing Spain's manufacturing industry is provided 
in Annex 5. For a more detailed description of greenhouse 
gas emissions from industry, see European Commission 
(2025), 2025 Country Report - Spain, Commission staff 
working document, SWD (2025) 205 final, Brussels, 
4.6.2025, Annex A7. Clean industry and climate mitigation. 

(160) Data on the manufacturing sector exclude the NACE division 
C19 – manufacture of coke and refined petroleum products, 
for better match of the sectoral data from Eurostat (gross 
value added) with those from the UNFCCC under the 
Common Reporting Format. Also see further indicators on 
industry decarbonisation, as well as the annotation for 
further information, in table A8.1 at the end of this Annex. 

74 

particularly 
compared with the EU average (161). 

GHG 

emission-intensive, 

Policies to promote industry decarbonisation 

for 

the 

targeted 

complements 

Spain 
carbon  price 
incentive of the EU emissions trading system 
industry 
support 
with 
decarbonisation,  largely  channelled  through  its 
recovery  and  resilience  plan  (RRP)  and  national 
programmes. Spain’s Law on Climate Change and 
Energy  Transition  (Law  7/2021)  and  the  2024 
updated  energy  and  climate  plan  set  binding 
economy-wide  targets  and 
indicative  sectoral 
trajectories  consistent  with  a  net  greenhouse  gas 
emission  reduction  of  at  least  32%  by  2030 
compared to 1990 levels. The energy and climate 
plan  anticipates  a  significant  contribution  from 
through  electrification,  fuel 
industry,  notably 
switching, energy efficiency improvements and the 
deployment  of  renewable  hydrogen (162).  Although 
industrial  emissions  have  fallen  since  2007, 
Spain's industrial emissions will not reach the path 
set  out in the energy and climate plan unless the 
process of industrial decarbonisation picks up pace 
(163).  However,  Spain  has 
implemented  and 
announced initiatives aimed at decarbonising both 
its 
the  PERTE  for 
Industrial  Decarbonisation  and  the  PERTE  for 
Electric and Connected Vehicles. 

industrial  base—such  as 

recovery  and 

Spain’s  main  public  funding  instruments  for 
industrial  climate  mitigation  are  embedded 
in  its  recovery  and  resilience  plan.  Notable 
examples  are  the  'PERTE'  strategic  projects  for 
economic 
transformation  on 
industrial  decarbonisation  and  renewable  energy, 
renewable  hydrogen  and  storage  respectively. 
Measures  to  support  the  decarbonisation  of 
manufacturing  include  large-scale  support  for 
renewable energy and low-carbon hydrogen value 
chains,  grants  for  industrial  electrification  and 
energy  efficiency,  and  targeted  aid  for  industrial 

(161) For a regional perspective regarding Spain’s transition to 
climate neutrality and energy-intensive industries in 
particular, see Annex 19.  

(162) Spain’s final updated national energy and climate plan 

2021-2030, 2024. 

(163) European Commission (2025), Climate Action Progress 

Report 2025, Spain country profile. 

 
 
 
 
 
 
 
decarbonisation  projects (164).  These  measures 
large  companies  and  small  and 
target  both 
medium-sized enterprises. 

Calls for funding under national programmes 
and  EU-level  instruments  (such  as  the  EU 
Innovation  Fund)  have  focused  on  energy-
intensive  sectors  such  as  steel,  cement, 
ceramics,  chemicals  and  refining (165).  Spain 
participates  actively  in  the  EU  Innovation  Fund, 
with 
such  as  hydrogen 
production,  industrial  use  of  heat  pumps  and  the 
substitution  of  petroleum  coke  in  the  cement 
industry. (166)  These  projects  contribute  to  a  first-
of-a-kind 
reducing 
technological  and  investment  risks  in  hard-to-
abate sectors.  

selected  projects 

deployment 

and 

to 

the  clean 

Spain’s recovery and resilience plan provides 
broad  support  for 
industry 
transition.  Industry  decarbonisation  measures 
including  hydrogen  valleys, 
Innovation  Fund 
projects  and  PERTE-supported  investments  are  a 
central  component  of  the  plan.  It  also  includes 
measures to invest in skills development, reskilling 
and  upskilling,  particularly  in  regions  affected  by 
industrial  restructuring  and 
the  coal  phase-
out (167),  notably  through  training  in  renewable 
energy,  environmental  restoration  and  energy-
efficient  building 
In 
renovation 
parallel,  Spain  has  implemented  measures  to 
for  high-use 
mitigate  high  electricity  costs 
consumers,  including  indirect  cost  compensation. 
The  updated  energy  and  climate  plan  projects 
industrial  decarbonisation  investments  to  raise 
GDP and net job creation to reach 560 000 people 
per year by 2030 (169). 

(C10.I1) (168). 

Spain  is  also  acting  on  net-zero  industry 
infrastructure  and  to  stimulate  demand  for 
clean  products.  Its  energy  and  climate  plan 
provides  for  the  development  of  renewable 

(164) See Spain’s recovery and resilience plan. 

(165) See Spain’s recovery and resilience plan. 

(166) See INNOVFUND Spain. 

(167) See Spain’s recovery and resilience plan, and From phasing-
out to phasing-in: lessons from Spain’s just transition 
governance framework. 

(168) These measures are also supported by the European Social 

Fund+ and Just Transition Fund programmes. 

(169) Spain’s final updated national energy and climate plan 

2021-2030, 2024. 

75 

infrastructure, 
electrolysers 

including 
and 
It  promotes  demand 

hydrogen 
hydrogen 
transport 
valleys, 
infrastructure (170). 
for 
climate-friendly  products  through  green  public 
procurement  and  circular  economy  policies, 
including  the  use  of  environmental  criteria  in 
public tenders (171).  

regarding 

permitting, 

Despite  Spain’s  expanded  policy  toolkit  for 
the  clean  industrial  transition,  challenges 
remain.  Key  constraints  include  grid  congestion 
and  delays  in  grid  connections,  limited  uptake  of 
renewable hydrogen, financing gaps for first-of-a-
kind projects and administrative complexity related 
to permitting (172). However, steps have been taken 
by the government with the approval of the Royal 
Decree 997/2025 and Royal  Decreee Law 7/2026 
with  measures 
grids, 
for 
electrointensive industries, among other important 
measures.  Uncertainty 
long-term 
electricity  prices,  hydrogen  supply  and  future 
demand  for  low-carbon  products  continue  to 
somewhat  curb  the  appetite  to  invest  in  net-zero 
industry,  although  investments  in  decarbonisation 
and  net-zero  industries  continue  to  grow  at  high 
rates despite all of the aforementioned constrains. 
international 
Concerns 
competitiveness  and  carbon 
in 
the 
energy-intensive  sectors,  particularly 
absence  of  long-term  demand-side  measures. 
Many  industrial  decarbonisation  measures  remain 
at  an  early  stage  of  deployment,  requiring  faster 
implementation  in  the  second  half  of  the  decade 
to meet the targets set in the energy and climate 
plan (173).  

leakage  risks 

remain 

about 

in 

A particular challenge for investment in low-
carbon technologies concerns permitting and 
regulatory  clarity  for  integrated  and  hybrid 
projects.  Although  permitting  procedures  for 
renewable  electricity  generation  have  been 
streamlined,  they  could  still  be  tweaked  to  better 
accommodate  projects 
renewable 
generation  with  hydrogen  production,  storage  or 

combining 

(170) Ibid.; European Commission, assessment of the final updated 

national energy and climate plan of Spain. 

(171) Spain’s final updated national energy and climate plan 

2021-2030, 2024. 

(172) See European Commission, 2025 Country Report - Spain, 
ibid., and European Commission (2025), Climate Action 
Progress Report 2025, Spain country profile. 

(173) European Commission (2025), ibid.  

 
 
 
The 

issue 

industrial 

use (174). 
direct 
of 
competences and procedures overlapping between 
national,  regional  and local  authorities, as well as 
evolving  regulatory  requirements  can  lead  to 
increased  administrative  burden. 
delays  and 
clarify 
standardise  and 
Further  action 
permitting 
reduce 
help 
uncertainty  and  support  the  swift  roll-out  of 
industrial decarbonisation investments. 

procedures  would 

to 

Reduction of effort sharing emissions 

Compliance  with  effort  sharing  limits  with 
domestic measures 

For  2030,  Spain  is  projected  to  overachieve 
its  effort  sharing  target (175). 
In  2024, 
greenhouse  gas  emissions  from  Spain’s  effort 
sharing sectors are expected  to have been 22.3% 
below  2005  levels.  By  2030,  with  current  and 
planned  policies  and  measures,  these  emissions 
are expected to decrease by 45.3%, resulting in a 
surplus  of  7.6  percentage  points  relative  to  the 
2030 target reduction of 37.7%. Spain is projected 
to  exceed  its  effort  sharing  emissions  limits 
temporarily  in  the  2021-2030  period  but  could 
cover  the  gap  with  unused  annual  emission 
allocations from other years to achieve compliance 
with the Effort Sharing Regulation.  

In  2024,  greenhouse  gas  emissions  from 
Spain’s effort sharing sectors increased,  the 
key  challenges  being  emissions  from  road 
transport and buildings. In 2024, the emissions 

(174) See European Commission, 2025 Country Report – and 

Spain, ibid., European Commission, 2025, assessment of the 
final updated national energy and climate plan of Spain. 

(175) The  national  GHG  emission  reduction  target  is  set  out  in 
Regulation (EU) 2018/842 (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). The emissions from effort sharing 
sectors for 2024 are based on approximated inventory data. 
The  final  data  will  be  calculated 
in  2027  after  a 
comprehensive  review.  Projections  about  the  impact  of 
current  policies 
(‘with  existing  measures’,  WEM)  and 
additional  policies (‘with  additional  measures’,  WAM)  as  per 
Spain’s  2025  reporting  under  Article  17  of  Regulation  (EU) 
2018/1999 (the Governance Regulation). Also see European 
Commission  (2025),  Climate  Action  Progress  Report  2025 – 
Technical  Information,  Commission  staff  working  document, 
Brussels, Chapter 9 (pp. 111ff.),  and in particular Tables 25 
and 26. 

generated  by the  effort  sharing  sectors  increased 
year-on-year by 1.4%, driven by transport (+1.9%) 
and buildings (+2.6%). Transport generated around 
46%  of  all  effort  sharing  emissions  in  Spain  in 
2024 and buildings generated a further 19% (176). 
Emissions  have  remained  persistently  high  in 
these  sectors,  reflecting  structural  challenges  to 
the process of decarbonisation. 

Graph A8.1: Greenhouse gas emissions in the 
effort sharing sectors, 2005, 2023, and 2024 

Source: European Environment Agency. 

Sustainable transport 

in 

reductions 

In addition to the shift to electric buses and 
rail,  a  swift  roll-out  of  electric  vehicles  and 
charging  infrastructure  is  needed  to  make 
sustained 
road  transport 
emissions.  In  2023,  92.1%  of  Spain’s  freight 
transport on land (in tonne-kilometres) was carried 
by road and 4.1% by rail (177), reflecting structural 
factors  such  as  dispersed  freight  demand,  strong 
road  infrastructure  or  capacity  constraints.  While 
the roll-out of electric vehicles for both passengers 
and  goods  increased  by  22.6%  in  2024,  overall 
they  still  account  for  a  low  share  of  the  vehicle 
fleet (178). Zero-emission passenger cars accounted 
for only 9.1%(179) of new registrations in 2025 (EU: 
17.4 %),  slowing  the  pace  of  greenhouse  gas 
emission reductions from road transport. The slow 
rate  of  renewal  of  the  passenger  car  fleet (180)  is 
another barrier to progress on the shift to electric 
transport 
reductions. 
the  Spanish  Government  has 
Nevertheless, 

emission 

yield 

to 

(176) See Graph A8.1, and Table A8.1 at the end of this Annex. 

(177) EU transport in figures – Statistical pocketbook 2025. 

(178) Growth rate of the alternative fuels for M1&N1, Spain | 

European Alternative Fuels Observatory. 

(179) Eurostat, road_eqr_zev. 

(180) Eurostat, road_eqr_carmot and road_eqs_carmot. 

76 

050100150200250200520232024MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
 
  
 
announced  the  Auto+  Program,  which  seeks  to 
address  this  structural  challenge  by  promoting 
fleet turnover through targeted financial incentives 
and  thereby  contribute  to  emissions  reductions  in 
the  transport  sector.  Furthermore,  zero-emission 
from 
vehicles  are  not  exonerated 
goods 
concession tolls.  

Spain  built  more  charging  infrastructure  in 
2025,  reaching  53 000  operational  public 
charging  points (181).  However,  administrative 
and grid connection delays mean that a significant 
share  of  installed  chargers  is  not  yet  operational, 
and the relatively low share of fast and ultra-fast 
chargers may constrain uptake. This might become 
a  significant  constraint  to  the  ability  of  truck 
manufacturers  to  meet  their  legally  binding  sales 
target. As a result, it is essential to accelerate the 
modal  shift,  in  particular  to  shift  freight  traffic 
from road to rail. 

The shift to electric transport has progressed 
in public transport, with zero-emission buses 
and  coaches  accounting  for  15.3%  of  new 
registrations,  close  to  the  EU  average 
(17.8%),  indicating  the  potential  for  further 
emission reductions if scaled up. Spain has 49 
the  TEN-T 
urban  nodes  as  defined  under 
Regulation.  These  must  include  at  least  one 
multimodal passenger hub per node by 2030 to be 
equipped  with  charging  infrastructure  for  buses 
and coaches (182) Overall, this points to the need to 
accelerate the shift to electric transport, including 
multimodal  connection  and  passenger  services, to 
translate  progress 
sustained  emission 
into 
reductions. 

Decarbonisation of fisheries 

The  Spanish  fishing  fleet  is  the  highest-
emitting  fleet  in  the  EU  in  terms  of  total 
CO2eq,  amounting  to  an  average  of  1,539 
thousand  tonnes  CO₂-equivalent  between 
2018  and  2022 (183),  and  453.6  million  litres 
of  marine  fuel  consumed  in  2023.  In  view  of 
climate  change  mitigation,  both  the  fisheries  and 
aquaculture  sectors  face  the  dual  challenge  of 

(181) Data from the European Alternative Fuels Observatory. 

(182) Eurostat, road_eqr_zev 

(183)Study on greenhouse gas emission (GHG) reduction costs, 

scenarios and pathways for EU fisheries to achieve net zero 
by 2050 - Publications Office of the EU. 

that 

incorporates 

moving  away  from  fossil  fuels  and  increasing 
energy efficiency to enhance sector resilience. This 
transition 
requires  a  comprehensive  energy 
strategy 
renewable  energy 
sources,  technological  innovation,  balance  effort 
(e.g  additional  space  for  new  technologies)  with 
available  resources,  adequate  infrastructure  and 
access  to  energy  sources,  and  improved  energy 
practices across the sector's operations. 

Sustainable industry 

Circular economy industry 

waste 

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 out the long-term vision for the 
country’s  transition  to  a  circular  economy.  The 
strategy’s  objectives  will  be  achieved  with  the 
approval  of  three-year  action  plans.  The  first 
circular  economy  action  plan  has  already  been 
the 
implemented.  The  government  approved 
second 
circular  economy  action  plan  on 
27 January 2026.  It  includes  105  measures  and 
an  investment  of  around  EUR 1.9  billion.  Many 
autonomous  communities  have  also  adopted 
regional strategies on the circular economy. 

a 

by 

series 

followed 

In 2022, Spain adopted Law 7/2022 on waste 
and  contaminated  soils  for  a  circular 
economy, 
of 
implementing  regulations.  The  government 
approved  the  new  national  waste  management 
plan  (PEMAR  2025-2035)  on  16 December 2025 
in line with the new EU requirements in the waste 
sector. Regional  waste management plans for the 
two 
17  autonomous  communities  and 
autonomous cities need to be updated, with a few 
plans still pending. 

the 

Spain  is  below  the  EU  average  on  some  of 
the  relevant  circular  economy  and  waste 
management 
indicator 
tracking 
the  circular  use  of  materials  has 
decreased in recent years to 7.4% in 2024, below 

indicators.  Spain’s 

77 

 
 
the  EU  average  of  12.2% (184).  However,  resource 
productivity  is  above  the  EU  average  at  EUR 3.5 
per  kg  of  material  consumed  (against  the  EU 
average  of  EUR 3  per  kg) (185).  According  to  the 
latest  available  data,  in  2024,  Spain  generated 
456 kg  per  capita  of  municipal  waste,  below  the 
EU average of 517 kg per capita and continuing a 
downward  trend  (463 kg  in  2023  and  482 kg  in 
2022 and 2021) (186). Spain is one of the countries 
that  missed  the  EU  target  of  recycling  50%  of 
municipal  waste  by  2020  and  is  at  high  risk  of 
missing the  new  EU  target  of  55%  for  2025 (187). 
Spain's  recycling  rate  was  42.5%  in  2024,  below 
the  EU  average  of  48.1% (188).  However,  the 
situation varies by region (189).  

recent 

Spain  is  also  at  risk  of  not  meeting  the  EU 
2035  target  to  have  a  maximum  of  10%  of 
municipal  waste  landfilled.  Spain  is  still  very 
dependent  on  landfilling  for  waste  management, 
ranking  eighth  on  this  aspect.  The  landfilling  rate 
was 47.3% in 2024, well above the EU average of 
21.3%  and  a  slow  decrease  from  62% 
in 
2010 (190).  Construction  and  demolition  waste 
accounts for almost 40% of all waste generated in 
the  EU.  A 
that 
environmentally,  it  is  preferable  to  prepare  waste 
for 
recycling  operations  over 
incineration  and  landfilling  for  most  individual 
fractions  of  construction  and  demolition  waste. 
The  rate  of  preparing  mineral  construction  and 
demolition  waste  for  reuse  and  recycling in  Spain 
in  2022  was  70.5%,  against  the  EU  average  of 
79.7%. Therefore, it is essential to implement the 
new  legislation  and  the  new  plans,  including 
additional  measures  and  investments,  several  of 
which  are 
in  Spain's  recovery  and 
resilience plan (RRP) under Component 12. 

reuse  and 

study (191) 

included 

shows 

(184) Eurostat, circular material use rate, Link. 

(185) Eurostat, resource productivity, Link. 

(186) Eurostat, generation of municipal waste per capita, Link. 

(187) European Commission, 2023 Waste early warning report, 

Link. 

(188) The last available data are from 2023. Eurostat, recycling 

rate of municipal waste, Link. 

(189) Ministry for the Environment, 2023 Annual Report on waste 

generation and management in Spain, Link. 

(190) European Environment Agency (EEA), Municipal waste landfill 

rates in Europe by country (2010 and 2023), Link. 

On the positive side, Spain's recycling rate of 
packaging  waste  in  2023  was  70.5%,  which 
already meet the EU targets both of 65% for 
2025  and  70%  for  2030 (192).  Spain’s  plastic 
recycling  rate  was  46.2%  in  2023,  above  the  EU 
average  of  42.1%  (193).  On  innovation,  in  2021 
Spain  filed  22  patents  related  to  recycling  and 
secondary  raw  materials.  This  exceeds  the  EU 
leading 
average  but  remains  far  below  the 
countries on this front (194). Spain recorded a 16% 
increase in the number of people employed in the 
circular economy  sector  since  2014. However, the 
sector  accounts  for  around  2%  of  overall 
employment, as in the last 10 years (195). Over the 
past  five  years,  per  capita  material  consumption 
has  plateaued,  unlike  the  overall  trend in  the  EU 
which  indicates  that  material  consumption  is 
decreasing (196). 

On  environmental  taxation,  some  progress 
can  be  observed.  As  part  of  the  reforms  under 
Spain's  RRP,  new  national  taxes  have  been 
introduced in recent years on non-reusable plastic 
packaging  and  on  waste  management  (landfill, 
incineration and co-incineration). 

Extended  producer  responsibility  schemes 
are  well  developed  in  Spain.  There  are  15 
schemes  in  operation  for  oils,  packaging,  paper, 
textiles,  batteries,  electronic  waste,  construction, 
pharma, gardening and homeware supplies, sports 
equipment,  toys,  plastic  fishing  gear,  chemical 
products  and  furniture,  and  single-use  plastics 
(197). 

to  a 

investment 
circular  economy 

in  the 
The  current  level  of 
transition 
is 
insufficient,  despite  the  provision  of  EU 
funding,  for  example  under  the  European 
Regional Development Fund and the Recovery 
and  Resilience  Facility.  Spain  is  estimated  to 
need  additional  investment  of  EUR 2.3  billion  a 
year  to  fund  the  circular  economy  transition, 

(192) Eurostat: Recycling rates for packaging waste, Link. 

(193) Eurostat, Plastic packaging recycling rate, Link. 

(194) Eurostat, Patents related to recycling and secondary raw 

materials, Link. 

(195) Eurostat, Persons employed in circular economy sectors, Link. 

(191) European Commission: Joint Research Centre, Techno-

economic and environmental assessment of construction and 
demolition waste management in the EU, 2024, Link. 

(196) Eurostat, Material footprints, Link.  

(197) LIFE4EPR mapping tool, Link. 

78 

 
 
 
including investment in waste management, which 
represents 0.17% of Spain’s GDP (198). 

2030) (203),  which  provides  the  overarching  policy 
framework  for  scaling  up  bio-based  value  chains 
across the country. 

Bioeconomy industry 

In  Spain,  value  added  in  the  bioeconomy 
sector  has  grown  slightly  faster  than 
domestic  GDP  in  recent  years.  This  has  been 
driven notably by the wood products and furniture 
and bio-based chemicals and plastics sectors, with 
the  former  registering  the  highest  value  added 
growth among the sub-sectors at 7.1% on average 
between  2018  and  2023  (199)(200).  Employment 
trends are similarly positive across key segments: 
food and beverages, wood products and furniture, 
and bio-based chemicals and plastics all recorded 
growth. Bio-based chemicals and plastics grew the 
fastest  at  3.4%,  reflecting  the  sector's  expanding 
industrial footprint. Labour productivity was 90.6% 
of  the  national  average,  up  from  82.9%  in 
2018 (201). 
relative 
underperformance  is  research  and  development 
(R&D),  where 
from 
bioeconomy sub-sectors grew by an average 5.3% 
between  2018  and  2023  —  somewhat  below  the 
national  R&D  average of 6.9%  — suggesting that 
innovation investment has not yet fully kept pace 
with 
the  sector's  output  and  employment 
momentum (202). 

expenditure 

business 

area 

one 

The 

of 

Structurally,  Spain's  bioeconomy is  anchored 
by  a  dominant  food  and  beverage  industry. 
This  is  built  on  large-scale  value  creation  from 
agri-food  residues  from  olive  oil  and  wine 
production,  complemented  by  an  emerging  bio-
based  chemicals  and  plastics  segment  and  a 
resilient  wood  and  furniture  sector 
is 
increasingly geared toward engineered timber and 
sustainable 
These 
in  the  Spanish 
developments  are  embedded 
(Horizonte 
National 

management. 

Bioeconomy 

Strategy 

forest 

that 

(198) European Commission, Environmental Implementation 
Review (EIR) 2025, Country Report Spain. Estimates 
expressed in 2022 prices, Link. 

(199) Bioeconomy subsectors: food and beverages; bio-based 

textiles; wood products and furniture; bio-based chemicals 
and plastics. 

(200) Joint Research Centre, Developments of Economic Growth 

and Employment in Bioeconomy Sectors across the EU, Link. 

(201) Ibid. 

(202) Joint Research Centre, Business expenditure in Research and 

Development (R&D) in the EU bioeconomy, Link,. 

79 

Zero-pollution industry 

Spain  has  made  considerable  progress  in 
is  now 
reducing  air  pollution,  which 
decoupled  from  GDP  growth.  However,  Spain's 
progress on air pollution is mixed. While emissions 
of  several  air  pollutants  have  fallen  in  recent 
decades,  air  quality  in  Spain  remains  a  cause  for 
concern,  mainly  as  regards  nitrogen  dioxide.  In 
particular,  private  transport  exacerbates  seasonal 
air  quality  problems  and  traffic  congestion  in  the 
major  metropolitan  areas,  namely  Madrid  and 
Barcelona,  leading  to  health  and  economic  costs. 
In  this  context,  Low  Emission  Zones  (LEZs)  have 
been  introduced  as  a  key  policy  instrument.  To 
improve  air  quality  and  reduce  emissions.  Under 
Spain’s Climate Change Law, their implementation 
is  mandatory  in  cities  with  more  than  50,000 
inhabitants. 

Spain’s  industry  continues  to  release  large 
volumes of air and water pollutants. In Spain, 
around  7 000  industrial  installations  are  required 
under the Industrial Emissions Directive to have a 
permit.  Most  of  these  installations  are  in  the 
sectors of intensive poultry and pig farming (56%), 
followed by the food and drink sector. Spain has a 
relatively  high  rate  of  damage  to  health  and  the 
environment (the fifth highest damage in the EU). 
The main industrial sources of emissions to air are 
the energy sector (including refineries, gasification, 
etc.),  the  mineral  sector  and  the  metal  sector. 
Regarding industrial emissions of heavy metals to 
water,  considering  the  human  toxicity  of  each 
metal, as well as the emission intensity, based on 
its ratio with industrial activity (expressed in GVA), 
Spain  has  the  fifth  highest  level  of  emissions  of 
heavy metals to water and is in ninth on emission 
intensity (204).  Water  pollution  by  Spanish  industry 
imposes direct and indirect costs of EUR 36 million 

(203) Estrategia Española de Bioeconomía, Horizonte 2030, Link. 

(204) European Commission, Environmental Implementation 
Review (EIR) 2025, Country Report Spain. Estimates 
expressed in 2022 prices, Link. 

 
 
 
 
a  year,  not  yet  sufficiently  borne  by  the  polluters 
(205). 

Air  pollution  continues  to  have  a  significant 
impact  on  human  health.  The  latest  available 
annual  estimates  (for  2023)  by  the  European 
Environment  Agency  for  Spain  attribute  13 317 
deaths  each  year  (or  140 261  years  of  life  lost 
(YLL))  to  fine  particulate  matter  (PM2.5);  4 135 
deaths  each  year  (or  43 553  YLL)  to  nitrogen 
dioxide  (NO2)  and  6 527  deaths  each  year  (or 
69 006 YLL) to ozone pollution (206). 

The costs of pollution remain far higher than 
the costs of investing in pollution prevention 
and control. To meet its environmental objectives 
on  pollution  prevention  and  control  (towards  zero 
pollution), Spain would need additional investment 
of  EUR 1.7  billion  a  year  (0.13%  of  GDP),  mostly 
for  measures  on  clean  air  and  noise (207). 
Implementing  the  national  climate  and  energy 
plan, which provides for investments in sustainable 
energy and transport, would largely deliver this. 

(205) European Commission, Directorate-General for Environment, 
IEEP, Green taxation and other economic instruments – 
Internalising environmental costs to make the polluter pay, 
2021, p.35, table 5, Link. 

(206) EEA 2025, Harm to human health from air pollution in 

Europe: burden of disease status, Link. 

(207) European Commission, Environmental Implementation 
Review (EIR) 2025, Country Report Spain. Estimates 
expressed in 2022 prices, Link. 

80 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A8.1:  Key clean industry and climate mitigation indicators: Spain 

Sources and notes: Industry decarbonisation: All data are from Eurostat; data following the UNFCCC Common Reporting 
Format (CRF) are from the European Environment Agency (EEA), republished by Eurostat. (1) Sectors covered: all divisions of 
section C - Manufacturing - of the NACE Rev. 2 statistical classification of economic activities, except C19 (manufacture of coke 
and refined petroleum products). (2) GHG emissions as per UNFCCC Common Reporting Framework (CRF) categories 1.A.2 - fuel 
combustion in manufacturing in industries and construction (that broadly correspond to the broadly correspond to the NACE 
sections C - Manufacturing and E - Construction, excluding C-19),  and CRF2 - industrial processes and product use. The figures 
shows the emissions in the 1.A.2 category as a share of the sum of CRF1.A.2. and CRF2 emissions. (3) Sectors covered: CRF 1.A.2 
as described above. Gross value added (GVA) data in the denominator aligned in sectoral coverage, in 2020 prices. (4) Sectors 
covered: NACE section C excluding C19. (5) Nominator: NACE divisions C17, 20, 23, 24; denominator: NACE section C excluding 
C19 (see above). (6) GVA (denominator) in 2020 prices. Reduction of effort sharing emissions: Data source: European 
Environment Agency, greenhouse gas data viewer; European Commission, Climate Action Progress Report, 2025. For details, see 
the footnote in the "Reduction of effort sharing emissions" section. Sustainable road transport: (7) Source: Eurostat; (8) Source: 
European Alternative Fuels Observatory; (9) Source: Eurostat. For all climate mitigation indicators, the trend arrows compare the 
latest available data (year t) with the data four years earlier (t-4). Sustainable industry: Bioeconomy value added, employment 
and productivity: JRC, Developments of Economic Growth and Employment in Bioeconomy Sectors across the EU. Bioeconomy 
R&D business expenditure: JRC, Business expenditure in Research and Development (R&D) in the EU bioeconomy. Damage cost for 
industrial pollution: EEA, The costs to health and the environment from industrial air pollution in Europe, 2024. Water industrial 
pollutants releases: EEA, Industrial releases of pollutants to water and economic activity in the EU-27, 2024. Water chemical 
status: WISE, Surface water bodies: Chemical status, 2024 and WISE Groundwater bodies: chemical status, 2024. Other indicators: 
Eurostat. For circular economy indicators, the trend arrows compare the latest available data (year t) with the data two years 
earlier (t-2). 

81 

Climate mitigationTrendIndustry decarbonisation201820192020202120222023202420182023GHG emissions intensity of manufacturing production, g/€ (1)497478497477391354-330-Share of energy-related emissions in industrial GHG emissions (2)63.765.064.665.562.663.7-55.557.9Energy-related GHG emissions intensity of manufacturing and construction, g/€ (3)334.7330.6340.2328.1259.8236.9-203.9163.0Share of electricity and renewables in final energy consumption in manufacturing, % (4)41.140.440.041.644.845.444.742.843.9Energy intensity of manufacturing, GWh/€ (4)1.611.591.721.601.381.361.351.271.05Share of energy-intensive industries in manufacturing production, % in GVA (5)18.6818.6318.9520.7018.9818.25---GHG emissions intensity of production in sector [...], g/€ (6)- paper and paper products (NACE C17) 1 234       1 319       1 116              1 207         1 102               849           -722             619            - chemicals and chemical products (NACE C20) 1 665       1 490       1 364              1 415         1 500               1 148        -              --- other non-metallic mineral products (NACE C23) 3 948       3 394       3 517              3 158         2 896               3 225        -2 495          2 352         - basic metals (NACE C24) 2 795       2 723       2 528              5 075         5 766               4 321        -2 842          3 099         Reduction of effort sharing emissions201820192020202120222023202420182023GHG emission reductions relative to base year, % -19.5-19.7-22.8-22.3- domestic road transport-11.7-10.7-26.8-15.7-11.6-14.6-12.9-1.4-5.6- buildings-5.8-10.2-11.1-8.9-14.9-16.5-14.3-20.3-33.520052021202220232024TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %242.0194.7194.2186.9188.1-37.7%-35.4%-45.3%Sustainable road transport2018201920202021202220232024202520182021New zero-emission vehicles, electricity motor, % (7)0.430.761.962.663.735.635.571.038.96Number of publicly accessible AC/DC charging points (8)--5741859122090303724521346902446956n/aShare of electrified railways, % of total (9)63.6964.0564.5764.0564.7966.5065.6055.4756.49Sustainable industryTrendEU-27Circular economy transition20182019202020212022202320242018latest dataMaterial footprint, tonnes per person10.910.110.110.410.09.310.214.813.7Circular material use rate, %9.0            9.0           9.4                  9.1             9.6                    8.2             7.411.612.2Resource productivity, €/kg2.7            2.9           2.7                  2.8             3.2                    3.6             3.52.13.0Employees in circular economy2.2            2.32.3                  2.3             1.9                    2.0             -2.12.0Patents in circular economy17.815.3         29.5                22.3           12.312.0Recycling rate           34.8           38.0                  40.4             43.7                   43.1            43.3 42.5            46.4048.1Plastic recyling 51%52%41%44%41%46%-41%42%Construction and demolition waste (CDW) recovery 75-738889Bioeconomy industry 2018201920202021202220232024CAGR 2018-202320182023Value added, million EUR67 98568 57267 84475 68774 48686 840-4.2%642 438863 436Employment, total number of people employed1 488 9121 497 0811 457 1581 513 8921 522 4301 508 722-0.2%17 649 04017 085 642ProductivityValued added per worker, thousand EUR45.745.846.650.048.957.6-3.9%36.450.5Valued added per worker, % of national average82.982.488.489.781.290.6--62.270.7R&D business expenditureTotal bioeconomy (biomass producing and converting sectors)1 2661 3441 3801 5791 5881 7265.3%15 67223 335Total R&D business expenditure8 4458 7418 7679 69610 90212 616-6.9%196 587259 525Zero pollution industry201820192020202120222023202420182021Damage cost for industrial pollution36.426.023.421.3---414.9352.7Water industrial pollutants releases 2021change (2010)2021change (2010)2021change (2010)2021change (2010)11 555     -62%49 519 400     24%-                   -6%4 128 000   -1% Water chemical statusGood4 915              Good (%)0.9                    Poor386.0Poor (%)7%EUTOCPhosporusSpainSpainCd, Hg, Ni, Pbnitrogen 
 
  
 
ANNEX 9: AFFORDABLE ENERGY TRANSITION 

This  annex  outlines  the  progress  made  and 
the  ongoing  challenges  faced  in  increasing 
energy  competitiveness  and  affordability, 
while  advancing  the  transition  to  net  zero. 
Spain’s  2025  country-specific  recommendations 
highlighted the need to invest in energy storage, in 
electricity  transmission  and  distribution,  and  in 
cross-border electricity interconnections. Spain has 
taken  measures  to  achieve  a  balanced  energy 
transition,  including  measures  to  address  the 
findings of the ENTSO-E expert panel’s analysis of 
the electricity blackout of 28 April 2025. However, 
Spain  would  benefit  from  taking  further  steps  to 
enable  its  transmission  system  operator,  REE,  to 
take the electricity grid out of ‘reinforced operation 
mode’.  

Energy prices and costs 

With  the  exception  of  household  gas  prices, 
retail  energy  prices  for 
industrial  and 
household  consumers  increased  in  Spain  in 
2025  compared  to  2024,  but  remain  below 
the EU average. 

Graph A9.1: Electricity and gas prices for 
household and non-household consumers, first 
half of 2025 

(i) For household consumers, the consumption band is DC for 
electricity and D2 for gas. 
(ii) For non-household consumers, the consumption band is ID 
for electricity and I4 for gas. VAT and recoverable charges are 
not displayed for non-household consumers as these are 
typically recovered by businesses. This also applies to the ‘% 
of taxes and levies’, which is shown excluding VAT and 
recoverable charges for non-household consumers. 
(iii) ‘Without taxes and levies’ indicates the retail price 
excluding all taxes and levies. It always includes the 
energy/supply and network cost components, which are not 
disaggregated in Eurostat’s six-monthly price dataset. 
Source: Eurostat 

Household  electricity  prices  in  Spain  increased 
during the first half of 2025, but remained below 
the  EU  average  at  EUR 0.2608/kWh.  Household 
gas prices also remained below the EU average at 
EUR 0.0859/kWh.  Non-household  consumer  prices 
for  electricity  and  gas  were  up  on  2024  but 
remained  below  the  EU  average.  For 
large 
businesses,  electricity  was  2.7 
times  more 
expensive  than  gas  during  the  first  half  of  2025. 
Taxes  and  levies  (excluding  VAT)  accounted  for 
11%  of  electricity  bills  and  4%  of  gas  bills. 
Excluding  taxes  and  levies,  the  electricity-to-gas 
price ratio would have decreased to 2.5, indicating 
that  Spain’s  fiscal  measures  have  an  uneven 
impact. For household consumers, taxes and levies 
also  had  an  impact  on  the  electricity-to-gas  price 
ratio, which would have decreased from 3 to 2.7 if 
taxes and levies are excluded. 

fourth 

The  high  share  of  clean  energy  (54.9%)  in 
Spain’s electricity mix meant that Spain had 
the 
lowest  average  wholesale 
electricity  prices  in  the  EU  in  2025,  at 
EUR 66/MWh,  below  the  EU  average  of 
EUR 85/MWh.  In  2025,  Spain  had  the  highest 
number of hours with negative power prices in the 
EU. 

Further aligning demand to renewable energy 
supply  is  key  to  containing  prices  in  Spain. 
Daytime  prices  have  fallen  in  recent  years  owing 
to  the  deployment  of  solar  power.  However, 
thermal  plants,  which  are  costlier  to  run,  are 
needed  to  make  up  for  lower  solar  output  in  the 
evening  and  early  morning,  and  for 
limited 
demand  flexibility.  As  a  result,  intraday  price 
spreads  between  peak  and  off-peak  periods 
averaged EUR 93/MWh in 2025, up 31% compared 
to  2024.  Overall,  average  day-ahead  electricity 
prices  in  Spain  and  the  broader  region  increased 
by 7% in 2025 due to rising natural gas costs. 

Spain  has  so  far  been  unable  to  use  its 
allocation  under  the  Social  Climate  Fund  to 
support  vulnerable  consumers,  as  other 
Member  States.  Energy  poverty  is  relatively 
higher in Spain than in other Member States and is 
somewhat  acute  among  households  at  risk  of 
poverty  (208).  Spain  has  already  tackled  these 
problems  with  both  temporary  and  long-term 
structural  policies  to  take  care  of  the  most 
vulnerable  households.    Spain  has  so  far  not 

(208) See Annex 12. 

82 

 
 
 
 
 
 
transposed  the  Emissions  Trading  System  2 
Directive due to parliamentary constrains, being so 
far  unable  to  tap  into  the  Social  Climate  Fund  to 
offer  support  to  vulnerable  groups,  like  other 
Member  States.  The  government  has  instead 
resorted  to  temporary  measures  to  address  high 
energy prices (209). 

Graph A9.2: Low-carbon electricity generation vs. 
electricity wholesale prices, 2025 

Unavailable data for Cyprus and Malta. Wholesale price is 
given as average of day-ahead electricity prices over 2025. 
EU-27 average is calculated as consumption-weighted. EU 
low-carbon share is calculated out of total EU electricity 
generation. Low-carbon share by country is calculated out of 
total public electricity generation. Low-carbon includes 
renewables and nuclear. 
Source: Eurostat 

Flexibility and electricity grids 

Spain  has  made  progress  towards  achieving 
in 
the  2025  recommendation  to 
energy  storage,  electricity  transmission  and 
distribution.  However,  further  work  is  needed, 
given  the  challenges  exposed  by  the  blackout  on 
28 April 2025. 

invest 

Prior to the blackout on 28 April 2025, Spain 
had already been taking significant remedial 
actions to control grid voltage. In 2024, Spain 
had  the  highest  number  of  remedial  actions 
activated  as  a  percentage  of  electricity  demand 
after Denmark. Moreover, it was the only Member 
State  where  almost  half  of  all  remedial  actions 
were to address voltage security limit violations. 

Spain  is  advised  to  continue  taking  the 
necessary  steps  to  take  its  grid  out  of 

‘reinforced  operation  mode’.  To  ensure  grid 
stability,  the  transmission  system  operator  is 
actively  using  gas  power  plants  to  maintain 
voltage  stability  pending  further  reforms  and 
investments  being 
reinforce 
voltage control. 

implemented 

to 

A  more  strategic  approach  to  the  permit-
granting  process  is  being  put  in  place.  The 
significant  volume  of  grid  connection  applications 
(around  60GW  for  wind,  150GW  for  solar  PV  and 
100GW  for  battery  storage)  also  reflects  strong 
investor interest in renewable deployment in Spain. 
In  this  context,  the  authorities  have  adopted 
measures  to  address  potential  permit  hoarding 
and  ensure  that  grid  access  is  allocated  to  the 
thereby 
most  mature  and 
improving the efficiency of the connection process. 
Additionally, as with REPowerEU, the Recovery and 
Resilience Facility has a specific chapter dedicated 
infrastructure, 
to  supporting  electricity  grid 
flexibility and storage. 

robust  projects, 

The discrepancy between the number of grid 
access  requests  and  the  number  of  projects 
actually  entering  operation 
is  far  from 
trivial.  As  this  Annex  and  the  Annex  on  industry 
decarbonisation (210) show, there are challenges in 
accessing  the  grid  but  also  in  translating  access 
into  operation.  For  instance,  the  final  version  of 
Spain’s updated NECP sets a target of 22.5GW of 
energy  storage  capacity  by  2030.  However, 
additional  projects  in  the  pipeline  to  supplement 
the  7.65GW  currently 
including 
measures  under  Spain’s  recovery  and  resilience 
plan, are only set to bring the total up to 14.2GW. 

in  operation, 

By adapting its grid remuneration framework 
Spain  could  support  the  large  investments 
its  NECP  targets.  The 
needed  to  reach 
authorities  have  set  the  financial  remuneration 
rate  for  grid 
i.e.  1 
percentage  point  higher  than  in  the  period  2021-
2026.  In  addition,  they  have  allowed,  under 
exceptional  circumstances, 
limit 
subject to this rate to be increased beyond 0.13% 
of  GDP  for  transport  and  0.065%  for  distribution, 
by up to EUR 13.3bn. 

investments  at  6.58%, 

funding 

the 

In relation to cross-border electricity trading, 
Spain  has  been  taking  significant  costly 
remedial  actions  to  manage  congestion  at 

(209) Real Decreto-ley 7/2026. 

(210) See Annex 8. 

83 

 
 
 
 
the border with France. Limitations to additional 
cross-zonal  trade  are  a  constant  problem  at  the 
France-Spain  border,  as  well  as  at  certain  other 
borders  in  the  EU  (e.g.  the  border  between  the 
Continental Europe and Nordic synchronous areas, 
and the Italy North border).  

As  of  2026,  Spain’s  interconnection  level  is 
3.11%,  compared  with  3.62%  in  2025.  This 
decrease  is  linked  to  a  temporary  reduction 
in  available  alternating  current  due  to 
planned  maintenance  as  well  as  rapid  solar 
capacity  expansion  which  has  impacted  the 
denominator.  Nevertheless,  Spain  is  still  a  long 
way off the 2030 interconnectivity target of 15% 
which  highlights  the  need  for  cross-border  and 
internal grid reinforcements. 

interconnection  projects. 

Progress  has  been  made  on  several 
electricity 
The 
interconnection  with  Portugal,  between  Beariz, 
Fontefría  and  Ponte  de  Lima,  expected  to  be 
commissioned  in  Q1  2026,  will  improve  system 
flexibility  in  the  Iberian  Peninsula.  The  Bay  of 
Biscay  electricity  interconnection  between  Spain 
and  France,  which  is  due  to  be  commissioned  in 
2028,  will  double  interconnection  capacity  to 
5 GW.  The  second  list  of  Projects  of  Common 
Interest  and  Projects  of  Mutual  Interest  also 
included  the  Pyrenean  Crossing  interconnectors 
with  France  and  a  number  of  electricity  storage 
projects.  These  projects  respond  to  the  need 
identified  in  the  ten-year  network  development 
plan  to  establish  additional  cross-border  capacity 
and flexibility to support solar expansion. 

demand 

response, 

Spain  is  promoting  consumer  empowerment 
through 
energy 
communities,  dynamic  pricing  and  smart 
grids.  Dynamic  price  contracts  are  available  for 
household  and  non-household  customers.  99%  of 
final  household  consumers  already  have  a  smart 
meter.  Around  2%  of  Spanish  household 
consumers 
‘prosumers’. 
Furthermore, the number of energy communities is 
steadily 
identified. 
increasing,  with  over  365 
Spain’s recovery and resilience plan offers support 
for  energy  communities  and  self-consumption 
under  the  strategic  project  for  economic  recovery 
and transformation - renewable energy, renewable 
hydrogen and storage (PERTE ERHA). 

considered 

can  be 

In  2024,  electricity  accounted  for  24.8%  of 
(FEC) 
Spain’s  final  energy  consumption 

84 

(slightly  above  the  EU  average  of  23.4%),  a 
share which has remained largely unchanged 
over  the  last  decade (211),  partly  due  to  an 
unfavourable  electricity-to-gas  price  ratio 
that  disincentivises  electrification  and  cost-
effective  decarbonisation.  Electricity  accounts 
for 46.6% and 30.7% of household and industrial 
FEC  respectively  (see  Annex  8).  In  the  transport 
sector,  the  share  of  FEC  accounted  for  by 
electricity  remained  negligible  (1.2%).  Further 
progress  would  help  to  decarbonise  the  economy 
and bring the benefits of affordable renewables to 
consumers. 

Renewables and long-term contracts 

Following  a  record  year  for  renewable 
electricity  generation  in  2024,  a  decline  by 
1.4 percentage points was observed in 2025. 
In  Spain,  renewables  account  for  a  significant 
share  of  the  electricity  mix (54.9%  vs  an  overall 
EU share of 44.8%), despite the 28 April blackout 
causing  this  to  fall.  The  second  largest  share  is 
accounted  for  by  nuclear  (18.6%).  Fossil  fuels 
represented  less  than  a  quarter  of  electricity 
generation (212). 

for 

capacity 

renewables 
Installed 
in  2025  (213). 
represented  98  614  MW 
Installed  wind  and  solar  capacity  in  Spain 
grew  by  12%  in  2025  to  reach  97 530  MW 
(see graph below). The highest growth was in solar 
energy, with installed capacity increasing by 7 800 
MW  to  reach  48 130  MW,  i.e.  an  18%  increase. 
Total  installed  capacity  for  wind  increased  by 
1 050 MW to reach 33 100 MW, a 3.1% increase. 
Curtailment  of  renewable  energy  reached  1%  in 
2025. 

reforming 
In  2025,  Spain 

Spain 
is 
its  permit-granting 
to 
processes. 
accelerate and simplify permit-granting processes 
for  repowering  renewable  energy  installations,  as 

took  steps 

(211)The  CAGR  (compound  annual  growth  rate)  was  -0.54% 
between  2015  and  2024  and  minimum/maximum  share  of 
24.5%  and  26.0%, 
respectively.  Source:  Final  energy 
balances, (Source: Eurostat). 

(212) Energy charts based on ENTSO-E Transparency Platform. 

(213) International Renewable Energy Agency (IRENA) - Renewable 

Capacity Statistics 2026. 

 
 
well  as  storage  and  hybrid  installations.  The 
current  permitting  framework  for  renewables 
includes  measures  on  knowledge-sharing,  on 
publishing  the  grid  capacity  of  system  operators 
and 
for 
regulatory 
innovative projects. 

developing 

sandboxes 

Graph A9.3: Spain’s installed renewable capacity 
vs electricity generation mix 

Electricity mix is given as net electricity generation (gross 
electricity production minus consumption of power stations’ 
auxiliary services). Electricity produced in pumped hydro 
plants is excluded from total net electricity production, as it 
was previously counted as electricity produced from another 
source. 
“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Eurostat 

Spain’s national energy and climate plan sets 
a target for the share of renewables in final 
energy  consumption  (FEC)  of  48%  by  2030, 
which is above the EU-level target of 42.5%. 
Spain  also  aims  for  renewables  to  account  for 
81%  of  electricity  generation  by  2030  and  to 
reach 160 GW of installed renewables capacity by 
2030  (including  76 GW  of  solar  and  62 GW  of 
wind). However, no new schedule on the expected 
allocation of support for renewables was released 
in  2024  in  the  Union  Renewables  Development 
Platform. 

Around 

(PPAs). 

Spain  remains  the  EU’s  largest  and  most 
for  power  purchase 
dynamic  market 
agreements 
of 
is  covered  by  private 
renewables  capacity 
contracts,  with  solar  accounting  for  the  majority. 
Following a record year for PPAs in 2024 with the 
negotiation of 6 GW of new capacity, 2025 saw a 
slow-down as the market adjusted to lower growth 
in electricity generated from renewables. 

11 GW 

Spain  is  taking  steps  to  support  biogas  and 
biomethane production. For instance, in January 

85 

its  2030 

the  Spanish 

(CNMC)  provided 

2026, 
independent  competition 
clarification  on 
regulator 
precedence  of  claims,  capacity  allocation,  cost 
sharing  between  operators  and  management  of 
reverse  flows  (214).  However, 
in  2024  Spain 
for 
target 
of 
reached  1.6% 
biogas/biomethane  production  as  set 
its 
national energy and climate plan (i.e. 319 GWh vs 
20  TWh).  The  1.6%  figure  refers  specifically  to 
biomethane  injection  into  the  grid.  According  to 
MITECO's  PNIEC  2023-2030  monitoring  (February 
2026),  total  biogas  production  reached  4.36  TWh 
in  2024,  equivalent  to  a  21.8%  compliance  rate 
against the PNIEC 2030 target of 20 TWh for total 
biogas.  RDL  7/2026  further  introduces mandatory 
biomethane targets in sectors other than transport 
and  a  dedicated  sustainability  label,  with  a  public 
consultation open until 15 May 2026 

in 

Energy efficiency 

Further  efforts  are  needed  for  Spain  to 
achieve  its  2030  energy  efficiency  targets.  
Final  energy consumption in the residential sector 
decreased between 2019 and 2024 but remains a 
long  way  off  the  objective  set  in  the  2020  long-
term  renovation  strategy(215).  While  final  energy 
consumption  has  decreased  substantially 
in 
industry  (-11.2%  since  2019),  and 
is  on  a 
downward trend in the residential sector (-4.6%), it 
has  increased  in  services  (+3.4%)  and  transport 
(+0.7%). 
energy 
consumption  was  83.5 Mtoe  and  therefore  not  in 
line  with  the  trajectory  for  meeting  its  expected 
contribution by 2030. 

In  2024, 

Spain’s 

final 

Spain  has  submitted 
its  draft  national 
building renovation plan. The aim of this plan is 
to create a predictable pathway towards achieving 
an  energy  efficient  and  decarbonised  building 
stock which, at present, is responsible for 28.5% of 
total  final energy consumption. In this plan, Spain 
estimates to EUR 233 billion the needs to reach a 
high-efficient  and  decarbonised  building  stock 
between  2026  and  2050.  The  plan  also 
acknowledges  the  importance  of  the  sector  for 

(214) Acuerdo del Consejo 

https://www.cnmc.es/expedientes/cnsde96525 

(215) Annex 12 presents the state of energy poverty in Spain. 

 
 
 
 
 
(216).  Alongside 
improving  energy  efficiency 
measures  under  Spain’s  recovery  and  resilience 
plan, the Social Climate Fund can help respond to 
the  significant investments  needs  associated  with 
renovating  the  housing  stock,  particularly  taking 
into account vulnerable groups. 

Renewables  account  for  a  limited  share 
(22%)  of  total  energy  used  in  heating  and 
cooling  across  all  sectors.  Around  200 000 
heat pumps were sold in 2025, a decrease of 6% 
compared  to  2024,  taking  Spain’s  stock  of  heat 
pumps  to  around  1 700 000.  The  sector  as  a 
whole generated 230 000 direct and indirect jobs. 
Spain  has  at  least  13  facilities  producing  heat 
pumps. 

The  cost  of  electricity  used  for  heating  was 
three  times  more  expensive  than  gas  during 
the first half of 2025 in Spain. This means that 
unless heat pumps are three times more efficient 
than  gas  boilers,  there  is  limited  incentive  to 
switch to a heat pump. 

Security of supply and diversification 

Spain  aims  to  reduce  its  dependency  on 
energy imports from 73% in 2019 to 50% by 
2030.  To  achieve  this,  Spain  intends  to  increase 
renewables,  while 
domestic  production  of 
decreasing fossil fuel imports and primary energy 
consumption.  Over  25  emergency  measures  were 
taken in 2021 to strengthen the energy supply. An 
additional  73  measures  were  introduced  in  2022, 
focusing  on  energy  savings,  efficiency  and 
renewables. The gas sector is relatively resilient as 
imports  come  from  16  different  sources.  The 
government  is  promoting  renewable  gas  and 
minimum  emergency  stocks.  Natural  gas  traders 
and  direct  consumers  are  required  to  hold 
27.5 days’  worth  of  firm  sales  or  consumption  in 
emergency  stocks.  Russian  LNG  imports  fell  by 
41% in 2025. 

in  deploying 
Despite  making  progress 
renewables,  Spain’s  overall  energy  mix  in 
2024 remained heavily based on fossil fuels. 
Oil  and  natural  gas  accounted  for  45.6%  and 

(216) Annex 7 presents evidence on energy efficiency of the 

Spanish housing stock. 

20.0%  of  gross  inland  consumption  respectively, 
with  Spain  no  longer  relying  on  coal.  Renewables 
(including  biofuels)  accounted  for  19.9%.  Spain’s 
continued  reliance  on  fossil  fuels  underscores the 
importance  of  its  ongoing  efforts  to  diversify 
energy  sources  and  strengthen  energy  security 
(217).  

report  by 

On  28  April  2025,  Spain,  Portugal  and  parts 
of  France  experienced  an  unprecedented 
power outage. As required by EU law, ENTSO-E is 
leading  an  in-depth  investigation  into  the  causes 
of  this  blackout.  A  factual  report  describing  the 
sequence  of  events  leading  up  to  and  following 
the  blackout  was  published  in  October  2025.  A 
final 
the  ENTSO-E  expert  panel 
explaining  the  root  causes  of  the  blackout  was 
published on March 2026. Spain and Portugal have 
submitted  their  ex  post  evaluation  report.  At  the 
request  of  the  Spanish  Government,  Spain’s 
independent competition regulator (CNMC)  and its 
transmission  system  operator  (REE)  are  reviewing 
operating procedures (218)  for renewables, storage 
and  demand  response  to  better  manage  voltage 
and  congestion  in  a  holistic  way,  with  a  clear 
timeline.  Redispatch  costs,  plus  costs  from 
operating  in  reinforced  mode  resulted  from  the 
reduced  share  of  renewables-based  electricity 
generation  (as  well  as  curtailment).  owever,  after 
CNMC  has  approved  the  updated  Operating 
Procedure  7.4  opening  up  voltage  control  to  all 
technologies,  including  renewable  energy,  there 
are  now  more  than  4GW  of  renewables  providing 
dynamic voltage control. 

Spain's  nuclear  fleet,  composed  of  seven 
reactors  generating  approximately  20%  of 
electricity,  operates  under  the  2019  phase-
out  agreement  establishing  a  gradual 
schedule through 2035. In November 2025, the 
license holder of the Almaraz nuclear power plant 
submitted  an  application  to  the  Ministry  for  the 
Ecological  Transition  and 
the  Demographic 
the 
Challenge 
exploitation  licence  of  its  two  reactors.  Any  such 
application is subject to the independent technical 
assessment  of  the  CSN, 
in  accordance  with 
international  safety 
legislation  and 
national 
standards.  Spain  is  actively  involved  in  fusion 

(Miteco)  for 

renewal  of 

the 

(217) Electricity  and  heat  are  excluded  in  order  to  avoid  double-
counting,  as  the  focus  is  on  primary  energy  sources  (gross 
inland consumption (Eurostat). 

(218) For example Procedimiento Operativo 7 - DCOOR/DE/005/24. 

86 

 
 
 
(F4E)  Joint  Undertaking 

energy  research,  in  particular  with  the  Fusion  for 
in 
Energy 
in-kind 
Barcelona 
contributions 
the 
international  IFMIF-DONES  programme,  initiated 
by  Spain  and  Croatia,  and  aiming  at  building  a 
materials test facility in Granada. 

in  charge  of  EU 
ITER),  and  also  with 

(F4E 
to 

located 

is 

In  response  to  the  regional  crisis  in  the 
Middle East, Spain has allocated €5 billion to 
mitigate  impacts,  including  VAT  reductions 
from 21% to 10% on gas, electricity, petrol, 
and  biomass,  and  tax  cuts  on  fossil  fuels  to 
EU  minimum  levels.  Spain  has  also  introduced 
€0.20/litre  subsidies  for  farmers  and  transport 
companies,  direct  aid 
for  electro-intensive 
reforms  such  as 
industries,  and  structural 
Renewable  Acceleration  Areas  (RAAs)  with  fast-
track permitting. 

Fossil fuel subsidies 

In  2024,  environmentally  harmful(219)  fossil 
fuel  subsidies  without  a  planned  phase-out 
represented  0.22%(220)  of 
before  2030 
(221).  However,  Spain’s  2023 
Spain’s  GDP 
Effective Carbon Rate(222) averaged EUR 71.10 per 
tonne of CO₂, below the EU weighted mean of EUR 
84.80(223).  

(219) Explicit fossil fuel subsidies (e.g. direct transfers) and implicit 
fossil fuel subsidies (i.e. tax expenditures linked to forgone 
tax revenues that have an identifiable fiscal impact for the 
central budget) that support fossil fuel energy production, 
transmission and/or consumption. 

(220) European Commission calculation based on underlying data 
from the Study on energy subsidies and other government 
interventions in the EU – 2025 edition, Enerdata. 

(221) 2024 Gross Domestic Product at market prices, Eurostat. 

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

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

(223) OECD (2024), Pricing Greenhouse Gas Emissions 2024. 

87 

 
 
ANNEX 10: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

Spain  remains  one  of  the  most  climate-
vulnerable  Member  States,  despite  progress 
in  strengthening  its  adaptation  framework. 
Spain  faces  increasing  exposure  to  climate  risks 
(notably heatwaves, droughts, floods, wildfires and 
coastal  erosion)  and  growing  human,  economic 
and  environmental  costs  across  sectors  such  as 
transport. 
agriculture,  water, 
in 
Implementation  gaps  persist 
addressing  droughts,  floods  and  forest  fires)  and 
are  more  pronounced  at  the  regional  and  local 
levels (see Annex 18).  Spain received a 2025 CSR 
on  water  management  and  climate  adaptation. 
Climate-proofing  of  infrastructure  and  uptake  of 
nature-based solutions remain limited. 

and 
(particularly 

energy 

Declining net carbon removals in the LULUCF 
sector, which are exacerbated by forest fires, 
put Spain at risk of missing its 2030 climate 
mitigation 
water 
management  remains  a  major  environmental 
challenge.  The  state  of  nature  and  ecosystems 
continues 
to  degrade,  presenting  significant 
economic  and  competitiveness  risks.  There  are 
also significant investment gaps in these fields. 

Sustainable 

target. 

Climate adaptation and preparedness 

require 

that  will 

Spain  is  very  exposed  to  climate  change 
significant 
impacts 
investment across different sectors. Southern 
Europe  is one of the hotspot  regions identified as 
having  the  greatest  climate  risks (224).  Spain  is 
particularly  exposed 
to  heatwaves,  droughts, 
floods (225),  wildfires,  desertification  and  coastal 
and  soil  erosion.  These  are  increasingly  affecting 
agriculture  and  water  management  in  particular, 
but  also  land  use  and  the  forestry,  energy  and 
tourism  sectors (226).  In  2024,  Spain  suffered 
140 heat-related  deaths  per  million  citizens,  the 
eighth  highest  proportionally  in  the  EU (227).  Spain 

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

(225)Spain’s  flood 

risk  management  plan  for  2022-2027 
identifies  several  challenges  related  to  climate  change 
(e.g. sea-level rise and increased frequency of floods). 

(226)EC,  2025,  Commission  Staff  Working  Document,  2025 

Country report – Spain, COM(2025) 325 final. 

(227)Janoš,  et  al.,  2025,  Heat-related  mortality  in  Europe  during 
reduce 

forecasting 

to 

2024  and  health  emergency 
preventable deaths. 

has  allocated  EUR 1.5 billion  to  implementing  the 
2021-2025  work  programme  that  underpins  its 
national  adaptation  plan (228).  A  recent  study 
commissioned  by  DG CLIMA  estimates  that  Spain 
will need to invest almost EUR 7 billion per year up 
to  2050 (229)  (0.4%  of  annual  GDP)  in  ecosystem 
restorations  (42%  of  the  total),  followed  by 
infrastructure retrofitting and reinforcement (25%) 
and resilience in agriculture (22%). 

risks 

policy 

increased 

framework, 

(ERICC-2025), 

Spain  has  a  comprehensive  and  a  legally 
binding 
but 
implementation  to  address  key  challenges 
remains  an  issue.  In  2025,  Spain  finalised  its 
new  national  assessment  of  climate  change 
impacts  and 
identifying 
17 risks  with  low  or  no  reversibility  (potentially 
causing  permanent  losses).  Key  risks  identified 
include 
heat-related  morbidity, 
transmission  of 
infectious  diseases,  extreme 
increased 
prolonged  droughts,  flood  damage, 
desertification and soil erosion, sea-level rise, and 
impacts  on  electricity  transmission  networks (230). 
In recent years, Spain has continued to strengthen 
its  adaptation  and  disaster  risk  management 
policy  framework  at  the  national,  regional  and 
its  2021-2030  climate 
local 
levels 
adaptation  plan, 
risk 
management  plan  and  some  adaptation  points  in 
the  updated  national  energy  and  climate  plan 
(NECP) (231)  (see  the  country  report  for  Spain  for 
2025). 

the  2022-2027  flood 

through 

At the regional level, the RRF-funded Law on 
Climate  Change  and  Energy  Transition 
(Law 7/2021) (232)  provides  the  legal  basis 
for Spain to reach the Paris Agreement goals 
and  guide  regional  climate  action,  because 
the  17 autonomous 
have 
communities 
in  climate  mitigation  and 
competences 

(228)1 500 millones de euros para poner en marcha el Plan 

Nacional de Adaptación - Aclima. 

(229)European  Commission,  2026,  Assessment  of  adaptation 

investment needs, Table 25, Link.  

(230)Spanish  Climate  Change  Office  (OECC),  Ministry  for  the 
Ecological  Transition  and  Demographic  Challenge,  MITECO, 
2025, Spain’s Climate Change Risks and Impacts Assessment 
(ERICC-2025). 

(231)European  Commission,  2025,  Commission  Staff  Working 
Document  2025  Country  report  –  Spain,  COM(2025) 209 
final. 

(232)Entry  into  force  of  Law  on  Climate  Change  and  Energy 

Transition – Reforms and Investments. 

88 

 
 
 
 
 
adaptation.  Many  Spanish  cities  are  active  in 
in  the 
initiatives.  7 cities  participate 
climate 
Horizon  Europe  Mission  for  Climate-neutral  and 
Smart  Cities.  1 945  local  communities  participate 
in  the  EU  Covenant  of  Mayors  for  Climate  and 
Energy initiative.  

recorded  EUR 119.6 billion 

Climate  risks  have  a  direct  and  significant 
effect  on  Spain’s  economy,  but  insurance 
coverage  remains  low.  Between  1980  and 
2024,  Spain 
in 
economic  losses (233)  caused  by  weather  and 
climate-related  extreme  events.  It  has  one  of  the 
highest ratios of natural catastrophes damages to 
GDP  in  the  EU (234).  Recent  studies  show  that 
extreme  weather  events  such  as  heatwaves, 
floods and drought are likely to have a prolonged 
and  intensifying  impact  on  economic  activity  in 
Spain,  and  that  Spain  has  some  of  the  most 
vulnerable regions in the EU. Total regional losses 
in  Spain  were  estimated  at  EUR 12.2 billion  in 
2025,  and  this 
increase  to 
EUR 34.8 billion  by  2029  (equivalent  to  0.8%  and 
2.4%  of  Spanish  2024  gross  value  added 
(GVA)) (235).  Spain’s  disaster-financing  through  the 
Consorcio  de  Compensación  de  Seguros 
is 
considered a solid and well-functioning model that 
has also been modernising itself to better prepare 
for future climatic disasters and catastrophes. (236). 
Spain has received nearly EUR 1.6 billion from the 
EU Solidarity Fund and the RESTORE mechanism to 
support recovery from the DANA storm (237). 

is  expected  to 

not 

has 

Climate-proofing 
been 
systematically  applied  across  sectors  and 
key  infrastructure  so  far,  but  aspects  of 
climate-proofing  in  planning  are  integrated 
into,  for  example,  Spain’s  NECP.  Climate-
proofing  guidelines  are  also  applied  in  EU-funded 
the  energy  sector,  Spain  has 
projects.  For 
level  of  vulnerability  and 
identified  a  high 

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

related extremes in Europe, Link. 

(234)ECB  and  EIOPA,  2024,  Towards  a  European  system  for 
natural  catastrophe  risk  management,  Chart 2.  This  figure 
includes earthquakes that happened in 2020-2023. 

(235)Usman,  Parker  and  Vallat,  2025,  Dry-roasted  NUTS:  early 
estimates of the regional impact of 2025 extreme weather. 

effectively 

assessed  the  consequences  of  future  water 
availability  and  risks  (e.g. insufficient  or disrupted 
water supply for hydropower generation, additional 
cooling  needs  and  flood  damage) (238).  Similarly, 
the  transport  vulnerability  index  of  the  TEN-T 
indicates  Spain’s 
network  to  climate  change 
challenging  geographical  position  (impacting  both 
rail  and  road  transport),  highlighting  the  need  for 
significant  adaptation  measures  in  these  sectors 
climate-related 
to 
disruptions (239).  Spain’s  transport  infrastructure 
was particularly exposed to floods in the past, but 
likely  to  play  an 
extreme  temperatures  are 
important role in the future. The highest costs are 
expected  for  adaptation  to  coastal  floods  and 
heatwaves. 
is  estimated  that  a  total  of 
EUR 10.2 billion  will  need  to  be  invested  in  TEN-T 
until  mid-century.  This  is  the  highest  amount  for 
any  EU  Member  State.  Most  of  this  is  needed  for 
railways 
roads 
(EUR 2.5 billion).  

(EUR 4.9 billion) 

respond 

and 

to 

It 

widely 

(NbS)  more 

There  is  scope  to  tap  into  nature-based 
solutions 
and 
systematically.  Nature-based  solutions  and 
prevention play a key role in increasing resilience. 
In  2025,  Spain  recorded  393 000 ha  of  burned 
areas – the highest number since the collection of 
European  Forest  Fire  Information  System  (EFFIS) 
data collection began (240). It is increasingly evident 
that  wildfires  are  no  longer  confined  to  summer 
months  but  extend  well  into  the  rest  of  the  year. 
Spain has taken some steps to promote the use of 
NbS to adapt to climate change. For example, the 
Law  on  Climate  Change  and  Energy  Transition 
promotes  ecosystem-based  approaches,  green 
infrastructure  and  NbS.  The  national  climate 
change  adaptation  plan 
(PNACC)  2021-2030 
identifies  risk  and  response  options  (including 
NbS).  Spain  has  a  national  strategy  for  green 
infrastructure  and  ecosystem  restoration.  It  has 
also  implemented  several  projects  under  the  EU’s 
focus  on  ecosystem 
LIFE  programme 
LIFE 
restoration 

(e.g. the 

that 

NbS 

and 

(238)Staff  working  document  accompanying 

the  EU-wide 
assessment of the final updated national energy and climate 
plans,  Delivering  the  Union’s  2030  energy  and  climate 
objectives, NECP assessment, COM(2025) 274 final. 

(236)OECD Economic Surveys: Spain 2025 (EN) and EIOPA, 2024, 
Towards a European system for natural catastrophe risk 
management. 

(239)Support  study  on  the  climate  adaptation  and  cross-border 
investment  needs  to  realise  the  TEN-T  network.  Publications 
Office of the European Union, 2024. 

(237)Inforegio – Almost EUR 1.6 billion of EU funds will help Spain 

(240)European  Forest  Fire  Information  System  (EFFIS),  Annual 

recover from Valencia’s devastating floods. 

Statistics for Spain, Link. 

89 

 
 
 
LIFE  Soria 
RedBosques_Clima  project  and 
is  still 
Forestadapt).  However,  further  action 
needed 
the  adoption  of  NbS 
(particularly  in  sectors  such  as  agriculture  and 
forestry). 

to  promote 

conventional  water  resources  and  promoting  the 
use  of  drought-resistant  crops).  The  challenges 
remain  significant,  particularly  in  regions  that 
suffer from water scarcity and during droughts (as 
the very severe drought of 2021-2024 showed). 

Water resilience 

Water resilience is very important for Spain. 
Some progress has been made in recent years, but 
in  terms  of  water 
many  challenges  remain 
management  (especially  in  the  areas  of  water 
governance,  water  body  rehabilitation  and  water 
efficiency).  Further  infrastructure  investment  is 
needed,  including  in  wastewater  collection  and 
treatment;  reducing  leaks  in  the  networks  and 
general  water  supply; 
improving  monitoring 
(quality and quantity); natured based solutions and 
river  restoration.  Spain  would  also  benefit  from 
taking further advantage of the potential of water 
reuse.  For  this  reason,  under  the  2024  and  2025 
European Semester, Spain received a CSR on water 
management  and  adaptation  to  climate  change 
that includes these elements. 

Large  areas  of  Spain  are  subject  to  water 
stress  (particularly  due  to  demand  from 
agriculture, tourism and energy). These sectors 
are  heavily  dependent  on  water  supply  and 
irrigation is crucial in many rural areas and for the 
Spanish agrifood sector. Spain’s water productivity 
is  considerably  lower  than  that  of  other  Member 
States  (being  EUR 38  per  m3  of  abstracted  water 
in  2022  –  below  the  EU-27  average  of  EUR 151 
per  m³) (241).  The  water  exploitation  index  plus 
(WEI+)  shows  that,  especially  in  summer  months, 
Spain’s  total  water  consumption  exceeds 
its 
renewable freshwater resources. Agriculture is the 
largest  consumer  of  water.  Water  abstraction  in 
the agricultural sector accounted for 63% of total 
consumption  in  2023,  at  20 796.5 million m3  (an 
8%  increase  on  19 254 million m3  in  2018) (242). 
Spain  is  implementing  measures  to  reduce  water 
consumption 
sector 
the 
(e.g. improving  irrigation  efficiency,  using  non-

agricultural 

in 

(241) Water productivity is a metric that is calculated by dividing 
GDP (in chain-linked volume) by total water abstraction. It 
indicates the average economic value (GDP) a Member State 
creates for each unit of water it takes from nature. 

the 

that 

Water  quality  in  Spain  has  only  marginally 
improved  and  concerns  remain  for  surface 
and  groundwater  bodies.  It  follows  from  the 
assessment  of  the  third  river  basin  management 
plans  (RBMPs)  (for  2022-2027)  under  the  Water 
Framework  Directive 
ecological 
status/potential  of  surface  waterbodies  has  only 
slightly improved since the second RBMPs, 58% of 
surface  waterbodies  have  good  status/potential. 
Furthermore, the chemical status has also slightly 
improved (90% of surface waterbodies have good 
chemical status). Groundwater bodies’ quantitative 
status  has  slightly  deteriorated  (75%  have  good 
quantitative status) and their chemical  status has 
slightly  improved  (at  least  67%  now  have  good 
chemical  status).  However,  43%  are  at  risk  of 
failing  to  achieve  good  chemical  status  by  2027. 
The  2025  Environmental  Implementation  Review 
provides  a  series  of  priority  actions  to  deal  with 
these issues (243). 

The  quality  of  drinking  water  (supplied  by 
in  Spain  is  very 
large  water  suppliers) 
compliant  with  the  Drinking  Water Directive. 
However, 
recast 
Drinking  Water  Directive,  which  is  now  applicable, 
raises new challenges for Spain in this field. 

implementation  of 

the 

the 

Spain’s wastewater treatment is a persistent 
cause  for  concern.  Compliance  has  improved 
over  the  years  (the  use  of  EU  funding  has  been 
in  this  respect),  but  Spain  has 
fundamental 
experienced  significant  difficulties 
in  properly 
implementing  the  Urban  Wastewater  Treatment 
Directive  (UWWTD).  This  partial  implementation 
has  forced  the  Commission  to  take  legal  actions 
that have led to rulings of the Court of Justice of 
the  EU.  Spain’s  overall  compliance  rate  was  86% 
in  2020,  but  around  450  agglomerations  did  not 
comply  with  all  the  Directive’s  requirements.  It 
would therefore be very beneficial if Spain were to 
take adequate measures and implement necessary 
projects without delay in order to fully comply with 
the requirements of the UWWTD, taking advantage 
of  the  available  EU  funding  (i.e. the  European 

(242) European Environment Agency, Water abstraction by 

(243) European Commission, Environmental Implementation 

economic sector, 2000-2023, Link. 

Review (EIR) 2025, country report Spain, Link. 

90 

 
 
 
Regional  Development  Fund 
Recovery  and  Resilience  Facility 
Annex 18)). 

(ERDF)  and  the 
(see 
(RRF) 

Nature restoration 

The  state  of  nature  and  ecosystems 
continues  to  deteriorate  in  Spain,  reducing 
its  climate resilience.  Spain  is  one  of  the most 
biologically diverse countries in the EU. It is home 
to  117 habitat  types  and  426 species  covered  by 
the  Habitats  Directive (244).  However,  the  latest 
available  data  indicate  that  only  8.9%  of  Spain’s 
habitats  have  a  good  status  (below  the  EU 
average  of  14.7%).  The  conservation  status  of 
species  is  similarly  concerning  (18.9%  have  good 
status  –  below  the  EU  average  of  27%).  Data 
show  a  deteriorating  trend  compared  with  the 
previous reporting period. This situation has severe 
implications for Spain’s climate resilience, because 
the loss of biodiversity impairs ecosystems’ ability 
to  provide  services  that  help  mitigate  the  effects 
of  climate  change  (e.g. regulating  water  cycles, 
maintaining  soil  health  and  sequestering  carbon). 
Spain’s RRP includes ambitious measures (reforms 
and investments) to improve this situation. 

Spain  contributes  the 
largest  terrestrial 
surface  to  the  EU  Natura  2000  network  in 
absolute terms. This covers 27.3% of its territory 
(Spain  is  the  sixth  Member  State  by  percentage, 
the EU average is 18.6%). Some designations are 
still  needed  in  the  marine  element.  The  main 
the  adoption  of  site-specific 
challenges  are 
conservation  objectives  and  measures,  and  the 
allocation  of  sufficient  resources  to  manage  the 
Natura  2000  network.  Spain  could  also  further 
exploit its very valuable natural capital to promote 
green growth and job creation. Taking both Natura 
2000  and  other  nationally  designated  protected 
legally 
into  consideration,  Spain  was 
areas 
protecting  28.1%  of  its  terrestrial  areas  (EU-27 
coverage: 26.4%) and 18.4% of its marine areas in 
2023 
is 
its  political 
therefore  on 
commitment  under  the  EU  Biodiversity  Strategy 
for 2030 to protect 30% of land and sea in 2030. 

(EU-27  coverage: 13.7%) (245).  Spain 

to  achieve 

track 

(244) European Environment Agency, 2019, Number of habitats 

and species per Member State, Link. 

(245) Eurostat, Protected areas, Link. 

91 

This is outlined in its Strategic Plan for the Natural 
Heritage and Biodiversity for 2030 and the Master 
Plan  for  the  Spanish  Marine  Protected  Areas 
Network,  which  were  both  approved  in  December 
2022 (246). 

Nature  degradation  presents  significant 
economic  and  competitiveness  risks  because 
Spain  has  one  of  the  greatest  dependencies 
on ecosystem services in the EU. Spain has the 
highest  degree  of  supply-chain  dependency  on 
ecosystem  services  in  the  EU  (32%  of  its  gross 
value  added  is  highly  dependent,  compared  with 
the EU-27 average of 22%). Its 50% overall direct 
dependency  on  ecosystem  services  is  also  above 
the  EU  average  of  44%.  This  shows  that  Spain  is 
particularly  prone  to  be  economically  affected  by 
biodiversity  loss (247)  (see  the  country  report  for 
2025 for more detail). 

Nature  degradation  is  further  amplified  by 
invasive alien species (IAS). Spain recorded 57 
IAS  in  2024 (248).  It  has  suffered  the  greatest 
damage  of  any  EU  Member  State  (estimated  at 
EUR 13.47 billion between 1960-2020) (249). 

Targeted  action  on  nature  protection  and 
restoration  is  necessary  in  order  to  meet 
Spain’s  nature  restoration  targets.  Spain 
needs  to  restore  up  to  113 410 km2  of  habitats 
listed 
the  Habitats  Directive 
to 
(corresponding to up to 22.4% of its land) (250). 

in  Annex I 

Spain  requires  EUR 8.1 billion  of  investment 
per  year  to  effectively  protect  and  restore 
its  natural  capital,  mitigate  the  impacts  of 
climate  change  and  preserve  Spain’s  rich 
biodiversity.  The  current  level  of  financing  for 
biodiversity  and  ecosystem  conservation  in  Spain 
is around EUR 3.1 billion per year. The investment 

(246) Adopted by Royal Decrees 1056/2022 (Link) and 1057/2022 

(Link) of 22 December 2022. 

(247) Commission / JRC, 2025, The EU economy’s dependency on 

nature, Link. 

(248) European Commission, Environmental Implementation 

Review (EIR) 2025, country report Spain, Link. 

(249) NeoBiota, 2021, Economic Cost of invasive alien species 
across Europe, Link. European Commission: EMRC, Logika 
Group and RPA Europe, 2025, Update of the costs of not 
implementing EU environmental law, Link. 

(250) European Commission, 2022, Impact assessment 

accompanying the proposal for a regulation on nature 
restoration, Link. 

 
 
 
gap is therefore estimated at around EUR 5 billion 
per  year  (0.37%  of  its  GDP) (251).  This  shortfall 
to  global 
undermines  Spain’s 
biodiversity  agreements  and 
long-term 
economic and social development. 

commitment 
its 

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). In Spain, net carbon removals 
in the LULUCF sector have been declining in recent 
years. To meet its 2030 LULUCF target, additional 
carbon  removals  of  5.3 million  tonnes  of  CO2 
equivalent  (MtCO2-eq)  are  needed (252).  The  latest 
available  projections  show  a  gap  to  target  of 
12 MtCO2-eq  for  2030 (253).  Additional  measures 
are therefore needed in the land sector in order to 
reach  the  2030  target.  In  addition  to  increasing 
LULUCF  net  removals,  further 
in 
healthy  forests  and  soils  is  key  to  building 
resilient,  biobased  product  value  chains  and 
enabling  a  growing,  competitive  EU  bioeconomy. 
Continued 
the  system  for 
monitoring  net  removal  data  and  projections 
would  greatly  support  timely  and  effective  action 
in the sector. 

improvements 

investment 

in 

In 2025 Spain took further steps to improve 
its  carbon  sequestration  capacities.  In  March 
2025, it adopted a royal decree that strengthened 
and  enhanced  the  national  carbon  footprint, 
compensation  and  CO2  absorption  projects 
register.  A  project  was  launched  to  promote 
enhanced carbon sequestration in agricultural soils 
management 
through 
practices (254).  However,  key  challenges  such  as 
increased  emissions  from  forest  fires  remain. 
Spain  has  taken  some  measures  to  strengthen 
forest  prevention  and  management  policies, 
including  through  investments  in  restoration  and 

improved 

land 

(251) European Commission, 2025, Environmental Implementation 
Review (EIR) 2025, country report Spain. Estimated at 2022 
prices. Link. 

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

Regulation (EU) 2023/839, Link. 

(253)Climate action progress report 2025, Link. 

(254)El  proyecto  AgriCapture  busca  reducir  las  emisiones  de 
carbono a través del suelo agrario | Red PAC. 

92 

preventive silviculture, in line with the 2022–2032 
Spanish Forest Plan and the 2050 Spanish Forest 
Strategy.  LULUCF  emissions  were  identified  as  a 
key 
the  Commission’s  2025 
assessment of Spain’s updated NECP (255). 

challenge 

in 

area 

urban 

functional 

Spain’s 
has 
considerably  expanded  in  recent  years.  Net 
land taken between 2018 and 2021 accounted for 
607 parts  per  million  per  year  of  Spain’s  total 
urban  surface.  Most  land  has  been  taken  from 
arable  land.  This  ongoing  ‘land  take’  and  the 
associated  soil-sealing  makes  ecosystems  less 
resilient,  decreases  carbon  sequestration  and 
impairs  flood  protection (256).  Nevertheless,  these 
trends  are  being  increasingly  addressed  through 
existing  policy  frameworks  such  as  the  Spanish 
Urban  Agenda  and  the  Recovery  and  Resilience 
Plan,  which 
for  urban 
include  measures 
regeneration,  building  rehabilitation,  densification 
of  existing  urban  areas  and  the  promotion  of 
nature-based  solutions  (e.g.,  green  infrastructure 
and sustainable urban drainage systems). 

Water  quality  pressures  are  intensifying. 
Under  the  Nitrates  Directive,  42%  of  Spain’s 
groundwater monitoring stations recorded average 
nitrate  concentrations  in  excess  of  25 mg/l  (and 
23%  above  50 mg/l,  the  EU  threshold  for  safe 
drinking water) between 2016 and 2019 (257). This 
trend underscores systemic agricultural  pressures, 
despite  Spain’s  relatively  low  livestock  density 
in  2020 (258), 
(0.7 livestock  units  per  hectare 
compared  with  the  EU  average  of  0.75).  A  15% 
reduction 
in  agricultural  ammonia  emissions 
between  2018  and  2023 (259)  underscores 
improvement  in  emission  control.  Spain  is  on 
track (260) 
reduction 
commitments. However, the persistent problem of 
in  nutrient 
nitrate  pollution  highlights  gaps 
management strategies. In response, policies have 

to  meet 

2030 

its 

(255)Commission  Assessment  of  the  Final  Updated  National 
Energy and Climate Plan of Spain - European Commission. 

(256) EEA, 2022, Land take and land degradation in functional 

urban areas, Link. 

(257) EEA, 2025, Nitrate in groundwater in Europe, Link. 

(258) Eurostat, Livestock density index, Link. 

(259) EEA, Air pollutant emissions data viewer (Gothenburg 

Protocol, Air Convention) 1990-2023, Link. 

(260) EEA, 2025, Magnitude of emission reductions (percentage) 
required by EU Member States to meet their emission 
reduction commitments for 2030 onwards, based on 2023 
data, Link. 

 
 
 
its  bioeconomy,  which  both  play  a  significant 
economic role. 

been  introduced  to  tackle  agricultural  diffuse 
including  Royal  Decree 
pollution  at  source, 
47/2022  of  18  January,  which  strengthens 
protection for water against nitrate pollution from 
agricultural sources. 

Pesticide  contamination  remains  an  issue. 
lakes  and 
36%,  23%  and  26%  of  rivers, 
groundwater 
regulatory 
exceeded 
bodies 
thresholds  for  pesticide  residues  between  2018 
and  2023 (261).  These  figures  are  above  the  EU’s 
respective 
totals  of  23%,  18%  and  12%. 
Pesticides  not  only  threaten  aquatic  ecosystems 
but  also  pose  long-term  risks  to  human  health 
through  contaminated  drinking  water  and  food 
chains.  Soil  contamination  over  0.05 mg/kg  has 
been found in 45% of the soil  samples  examined 
in Spain (262). 

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  practices  reduce  the  use  of 
synthetic  fertilisers  and  pesticides  and  are  highly 
beneficial  to  biodiversity.  They  made  up  around 
12%  of  Spain’s  agricultural  land  in  2024  (a  40% 
increase since 2014).  Spain aims to have 20% of 
Utilized Agricultural Area being farmed organically 
by  2030.  It  will  be  able  to  achieve  this  if  the 
current growth trend in organic farming surface is 
maintained. To mitigate the environmental impact 
the  Spanish  government  has 
of  agriculture, 
to  promote  water 
implemented  measures 
resilience  under  the  common  agricultural  policy 
strategic plan (263) and the Recovery and Resilience 
Plan.  The  plan  also  supports  the  increase  in  the 
share of organic farming and the use of soil cover; 
promotes crop rotation and diversification; helps to 
reduce  nutrient 
losses;  and  supports  other 
sustainable  agriculture  practices.  These  measures 
can  have  a  crucial  impact  on  the  long-term 
competitiveness  of  Spain’s  agri-food  system  and 

(261) EEA, 2025, Pesticides in rivers, lakes, and groundwater in 

Europe, Link. 

(262) Vieira et al. (JRC), 2023, Pesticides residues in European 

agricultural soils – Results from LUCAS 2018 soil module, 
Publications Office of the European Union, Link. 

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

93 

 
 
Table A10.1:Key Adaptation Indicators 

(1)  EFFIS (European Forest Fire Information System), Link. 
(2) The climate protection gap refers to the share of non-insured economic losses caused by climate-related disasters, based on modelling of the risk from floods, 
wildfires and windstorms, and on the insurance penetration rate. Scale: 0 (no protection gap) – 4 (very high gap). EIOPA, 2025, Dashboard on insurance protection gap 
for natural catastrophes. 
(3) This 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 severe water scarcity. 
(4) European Commission, 2024, Seventh 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). 
(5) Indicator refers to concentrations of nitrate (NO3) in groundwater, measured as milligrams per litre (mgNO3/L). Nitrate 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 is limited to 50 mgNO3/L to avoid 
threats to human health. 
(6) Net removals are expressed in negative figures and net emissions are expressed in positive figures. Reported data are from the 2025 greenhouse gas inventory 
submission. The 2030 value of net greenhouse gas removals is taken from Regulation (EU) 2023/839 – Annex IIa. 
Sources: Eurostat and EEA and JRC. 

94 

Climate adaptation and preparedness:EU-27201920202021202220232024latest dataDrought impact on ecosystems5.930.030.7411.336.84-2.76[area impacted by drought as % of total]Forest fires burned area (1)63 853     61 099     84 827     306 555   91 220     42 615     354 510     [burned area in ha. per year]Economic losses from extreme events5 279       2 513       3 024       11 574     7 346       18 220     40 452       [EUR million at constant 2022 prices]Insurance protection gap (2)---1              1              1               -[composite score between 0 and 4]Sub-national climate adaptation action35            44            48            50            58            59            34               [% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:EU-27201920202021202220232024latest dataWater Exploitation Index Plus, WEI+ (3)7.77         6.39         6.52         8.78         7.12         -4.53            [total water consumption as % of renewable freshwater resources]Water productivity41            36            -38            --151[EUR per m3]Water abstractionWater abstraction by source (% from surface water)80.18%80.21%----Water abstraction by sectorAgricultureElectricity coolingManufactu-ringPublic water supplyMining and QuarryingConstru- ction 63.58%17.74%1.81%16.87%0.00%0.00%Status of water bodies (4)[% of water bodies in a good status]Surface water bodies (ecological)-----58%38%Groundwater bodies (quantitative)-----75%93%Nature restoration:EU-27201920202021202220232024latest dataEcosystem dependency---50%--44%[% of direct dependency]Protected area28.128.128.128.128.126.4[% of terrestrial protected areas]Invasive alien species (IAS)-----5729.2[number of IAS of Union concern]Damage cost of IAS----13.471.69[EUR billion]Eutrophication 328328295[AAE of area at risk of euthrophication]Sustainable agriculture and land use:EU-272012-20182018-2021latest dataYearly net land taken by Member State182          607          670            [ppm of total urban surface per Member State]Land conversion in functional urban area [% of total land taken from 2018-2021]Arable land53%Complex and mixed cultivation0%Forests3%Herbaceous vegetation associations22%Open spaces with little or no vegetation0%Pastures12%Permanent crops9%Water1%Wetlands0%201920202021202220232024latest dataNitrates in groundwater (5)33.933.532.932.331.7[mgNO₃/l]Livestock density0.7:0.75(number of livestock units per hectare of utilised agricultural area)Ammonia emissions 98%98%98%98%98%-94%[% of total utilised agricultural area]Pesticide contamination on rivers and lakes water bodiesrivers36%27%[% of monitoring sites with pesticides exceeding thresholds, 2018-2023]lakes23%18%Pesticide contamination in soil 45%57%[% of samples with a concentration over 0.5 mg/Kg⁻¹]Net greenhouse gas removals from LULUCF (6)-51944.1-51083.8-51775.5-50620.8-51032.8--198 421 [ktCO₂-eq] 
 
       
 
FAIRNESS 
ANNEX 11: LABOUR MARKET 

Spain’s labour market remains resilient, with 
record employment, but persistent structural 
challenges continue to weigh on productivity 
and  labour  market  inclusion.  Job  creation  has 
been  concentrated  in  lower-productivity  sectors, 
limiting  real  wage  progression  and  productivity 
gains. Comparatively  high unemployment and low 
productivity  remain  key  constraints,  with  young 
people,  older  workers,  persons  with  disabilities, 
women  and  third-country  nationals  facing  the 
greatest  barriers.  Active  labour  market  policies 
have  significant  potential  to  support  Spain’s 
competitiveness,  but  shortcomings  in  their  design 
and targeting limit their effectiveness, especially in 
terms  of  skills  development.  As  Spain  moves 
towards  its  2030  employment  target,  unlocking 
untapped 
job 
quality  and  labour  market  policies  would  help 
support  a  more  competitive  and  inclusive  labour 
market.  

labour  capacity  and 

improving 

Graph A11.1: Employment rate by age, nationality 
and gender 

Source: Eurostat [lfsq_ergan, lfsq_egan] 

rate 

Employment  growth  remains  robust,  though 
structural  and  regional  challenges  persist. 
Spain’s  employment 
reached  an 
historical  high  of  72.4%  in  2025,  with  total 
employment  up  10.4%  since  2019.  This  was 
partly  driven  by  strong  GDP  growth  and  job 
creation,  including  in  knowledge-intensive  sectors, 
such as professional services, reflecting a gradual 
shift  towards  more  qualified  and  higher-value 
jobs (264).  However,  the  largest  share  of  new  jobs 
lower-productivity  activities, 
was  created 
and 
limiting 

productivity 

aggregate 

gains 

in 

despite 

sustainable  wage  growth.  This  pattern  is  also 
reflected  in  the  comparatively  high  employment 
rate  among  low-skilled  workers  (62.7%  vs  58.2% 
in  the  EU;  see  Annex  13).  Third-country  nationals 
and  dual  citizens  (see  Graph  A11.1)  have  been 
central  to  meeting  labour  demand  and  sustaining 
recent  employment  growth.  Regional  disparities 
convergence,  with 
persist 
employment 
in 
from  65.8% 
ranging 
Andalusia  to  77.9%  in  Madrid.  While  the  national 
employment  rate  remains  below  the  EU  average 
of 76.1%, Spain is broadly  on track to achieve its 
2030 employment target of 76%. The activity rate 
(15-64)  remains  close  to  the  EU  average  (74.9% 
vs 75.7%), indicating that Spain’s employment gap 
primarily  reflects  high  unemployment  rather  than 
low participation. 

some 

rates 

Labour market gains have been uneven, with 
several groups continuing to face barriers to 
accessing  the  labour  market.  Employment 
rates  among  young  people  remain  low  (41.2%), 
compared with the EU average (49.1%) and older 
cohorts  (see  Graph  A11.1),  and  medium-skilled 
workers face weaker employment prospects due to 
skills mismatches and overqualification (see Annex 
13).  Employment  rates  among  older  women  are 
also  significantly  lower,  especially  among  third-
country  nationals,  reflecting  the  combined  effects 
of career interruptions and limited access to stable 
employment.  National  statistics  indicate  stable 
employment 
with 
disabilities (265). 

persons 

rates 

for 

third-country 

Despite  a  steady  decline,  unemployment 
remains  high,  with  pronounced  regional 
disparities. The unemployment rate fell to 10.5% 
in  2025  (vs  6.0%  in  the  EU),  while  long-term 
unemployment  stood  at  3.4%  –  both  are  among 
the  highest  in  the  EU.  Young  people,  older  people 
and 
still 
disproportionately  affected.  High  labour  market 
slack  (18.2%  vs  11.7%  in  the  EU)  points  to 
substantial  underemployment,  with  Spain  among 
the  EU  countries  with  the  greatest  potential  to 
expand  labour  supply  if  underemployed  workers 
were  able 
their  desired  hours. 
Underemployment  is  concentrated  in  sectors  with 
a  high  proportion  of  female  workers,  such  as 
hospitality  and  cleaning,  which  tend  to  rely  on 

to  work 

nationals 

are 

(264) Comité  Económico  y  Social,  Memoria  Sobre  la  Situación 

Socioeconómica y Laboral 2024. 

(265) Instituto Nacional de Estadistica (INE). 

95 

0,0010,0020,0030,0040,0050,0060,0070,0080,0090,00MalesFemalesMalesFemalesMalesFemales15-2425-5455-64TotalReporting countryThird-country nationalsAge groupEmployment ES (15-64)Spain's national employment target 2030Employment EU (15-64) 
 
 
     
 
 
 
 
part-time  work  and  are  characterised  by  weaker 
bargaining  power (266).  Regional  divides  remain 
pronounced.  In  2024,  unemployment  rates  varied 
from 15.2% in Andalucia to 7.3% in Cantabria and 
Pais  Vasco.  Although  gaps  have  narrowed  since 
2019,  they  remain  wider  than  in  comparable 
Member  States,  such  as 
Italy,  France  and 
Germany (267), 
reflecting  persistent  structural 
regional  differences in sectoral  specialisation (see 
Annex 18). 

Low  productivity  growth 
remains  an 
important  factor  in  constraining  sustainable 
wage  increases.  Despite  recent  improvements, 
Spain’s  productivity  in  certain  sectors  remains 
weak  and  below  the  EU  average  (both  per  hour 
and per worker). High self-employment, persistent 
skills mismatches  (see  Annex  13)  and  reliance  on 
labour-intensive,  lower-productivity  services  limit 
productivity  gains  and  wage  progression  (see 
Graph  A11.2).  Looking  at  sectors,  despite  the 
growth  in  some  skill-intensive  and  productive 
sectors,  such  as  scientific  and  administrative  and 
industry,  most  new  jobs  are  created  in  low-
productivity sectors. Between 2010 and 2022, real 
compensation  fell  by  an  annualised  4%  despite 
productivity  growth  of  4.7% (268),  leading  to  a 
marked  fall  in  the  labour  share.  Since  2023,  real 
wages  have  partly  recovered  (annualised  growth 
of  1.6%  over  2023-2025),  outpacing 
labour 
productivity  growth  (+0.6%)  and  supporting  a 
partial recovery in the labour share.  

Minimum  wage  growth, 
in  real  terms, 
remains  low.  The  contribution  to  wage  recovery 
in past years has been partly supported by a 61% 
increase 
in  the  minimum  wage  since  2018 
(reaching  EUR  1  184  in  2025).  However,  in  real 
terms,  minimum  wage  growth  since  2020  has 
been  among  the  weakest  in  the  EU  (1.2%),  and 
real  wage  growth  is  projected  to  remain  subdued 
in  2026-2027  (0.6%  and  0.1%),  placing  Spain 
among  the  lowest  in  the  EU.  Minimum  wage 
increases  have  compressed  wages  at  the  bottom 
of the distribution, but they have not substantially 
altered the overall wage structure (269). The gender 

(266) European  Commission,  2025  Employment  and  Social 

Developments in Europe (ESDE) Report. 

(267) Banco de España, Informe Anual 2024. 

(268) Labour productivity per employee, European Commission, 

2025 LMWD Report. 

pay  gap  remains  below  the  EU  average  (7.3%  vs 
11.1%) but widens with age and tenure (270) and is 
larger in some female-dominated sectors such as 
health and care services. 

Graph A11.2: Productivity in Spain and the EU 
(GVA/Employment) and proportion of jobs created 
(%) by NACE groups 

* NACE category L (Real estate activities) has been excluded 
for presentation reasons (outlier). 
Source: Eurostat [nama_10_a10_e, nama_10_a10] 

The continued use of fixed-term employment 
contracts  in  the  public  sector  and  low  work 
intensity  arrangements  weigh  on  the  quality 
of 
jobs.  Fixed-term  employment  has  fallen 
significantly  in  the  private  sector  in  recent  years, 
following  the  2021  Labour  Market  reform  under 
the  recovery  and  resilience  plan.  However,  it 
remains very high in the public sector, particularly 
in  health  and  education,  where  women  are 
overrepresented  (see  2025  country  report).  In 
addition,  a  large  share  of  temporary  employment 
is  involuntary  (76.4%  vs  49.9%  in  the  EU).  Spain 
also has one of the highest in-work poverty rates 
(11.2% vs 8.3% in the EU) and shares of atypical 
working hours (38.5% vs 32.3% in the EU).  These 
conditions weaken access social protection and its 
financing. 

Young  people  and  older  workers  face 
persistent  barriers  amid  demographic  shifts, 
with  implications  for  labour  supply  and  job 
quality.  Although  the  situation  of  young  people 
and  older  workers  has  improved,  they  still  face 
obstacles amid ongoing demographic shifts. While 

(269) AIReF,  Análisis  microeconómico  del  impacto  del  salario 

(270) Fedea, Observatorio Trimestral del Mercado de Trabajo, May 

mínimo interprofesional en el empleo 2025. 

2025. 

96 

0%5%10%15%20%25%020000400006000080000100000120000140000G-IM-NB-EO-QFKAR-UJESEUEU Productivity averageJobs ES 
 
      
 
to 

the  EU  average 

the  unemployment  rate  of  young  people  has 
declined sharply. However, the employment rate of 
young  people  (15-29)  remains  well  below  the  EU 
average (41.2% vs 49.1% in 2025), and most new 
jobs  are  concentrated  in  low-skilled  services  (271), 
which could limit upward social mobility. The share 
of  young  people  neither  in  employment  nor  in 
(11.5%)  also 
education  and  training  (NEETs) 
slightly  exceeds 
(11.0%) 
Intergenerational  income  gaps  have  widened (272): 
while,  on  average,  older  working-age  people 
earned  less  than  younger  cohorts  three  decades 
training 
regulatory  changes 
ago.  Recent 
contracts aim to improve quality and safeguards – 
particularly  by  capping  the  share  of  apprentices 
and  limiting  their  number per  tutor  –  which  could 
strengthen school-to-work transitions if effectively 
implemented. Labour market outcomes also differ 
across age groups: young workers are more likely 
to  become  unemployed  due  to  the  end  of 
temporary  contracts,  while  older  workers  are 
typically  affected  by  collective  or  objective 
dismissals.  Among  older  workers 
(55-64), 
employment  has  increased  but  unemployment 
joblessness 
(10.1% 
remain  high,  partially  reflecting  the  need  to 
continue  strengthening  efforts  in  reskilling  and 
retention. The share of older workers in the labour 
force  is  rising  faster  than  in  the  EU,  especially  in 
the  north-western  regions,  exacerbating  ageing-
related labour shortages in sectors such as public 
administration. 

in  2025)  and 

long-term 

and 

precariousness 

Third-country  nationals  are  playing  a 
growing  role  in  the  labour  market  but  often 
informal 
face 
employment. Third-country nationals account for 
11.2% of the workforce (EU: 6.3%). They are most 
represented  in  hospitality,  care,  agriculture  and 
construction, which helps ease labour shortages in 
these  sectors (273).  However,  their  unemployment 
rate  (17%)  is  well  above  that  of  native  workers 
(9.6%) and the EU average (12.6%). Third-country 
national  women  face  the  biggest  disadvantages, 
reflecting their concentration in domestic and care 
services,  sectors  in  which  they  constitute  more 
than  half  of  total  employment.  Third-country 
nationals  are  also  more  likely  to  hold  temporary 

(23.6%)  or  part-time  (19.7%)  contracts  and  face 
widespread  skills  mismatches  (see  Annex  13). 
Detections  of  undeclared  work  increased  by  41% 
in  2023,  more  than  three  times  higher  than  in 
2018,  mainly 
commerce, 
construction  and  agriculture (274).  Against  this 
backdrop,  the  2025-2027  Labour  and  Social 
Security Inspectorate Strategy seeks to strengthen 
enforcement 
through  additional  staffing  and 
advanced digital anti-fraud tools. 

hospitality, 

in 

face  much  higher 

The  gender  employment  gap  has  narrowed, 
but  disparities  remain,  especially  among 
older workers and workers with lower levels 
of education. The gender employment gap fell to 
9.5 pps in 2025, slightly below the EU average, yet 
limit  women’s  employment 
structural  barriers 
prospects and career progression. Women continue 
to 
rates  of  part-time 
employment  (21.3%  vs  6.7%  for  men)  and 
temporary  employment  (17.3%  vs  12.7%),  often 
involuntarily.  They  remain  concentrated  in  health, 
education  and  domestic  work,  while 
their 
participation in sectors of strategic importance for 
productivity has increased only marginally and has 
stagnated  in  ICT (275).  In  parallel,  progress  has 
been  made  in  recent  years  to  support  work-life 
balance,  including  the  equalisation  of  maternity 
and paternity leave at 19 weeks, which is expected 
to  contribute  to  a  more  balanced  distribution  of 
care  responsibilities  and  improved  labour  market 
outcomes.  Employment  gaps  are  widest  among 
older  workers  (55-64)  and  workers  with  lower 
levels of education, where the employment rate of 
women  is  more  than  12  pps  below  that  of  men. 
Educational  attainment is strongly correlated with 
labour  market  outcomes:  unemployment  among 
women  with  less  than  lower  secondary  education 
(19.62.%) is almost 7 pps higher than among men. 
Despite  these  measures,  childbirth  continues  to 
trigger 
for 
employment 
women (276),  largely  due to an  uneven  distribution 
of  care  responsibilities  among  parents,  which 
to  equal 
remains  a  key  structural  barrier 
participation (see Annex 12). 

declines 

lasting 

Labour  shortages  are  below  the  EU  average 
overall  but  remain  high  in  specific  sectors. 

(271) Observatorio de las Ocupaciones, 2025 Informe del Mercado 

de Trabajo de los Jóvenes, datos 2024 

(274) Ministerio de Trabajo y Seguridad Social, Informe anual de la 

Inspección de Trabajo y Seguridad Social 2023. 

(272) Mid-Term Evaluation of Spain’s Youth Guarantee Plus Plan 

(275) Fedea, Observatorio Trimestral del Mercado de Trabajo, May 

2021-2027 | OECD). 

2025. 

(273) Banco de España, Informe Anual 2024. 

(276) European Commission, 2025 ESDE Report. 

97 

 
 
 
Spain’s  job  vacancy  rate  stood  at  0.9%  in  Q4-
2025, well below the EU average (2.1%) and close 
to  its  pre-pandemic  level.  However,  shortages 
remain  high  in  public  administration  and  defence 
(3.7%)  and  in  ICT  (1.0%)  in  Q4  2025.  In  the  ICT 
sector,  Spain  has  caught  up  the  EU  average,  with 
ICT specialists accounting for 4.8% of the number 
of  people  in  total  employment  in  Q4  2025.  The 
percentage  of  female  ICT  specialists  (19.5%)  is 
also  in  line  with  the  EU  average.  However,  the 
country’s  broader  population  performs  quite  well 
in digital skills, with 66.5% of individuals aged 16–
74  having  at  least  basic  digital  skills  in  2025, 
standing  6  pps  above  the  EU  average.  Shortages 
of  health professionals  are  a  persistent  challenge 
(see  Annex  15).  Survey  evidence  confirms  lower 
labour  shortage  pressures  than  the  EU  average: 
fewer firms in industry (8.1% vs 17.5% in the EU) 
and  construction  (21.9%  vs  27.5%)  reported 
shortages in 2025, although levels  are still above 
those observed in 2019. Shortages are most acute 
among  plant  and  machine  operators,  heavy  truck 
and bus drivers, and administrative and specialised 
secretaries. 

Active  labour  market  policies  (ALMPs)  are  a 
critical tool to help tackle Spain’s structural 
labour  market  weaknesses.  The  effectiveness 
of  ALMPs  is  constrained  by  limited  intensity  of 
support,  weak  targeting  and  structural  capacity 
bottlenecks.  Despite  one  of  the  highest  shares  of 
GDP  devoted  to  ALMPs  in  the  EU,  their  impact 
remains 
limited:  high  unemployment  dilutes 
resources,  resulting  in  per-participant  spending 
below  the  EU  average,  and  active  measures 
policies. 
continue 
Underinvestment  in  training  and  guidance  hinders 
upskilling workers and helping them adapt to new 
roles  amid  persistent  skills  mismatches  and 
demographic  pressures,  while  resources  remain 
skewed  towards  short-term  hiring 
incentives. 
Structural  bottlenecks  include  weak  coordination 
between  employment  and  social  services,  high 
caseloads  in  public  employment  services  and 
limited  employer  engagement.  These  bottlenecks 
further  reduce  the  capacity  of  ALMPs  to  support 
sustainable labour market integration. 

lag  behind 

passive 

to 

a 

stronger 

Spain  is  taking  steps  to  modernise  its  ALMP 
system,  with 
on 
coordination,  targeting  and  service  quality. 
The  new  Active  Support  to  Employment  Strategy 
(AESS  2025-2028)  strengthens  profiling,  skills-
needs  assessment  and  data-sharing  to  better 
is 
connect 

jobseekers  with  vacancies.  This 

focus 

Employment 

complemented by tailored programmes for groups 
facing persistent barriers – Roma, older people and 
people  in  long-term  unemployment.  Building  on 
the 2023 Employment Law, the 2025 Annual Plan 
for  Decent 
quantitative 
objectives  for  key  groups  (e.g.  women,  young 
people, 
persons  with 
disabilities)  and  relies  on  upgraded  digital  tools 
and AI-supported profiling. Ensuring the consistent 
uptake  of  these  reforms  across  Spain’s  regions 
and their evaluation will be essential to delivering 
tangible improvements (277). 

low-skilled  workers, 

sets 

Despite  high  collective  bargaining  coverage, 
social  dialogue  faces  structural  weaknesses. 
Although  collective  bargaining  coverage  is  high 
(92.1%  in  2024),  the density  of trade  unions  and 
employer organisations remains very low, standing 
at 12.5% and 40.1%, respectively (278). This points 
to  a  structural  imbalance,  where  the  very  high 
level  of  collective  bargaining  coverage  is  not 
matched  by  correspondingly  high  membership 
rates  in  trade  unions  and employer  organisations. 
Low  membership 
in  employer  organisations 
particularly  hinders  the  participation  of  SMEs  in 
collective 
the 
inclusiveness  of  social  partner  structures,  as 
affiliation  rates  remain  particularly  low  among 
smaller  firms  (15.0%  for  companies  with  5-9 
workers), compared with larger companies (20.4% 
overall) (279).  Coverage  of  collective  agreements 
remains very low in some sectors (280), which face 
low-quality  employment  conditions. 
persistent 
There  are  also 
the 
regional  variations 
effectiveness  and  representativeness  of  social 
dialogue structures in Spain, reflecting differences 
in  institutional  arrangements  and  social  partner 
presence in different autonomous communities.  

undermining 

bargaining, 

in 

(277) Full Report: Improving Active Labour Market Policies in Spain 

| OECD. 

(278) OECD/AIAS ICTWSS v2.0. 

(279) Ministerio de Trabajo y Economia Social, Encuesta anual 

laboral 2024. 

(280) Ministerio de Trabajo y Economia Social, Estadística de 

Convenios Colectivos de Trabajo, 2024 

98 

 
 
 
ANNEX 12: SOCIAL POLICIES 

The 

2025 

pressing 

challenge,  with 

Spain  faces  significant  social  challenges, 
especially  in  terms  of  poverty  and  child 
poverty. 
country-specific 
recommendations  urge  Spain  to  address  child 
poverty  and  improve  the  effectiveness,  coverage 
and  adequacy  of  its  social  assistance  system. 
Despite  slights  improvement,  this  remains  the 
most 
persistent 
inefficiencies  in  the  social  protection  system  and 
deep  regional  disparities  that  hinder  poverty 
reduction  efforts.  Spain does  not  appear  to  be  on 
track to reach its national 2030 poverty reduction 
the  specific  sub-target  for 
target, 
children. Social benefits have a limited capacity to 
reduce  poverty  and  inequality,  adding  to  growing 
housing-related  challenges  (see  Annex  16)  and 
persistent gaps in the long-term care (LTC) sector. 
Addressing these structural challenges would help 
to  ensure  Spain’s  competitiveness  as  well  as 
sustainable and inclusive growth.  

including 

Child  poverty  remains  high  and  keeps 
worsening.  In  2025,  33.8%  of  children  were  at 
risk  of  poverty  or  social  exclusion  (AROPE),  down 
from  34.6%  in  2024.  However,  this  represented 
one of the highest rates in the EU. Severe material 
and  social  deprivation  and  persistent  poverty  of 
children also showed some improvement in 2025, 
affecting respectively 10.4% (EU: 7.9%) compared 
to  11.2%  in  2024,  and  18.5%  (EU:  11.3%) 
compared to 20.6% in 2024. The economic cost of 
child  poverty  is  estimated  at  a  substantial  4%  to 
5.1%  of  GDP (281).  Spain  is  implementing  the 
European  Child  Guarantee  to  mitigate  these 
impacts.  There  has  been  progress  in  access  to 
quality education, but gaps remain in guaranteeing 
that  children  in  need  have  access  to  key  services 
and  goods,  such  as  housing.  Spain  announced  a 
State  Pact  against  Child  Poverty  and 
the 
introduction  of  a  universal  child  benefit  which, 
whether  or  not  combined  with  the  child  support 
supplement  (complemento  de  ayuda  para 
la 
infancia,  or  CAPI),  could  reduce  child  poverty  and 
the  poverty  gap,  albeit  at  a  relatively  high  fiscal 
cost (282).  Spain  also  published 
the  Revised 
Sustainable  Development  Strategy  2030,  aiming, 
child  poverty. 
among  other,  at 

reducing 

(281) Alto Comisionado contra la Pobreza Infantil, Fundación «la 
Caixa», El coste de la pobreza infantil en España, 2023; 
OECD, The economic costs of childhood socio-economic 
disadvantage, 2022. 

(282) The simulation was performed by the European Commission, 
Joint Research Centre, based on the EUROMOD model, J2.0+ 

Nonetheless, 
the  measure  has  not  been 
implemented yet. There remains scope for further 
policy  actions  to  address  the  country-specific 
recommendation on child poverty. 

(ECEC)  has 
Early  Childhood  and  Care 
expanded,  but  inequalities  persist.  Enrolment 
for  children  aged  3  to  6  is  almost  universal 
(around  98%  in  2024).  Participation  for  children 
aged  0-3  stands  at  56.8%  (16 pps  above  the  EU 
average), but it is still costly for users. As universal 
free  ECEC  is  not  guaranteed  nationally,  access  is 
uneven  across  regions  and  heavily  reliant  on 
private provision despite recent public expansion. A 
key  concern  is  the  participation  gap  between 
children  who  are  at  risk  of  poverty  and  social 
exclusion and those who are not. Despite progress, 
families  are  experiencing  affordability  issues  and 
shortages  with  long  waiting  lists,  limited  opening 
hours  and  long  travel  distances  to  childcare 
centres. Access to free school meals is also limited 
(see  Annex  13).  The  first  progress  report  on  the 
European  Child  Guarantee  confirms  that  only  the 
País  Vasco  guarantees  a  free  and  healthy  daily 
school  meal  for  all  children  in  need.  To  support 
shared 
Spanish 
responsibilities, 
government has, under the recovery and resilience 
plan  (RRP),  passed  legislation  extending  birth  and 
care leave from 16 to 19 weeks for each parent. 

care 

the 

Overall  poverty  in  Spain  remains  high,  with 
significant regional disparities. In 2025, 25.7% 
of  the  population  was  at  risk  of  poverty  or  social 
exclusion,  the  rate  showed  some  improvement 
compared to 2024, but remains well above the EU 
average of 20.8%. Despite decreasing slightly, the 
depth  of  poverty  remained  high,  with  the  poverty 
gap  rising  to  26.9%  (EU:  22.5%)  and  resulting  in 
some of the highest levels of severe material and 
social  deprivation  (8.1%)  in  the  EU.  Persistent 
poverty  also  decreased,  but  remained  high,  with 
12.5%  of  the  population  remaining  at  risk  for 
more  than  two  years 
(EU:  9.8%),  signalling 
structural  barriers  to  escaping  poverty  and  social 
exclusion.  Regional  disparities  are  stark,  with 
AROPE  rates  ranging  from  34.7%  in  Andalucía  to 
14.7%  in  the  País  Vasco.  This  reflects  uneven 
labour  market 
coverage, 
social 
conditions and access to services across territories 
particularly  as  concerns  rural  areas  (see  Annex 
19).  In  total,  12.5  million  people  were  at  risk  of 
poverty  or  social  exclusion  in  2025,  including  2.6 
million  children  —  331 000  more  overall  and 
77 000  more  children  than  in  2019,  highlighting 
the lack of progress towards Spain’s 2030 targets. 

protection 

99 

 
 
 
 
 
 
Spain  has  earmarked  more  than  33%  of  its 
European  Social  Fund  Plus  resources  for  social 
inclusion. This allocation is further bolstered by an 
additional  11%  dedicated  to  the  European  Child 
Guarantee  and  5% 
to  addressing  material 
deprivation. A comprehensive approach, as set out 
in the EU anti-poverty strategy, could help address 
the  multiple  dimensions  of  poverty  and  achieve 
the national anti-poverty target. 

rising 

in  2025, 

Some groups  face  higher  risks of poverty.  In 
2025,  around  half  of  single-parent  households 
(50.6%),  large  families  (47.1%)  and  third-country 
nationals (53.1%) were at risk of poverty or social 
exclusion.  This  reflects  a  combination  of  low 
income,  unstable 
increasingly  high 
jobs  and 
housing costs in some areas (see Annexes 11 and 
16).  In  this  context,  children  in  single-parent 
households, 
large  households,  or  households 
where  parents  have  a  low  level  of  education  are 
particularly  affected.  The  Roma  population  is 
extremely vulnerable, with 94% at risk of poverty 
(AROP) 
to  96%  for  Roma 
children (283).  Among  persons  with  disabilities, 
32.2% were at risk of poverty or social exclusion in 
2025  (EU:  28.8%),  and  13.5%  faced  severe 
material and social deprivation (EU: 10.5%). Young 
people  (15-29)  also  have  higher  poverty  risks 
(27.6%  vs  24.2%  in  the  EU).  Energy  poverty  in 
Spain 
in  2025)  while 
remaining  among  the  worst  in  the  EU.  This  is 
particularly  acute  among  households  at  risk  of 
poverty: in 2024, 28.3% could not afford adequate 
heating,  compared  with  12.9%  among  non-AROP 
households.  While  car  affordability  does  not 
appear to be a significant issue for the population 
at  large,  it  represents  a  problem  for  vulnerable 
people  of  whom  12.1%  could  not  afford  a  car  in 
2024.  The  regions  of  Castilla-La  Mancha  and 
Extremadura,  where  approximately  27%  of  the 
population  is  at  risk  of  poverty,  are  particularly 
poorly  served  by  public  transport (284).  Spain’s 
2024–2030  poverty  strategy  provides  a  roadmap 
for reducing poverty. Other targeted initiatives are 
also  in  place,  including  the  2021-2030  national 
strategy 
inclusion  and 
participation  and  the  draft  2026–2030  national 
strategy to combat energy poverty. 

for  Roma  equality, 

is  decreasing 

(15.9% 

wages have partly recovered, but despite a rise in 
the  nominal  minimum  wage,  real  minimum  wage 
growth  has  remained  among  the  weakest  in  the 
EU (see Annex 11). Thus, despite a slight decrease, 
in 2025, 11.2% of employed people were at risk of 
poverty  (EU:  8.3%).  While  employment  reduces 
poverty  risks,  in  some  cases  it  fails  to  lift 
households  out  of  poverty,  particularly  for  fixed-
term  workers,  single  parents  and  young  adults. 
60.6% of households with low work intensity were 
at  risk  of  poverty  and this  number  rose  to  82.4% 
for  children,  showing 
the  employment 
situation of the household heavily impacts poverty 
among  children.  The  self-employed  (such  as 
farmers)  face  especially  high  vulnerability  due  to 
low  and  unstable  earnings,  with  in-work  poverty 
and income insecurity persisting. While it increased 
in  2025,  the  real  gross  disposable  household 
income per capita surpassed its 2008 level only in 
2023 and remains way below the EU average.  

that 

The  impact  of  social  transfers  on  reducing 
poverty is low and income inequality remains 
due  to  persistent  gaps  in  coverage  and 
adequacy.  In  2025,  social  transfers  reduced 
poverty risks by only 23.3% (EU: 33.2%) and child 
poverty  by  just  18.7%  (EU:  40.1%),  placing  their 
effectiveness  among  the  lowest  in  the  EU,  with 
is  partly 
significant  regional  disparities.  This 
related  to  a  relatively  low  benefit  recipient  rate: 
only 68% of adults (18–64) who were both at risk 
of poverty and living in (quasi-)jobless households 
received benefits (EU: 82.3%) and just 49.7%% of 
people in poverty did so (EU: 72.4%). Benefit levels 
also appear insufficient to lift beneficiaries above 
the  poverty  line,  which  limits  both  their  poverty-
reducing  effect  and  their  role  as  an  effective 
social safety net. These gaps contribute to Spain’s 
persistently  high  levels  of  income  inequality:  the 
top  20%  earn  5.24  times  more  than  the  bottom 
20% (EU: 4.62) and the lowest decile captures only 
2.5%  of  total  income  (EU:  3.1%),  with  wide 
regional  gaps.  Taxes  and  social  benefits  reduced 
inequality  (measured  by  S80/S20)  by  only  37.9% 
(EU: 48.7%) in 2025. 

In-work  poverty  and  low  work  intensity  are 
key drivers of overall poverty. Since 2023, real 

(283) EUFRA, Roma Survey - Country Data - Spain, 2025. 

(284) Data from the Commission’s Transport Poverty Hub. 

100 

 
 
Graph A12.1: Impact of social benefits transfers 
(excluding pensions) on poverty reduction by 
NUTS2 region in 2025 

Source: Eurostat [tespm050_r] 

There 

levels, 

system. 

protection 

Governance  and  coordination  shortcomings 
continue  to  hinder  the  effectiveness  of  the 
social 
are 
inconsistencies  in  access,  quality  and  eligibility 
across the territory. Cash transfers coexist with in-
kind  support  and  tax  relief  in  Spain  at  various 
administrative 
creating  a  dispersed 
system (285).  Non-refundable  tax  credits  (e.g.  for 
dependent  children)  tend  to  exclude  low-income 
families,  while  refundable  tax  credits  apply  to 
mothers  who  work  or  receive  unemployment 
benefits  (contributory  or  not),  large  families  and 
dependants  with  disabilities.  Limited  coordination 
between social, health, education and employment 
services  hampers 
integrated,  person-centred 
support.  This  translates  into  benefits  often  not 
being  linked  to  targeted  social  assistance  and 
inclusion  services.  Insufficient  interoperability  of 
databases  and 
the  absence  of  automatic 
enrolment  mechanisms  further  reduce  benefit 
take-up  and  delay  access.  Spain  is  seeking  to 
improve take-up through initiatives such as the as 
the  Social  Security  online  portal  (Sede  Electrónica 
de  la  Seguridad  Social)  and  mobile  application 
(App  Seguridad  Social).  However,  challenges 
persist in the implementation of measures, notably 
related to governance and coordination. 

vs 

(5.42% 

8.74%), 

low 
alongside 
EU: 
comparatively  less  resources  for  social  inclusion 
(2.0%  vs  EU:  2.21%),  disability  (6%  vs  EU:  7.2%) 
and  housing  (0.44%  vs  EU:  1.35%).  In  2023,  per 
capita  spending  on  family  and  child  benefits 
(adjusted  for  purchasing  power)  stood  at  only 
EUR 484, around half the EU average of EUR 891, 
and  remained  relatively  stable  in  2024.  Specific 
investment  in  early  intervention  and  disability 
support for children also remained low.  

to 

The  implementation  of  the  minimum  income 
scheme  (IMV)  and  child  support  supplement 
(CAPI)  faces  challenges.  Since  its  creation  in 
2020,  the  minimum  income  scheme  has  reached 
more  than  3.5  million  people  in  Spain.  The  last 
data  available  shows  829  399  households 
received  the  benefit  (in  which  2  532  284  people 
live)  in  March  2026.  The  average  amount  of  the 
benefit is EUR 543.1 per month per household(286). 
Nonetheless,  the  take-up  rates  for  both  schemes 
remain  low  (see  2025  country  report).  Only  55% 
of eligible individuals receive the minimum income 
benefit  and  72%  the  child  support  supplement, 
the  administrative  burden,  complex 
due 
eligibility  checks  and  low  awareness (287).  These 
barriers  result  in  lower  coverage  among  some  of 
the  most  vulnerable  groups,  such  as  non-EU 
nationals and Roma (288).  With higher take-up, the 
minimum income benefit could better help reduce 
poverty – particularly child poverty – and lower the 
poverty  gap.  Greater  adequacy  of  benefits  would 
also  maximise  their  impact (289).  The  minimum 
income  scheme  has  also  been  found  to  be 
inflexible and unpredictable for beneficiaries, as it 
relies  on  the  previous  year’s  income  and  it  lacks 
mechanisms to rapidly  adjust support in response 
to  sudden  changes 
income  or 
employment  status,  which  could  discourage 
employment.  Moreover,  while  recent  adjustments 
have  aimed  at  reforming  the  work  incentive 
component, their effectiveness remains to be seen. 
In  fact,  recipients  tend  to  receive  benefits  over  a 
long  period  of  time:  90%  of  households  receive 

in  household 

(286) Ministerio de Inclusión, Seguridad Social y Migraciones  

(287) AIReF, 4.ª Opinión sobre el Ingreso Mínimo Vital, 2025. 

Family support remains limited. In 2024, social 
protection  spending  was  concentrated  on  old-age 
(42%,  EU:  41.5%)  and  healthcare  (29.26%,  EU: 
29.7%),  while  family  and  child  support  remained 

(288) Iseak  and  Fundacion  Secretariado  Gitano,  Study  on  the 
impact of the Minimum Vital Income on the poverty situation 
of  the  Spanish  Roma  people, 2023;  Friedrich  Ebert  Stiftung, 
Spain’s  Minimum  Income  Scheme,  Political  Impetus  to 
Protect the Most Vulnerable, 2024. 

(285) Missoc database. 

(289) The simulation was performed by the European Commission, 
Joint Research Centre, based on the EUROMOD model, J2.0+ 

101 

 
 
 
 
benefits for more than one year, 75% for over two 
years and 60% for more than three years (290).The 
government  has  taken  steps  to  address  these 
shortcomings, including a new elephone line, and a 
dedicated accessibility plan is intended to improve 
outreach and support. Within the framework of the 
RRP,  Spain  also  piloted  social  inclusion  pathways 
accompanying  the  minimum  income  benefit.  A 
specific proposal for the development of inclusion 
pathways  was  also  developed  with  support  from 
the Technical Support Instrument (291). Making such 
pathways  a  standard  feature  of  the  scheme,  by 
systematically  combining  income  support  with 
tailored  social  services,  would  strengthen  the 
social inclusion of vulnerable groups (292). 

(28.8% 

The  adequacy  of  social  protection  for  long-
term  care  remains  limited.  Public  expenditure 
on long-term care (LTC)  amounts to only 0.8% of 
GDP,  well  below  the  EU  average  of  1.7%,  despite 
in  Spain 
relatively  high  LTC  needs 
compared  with  26.6% in the  EU) (293).  As  a  result, 
older  people  face  high  out-of-pocket  costs  across 
all levels of care needs, and poverty risks linked to 
LTC remain well above the EU average for people 
with  both  moderate  and  severe  needs (294).  This 
means  that  a  relatively  low  proportion  of  the 
population aged 65 and over receives public home 
care (3.9%, EU:  5.5%)  or cash benefits (2.6%, EU: 
6.2%).  The  percentage  of  people  in  need  of  LTC 
but  not  using  (more)  professional  home-care 
services  primarily  due  to  financial  reasons  was 
above  the  EU  average  at  13.4%  (EU:  10.6%)  and 
9.3% had great difficulty in affording professional 

(290) AIReF, 4.ª Opinión sobre el Ingreso Mínimo Vital, 2025; OECD, 
OECD Economic Surveys Spain, 2023; OXFAM, El impacto del 
Ingreso  Mínimo  Vital  y  su  articulación  con  las  Rentas 
Mínimas  autonómicas:  una  estimación,  2024;  Ministerio  de 
Inclusion,  Seguridad  social  y  Migraciones,  Informes,  2024; 
Platafroma  Infancia,  El  impacto  del  Ingreso  Mínimo  Vital  y 
del  Complemento  de  Ayuda  a  la  Infancia  sobre  la  pobreza 
infantil:  limitaciones  y  vías  de  reforma,  2024;  European 
Commission, Investing in Children: The Impact of EU Tax and 
Benefit Systems on Child Poverty and Inequality, 2024. 

(291) A specific proposal for the development of inclusion 

pathways was developed with support from the Technical 
Support Instrument. 

(292) Laboratorio de Politicas de inclusion, 2025, and Secretaría de 
Estado de la Seguridad Social y Pensiones, Más de 70.000 
personas se han beneficiado de los itinerarios de inclusión 
vinculados al Ingreso Mínimo Vital, 2023. 

(293) EHIS, 2019. 

(294) OECD, Adequacy of social protection for long-term care: 

Spain, 2025. 

home-care service (EU: 8.2%) (295). The percentage 
of people aged 65 and over potentially in need of 
LTC who receive residential care is higher than the 
EU  average  (20.3%  compared  with  17.7%  in  the 
EU), as public funding is skewed towards this form 
of care (66.1% vs 46.2% in the EU), yet it remains 
unaffordable 
for  many  older  people,  while 
spending  on  home  care  is  still  well  below  the  EU 
average (20.5% vs 28.8% in the EU) (296). 

lead 

service 

turnover 

continue 

employment, 

coverage  and 

The  LTC  system  also  faces  structural 
challenges.  The  State  sets  out  the  common 
framework  and  co-funds  the  system,  while  the 
regional  authorities  are  responsible  for  service 
delivery.  Differences  between  regions  in  terms  of 
resources, 
to 
inequalities in access, availability and quality. Care 
is  provided  via  a  combination  of  public,  private 
(for-profit  and  non-profit)  and 
third-sector 
providers.  Low  wages,  fixed-term  employment, 
precarious  working 
informal 
conditions  and  high 
to 
undermine  job  quality  and  job  attractiveness.  At 
the  same  time,  the  system  relies  heavily  on 
informal  carers,  mainly  women,  and  third  country 
nationals.  Beneficiaries  receive  either  cash  or  in-
kind  benefits 
(home  care,  tele-assistance  or 
residential  services) but waiting lists are long due 
to funding constraints. At the same time, a recent 
study  shows  that  the  number  of  older  people 
(aged  65+)  in  residential  care  has  increased  by 
50% over the last decade (297). Recent reforms and 
investments,  including  the  2024-2030  national 
deinstitutionalisation  strategy  and,  under  the  RRP, 
the  agreements  of  the  territorial  council  of  social 
services  on  a  common  minimum  set  of  social 
services and the renovation of residential and day-
care centres, aims to foster independent living and 
inclusion  in  the  community,  but  further  scope  for 
action  remains.  Through  the  Technical  Support 
Instrument,  Spain  is  benefiting  from  support  for 
the  development  of  a  framework  for  integrated 
and  coordinated  care  as  well  as  for 
the 
development  of  a  national  strategy  for  workforce 

(295) https://webgate.ec.europa.eu/circabc-

ewpp/ui/group/bab664d7-1188-47b2-9fa6-
869902320ba2/library/2ac9aa59-5c4a-45c9-b710-
f73a14246666/detailsMonitoEU-SILC2024. 

(296) European Commission, Ageing Report, 2024. 

(297) Eurofound (2024), Paths towards independent living and 
social inclusion in Europe, Publications Office of the 
European Union, Luxembourg. 

102 

 
 
 
planning  and  professional 
mechanisms to support informal caregivers. 

recognition,  with 

103 

 
ANNEX 13: EDUCATION AND SKILLS 

remain 

barriers 

improve 

disadvantage, 

is  taking  steps  to 

Spain 
its 
training  systems,  while 
education  and 
unequal  education  outcomes  and  skills  gaps 
and  mismatches 
to 
competitiveness.  Reinforced  efforts  have  led  to 
visible improvements in early  childhood education 
and care (ECEC) and tertiary education attainment. 
However,  gaps  persist  across 
regions  and 
population  groups  with  regard  to  basic  skills  and 
early  leaving  from  education  and  training.  Socio-
economic 
gender,  migrant 
background  and  disability  continue  to  influence 
long-lasting 
trajectories,  with 
educational 
implications  for 
labour-market  outcomes  and 
productivity.  At  the  same  time,  skills  mismatches 
remain  present, 
reflecting  a  polarised  skills 
distribution, although recent reforms in vocational 
education  and  training  (VET),  together  with  a 
notable increase in enrolment in recent years, are 
contributing to improving medium-level pathways. 
There  is  also  scope  to  further  enhance  the 
responsiveness  of  tertiary  education  to  labour 
market needs, including in fields related to science, 
technology,  engineering  and  mathematics  (STEM) 
that are critical to the green and digital transitions. 
These  challenges  are  also  influenced  by  still 
uneven  participation  in  adult  learning,  although 
recent  policy  developments  have  reinforced  the 
focus  on  lifelong  learning  and  are  expected  to 
support  broader  access  to  reskilling  opportunities 
across the working-age population.  

Against  this  background,  the  2025  country-
specific  recommendations  (CSRs)  addressed 
to Spain focused also on education and skills. 
In  particular,  the  CSR  focused  on  reducing  skills 
shortages  and  mismatches  through  stronger  dual 
VET,  enhancing  lifelong  learning,  in  particular  for 
low-skilled  people,  improving  basic  skills,  and 
tackling  early  school  leaving  while  accounting  for 
regional  differences.  Enhancing  the  inclusiveness, 
quality  and  labour-market  relevance  of  education 
and  training  would  support  productivity  growth, 
reduce  skills  shortages,  and  help  ensure  that 
economic  transformation  translates  into  better 
and more equal opportunities for all. 

in  ECEC 

Participation  in  ECEC  remains  high  overall 
but  uneven  across  the  country.  In  Spain, 
participation 
is  nearly  universal  for 
children  aged  three  and  over  (97.8%  in  2024;  EU 
average:  95.0%).  For  children  under 
three, 
enrolment  in  formal  childcare  or  education  stood 
at 56.8% in 2025, markedly above the EU average 
(40.5%). It increased from 39.7% in 2015, due to 

in 

investments 

sustained 
the  expansion  of 
capacities  and  targeted  support  to  vulnerable 
groups,  co-financed  by  cohesion  policy  funds  and 
the Recovery and Resilience Facility (RRF). Despite 
progress,  enrolment  rates  differ  widely  across 
regions  from  64.3%  in  Galicia  to  29.9%  in  Ceuta. 
Moreover,  participation  among  children  at  risk  of 
poverty  or  social  exclusion  is  substantially  lower 
than among those not at risk (45.8% vs 62.4% in 
2025),  although  this  gap  is  in  line  with  the  EU 
average.  Evidence  from  recent  national  analysis 
highlights  financial  costs,  complex  administrative 
procedures, limited availability of clear information 
for  families  and  insufficient  flexibility  as  key 
factors  constraining  participation  (298).  Against  a 
background of persistently high child poverty rates 
(see Annex 12), ECEC participation plays a key role 
in  preventing  long-term  educational  gaps  and 
socio-economic inequalities. 

Declining basic skills proficiency, paired with 
low  shares  of  top  performers,  constrains 
efforts  towards  human  capital  development. 
Around  a  quarter  of  Spanish  15-year-olds  do  not 
reach  basic  proficiency  levels  in  mathematics 
(27.3%) and reading (24.4%), and about a fifth in 
science (21.3%) (299), although slightly better than 
the  respective  EU  averages  (29.5%,  26.2%  and 
24.2%,  respectively).  Echoing  broader  EU  trends, 
underachievement  in  basic  skills  has  gradually 
increased since 2012, albeit less than at EU level, 
widening  the  gap  in  relation  to  the  EU  target  of 
having  less  than  15%  low-achievers  in  reading, 
maths  and  science  by  2030.  Moreover,  the  share 
of top performers is well below the EU average, at 
5.9%  in  mathematics  (EU  average:  7.9%)  and 
4.9%  in  science  (EU  average:  6.9%),  reducing  the 
pool  of  talent  for  highly  skilled  professions,  such 
as  in  STEM,  and  hampering  innovation  capacity 
(see Annex 4).  Regional differences in basic skills 
are  considerable,  with  Andalusia,  the  Canary 
Islands  recording  consistently  lower  scores  than 
the 
18). 
Underachievement in digital skills, i.e. the share of 
students  not  reaching  basic  proficiency  levels  in 
the  2023  International Computer  and  Information 
Literacy  Study,  is  slightly  higher  than  the  EU 
average (44.4% vs 42.5%) and nearly triple the EU 
target (i.e. having less than 15%). 

national 

average 

Annex 

(see 

(298) Educo, Niñas y niños invisibles en el primer ciclo de 

Educación Infantil, 2024. 

(299) OECD, 2022 PISA. 

104 

 
 
 
 
 
Early  leaving  from  education  and  training 
has  continued  to  improve  in  recent  years, 
although  remains  a  critical  challenge  for 
some regions and population groups. The rate 
of early leavers from education and training (ELET) 
slightly  decreased  to  12.8%  in  2025  (down  from 
13.0%  in  2024),  it  is  still  above  both  the  EU 
average  (9.1%)  and  the  EU  2030  target  (9%). 
Having a migrant background is a key determinant 
of  ELET:  foreign-born  young  people  are  nearly 
three  times  more  likely  to  leave  education  early 
than native-born peers. Disability-related gaps are 
also  significant,  with  around  1  in  3  young  people 
with  some  or  severe  activity  limitations  leaving 
education early, compared with just 11% of those 
without  limitations,  in  2024.  Regional  disparities 
are  pronounced,  with  ELET  rates  ranging  from 
3.6%  in  the  Basque  Country  to  20.6%  in  Murcia. 
Gender  gaps  persist  as  well  (15.9%  for  men  and 
9.5% for women), although they have narrowed in 
recent years. Lastly, structural and socio-economic 
exclusion  further  compounds  these  disparities, 
particularly  for  Roma  students,  as  only  36%  of 
20–24-year-olds  had  completed  upper-secondary 
education in 2024, highlighting persistent barriers 
to inclusion (300). Early disadvantages tend to carry 
over  into  adulthood,  contributing  to  structural 
labour-market 
imbalances 
outcomes (301). 

skills 

and 

in 

Graph A13.1: Early leavers from education and 
training 

Source: Eurostat 

Policies to improve educational outcomes are 
being progressively  rolled  out.  The  Ministry  of 
Education  and  the  regional  governments  are 
reinforcing  territorial  cooperation  programmes 
that aim to improve basic skills, tackle early school 
leaving  and  address  regional  disparities.  These 
include  the  RRF-funded  programme  for  guidance, 

the  potential 

advancement and educational enrichment ‘PROA+’, 
which  supports  schools  of  particular  educational 
complexity  and  has  recently  been  renewed  until 
2028 with support from the European Social Fund 
Plus 
to 
(ESF+).  Moreover,  new  programmes 
strengthen basic skills in reading and mathematics 
have  been  implemented  since  2024.  In  parallel, 
the  reform  of  the  Education  Law  (LOMLOE)  has 
introduced  new  diagnostic  and  system-level 
to 
evaluations,  which  have 
strengthen  evidence-based  policymaking  and 
inform  targeted  interventions.  Starting  in  2026, 
Spain  will  join  the  Erasmus+  DigiCLASS  project  to 
adapt  and  trial  a  tool  for  assessing,  developing 
in  primary  and 
and  certifying  digital  skills 
secondary 
reduce 
in  basic  digital  skills.  The 
underachievement 
upcoming  ‘Strategic  Plan  for  Inclusive  Education’, 
anchored  in  a  new  vulnerability  index,  seeks  to 
promote  a  more  coherent,  system-wide  approach 
to  equity  challenges,  reinforcing  schools’  capacity 
to  address  diversity  and  educational  inequalities. 
These  efforts  could 
in 
addressing the 2025 CSR on improving basic skills 
and  reducing  early  school  leaving,  taking  into 
account regional differences.  

thus  support  Spain 

schools, 

aiming 

to 

Efforts to reduce disparities in education are 
in  monitoring  and 
hindered  by  gaps 
evaluation, as well as insufficient support to 
the  most  vulnerable.  In  its  2024  report (302), 
Spain’s State School Council highlights the need to 
reinforce coordination across levels of governance 
and  to  strengthen  monitoring  and  evaluation 
mechanisms  to  better  assess  the  impact  of 
territorial  cooperation  and  targeted  investments. 
The  report  also  points  to  the  relevance  of 
continued  public  debate  on  structural  issues  such 
as the possible extension of compulsory education 
to age 18, in light of ongoing challenges related to 
early  school  leaving.  Further  evidence  highlights 
that  the  structural  provision  of  individualised 
remedial education and language support remains 
to 
limited, 
address learning gaps and affecting students with 
a migrant background and special education needs 
the most (303).  

the  system’s  capacity 

impacting 

(300) Fundamental Rights Agency, 2025. Rights of Roma travellers 

(302) Consejo Escolar del Estado, Informe 2024 sobre el estado 

in 13 European Countries. 

del sistema educativo. 

(301) Funcas, Informe sobre el abandono educativo temprano en 
España. Datos de 2025 y análisis comparado, 2026. 

(303) EsadeEcPol Policy Brief #49, El estado de la profesión 

docente en España, 2025. 

105 

 
     
 
 
 
the 

diverse, 

requiring 

Pressures  on 
teaching  profession 
undermine the provision of consistent quality 
teaching.  Spain’s  teaching  workforce  is  ageing, 
with  39.1%  of  lower-secondary  teachers  aged  50 
or  over  in  2023,  while  only  6.7%  were  under  30. 
Results from the OECD’s TALIS 2024 survey show 
that, although Spanish teachers report high career 
satisfaction  and  low  attrition,  the  profession’s 
attractiveness is hampered by the high prevalence 
of  short-term  contracts  (30.8%;  EU  average: 
17.7%)  and  dissatisfaction  with  administrative 
workload (304).  Meanwhile,  student  cohorts  are 
greater 
increasingly 
individualised  support.  For  example,  the  share  of 
students  requiring  specific  educational  support  – 
due  to  socio-economic  vulnerability  or  special 
educational  needs  –  rose  from  8%  in  2017/2018 
to  14%  in  2023/2024 (305),  while  a  lack  of 
specialised  staff  is  reported  (306),  adding  further 
demands on teachers. To inform future reforms, a 
broad  study  process  was  initiated  in  2025,  with 
four  working  groups  examining  needs  and 
potential  measures 
professional 
competences,  systems  of  entry  into  and  selection 
continuous 
for 
education,  and  working  conditions.  Moreover,  a 
draft  bill  put  forward  by  the  government  in 
November 2025 proposes limits to teaching hours 
and  reduced  class  sizes,  with  implementation 
planned for the 2026/2027 school year.  

the  profession, 

initial  and 

regarding 

Spain  shows  a  highly  polarised  skills 
distribution  that  contributes  to  persistent 
skills  mismatches.  In  2025,  42.4%  of  adults 
(25-64)  held  tertiary  qualifications  (EU  average: 
36.9%),  while  34.6%  had  low-level  qualifications 
(EU average: 18.8%). By contrast, only 23.0% had 
intermediate  qualifications,  representing  one  of 
the  lowest  shares  in  the  EU  (EU  average:  44.3%). 
into  a  significant 
This 
misalignment  between  education  outputs  and 
labour-market 
macro-level 
mismatches at 22.1%, compared to an EU average 
of  19.2% (307).  Employer  surveys  show  that  the 

imbalance 

translates 

needs, 

with 

main  obstacles 
insufficient 
experience (308) (see Annex 11). 

to 

technical  skills  and  a 

filling  vacancies 

include 
lack  of 

21.4%), 

High  tertiary  attainment  in  Spain  coexists 
with  widespread  overqualification,  pointing 
to  difficulties  in  adapting  the  university 
offer  to 
labour-  market  needs.  Tertiary 
attainment  (25-34)  reached  52.5%  in  2025,  well 
above  the  EU  average  of 44.8%  and  the  EU-level 
target  of  45%  by  2030.  The  employment  rate  of 
recent  tertiary  graduates  has  steadily  increased 
since the pandemic (from 75.9% in 2020 to 86.2% 
in  2025),  stressing 
the  economy’s  growing 
demand  for  highly  skilled  workers:  since  2020, 
47%  of  newly  created  jobs  are  highly  qualified 
(309). However, many graduates still end up working 
below their qualification level (34.0% in 2025; EU 
average: 
highlighting  mismatches 
between  their  education  and  the  needs  of  the 
labour market. Overqualification disproportionately 
affects  foreign-born  workers  (52.3%  vs  32.7% 
among  native-born  workers).  Differences 
in 
labour-market outcomes by field of study are also 
pronounced:  based  on  social  security  affiliation 
rates,  full-time  employment  rates  exceed  90% 
among  graduates 
in  engineering  and  health 
sciences,  and  are  near  universal  among 
information  and  communications  technology  (ICT) 
graduates (95.6% of graduates work full time and 
93.8%  hold  permanent  contracts),  while  arts  and 
humanities  graduates  show  the  lowest  affiliation 
rates (63.5%) (310). Despite these disparities, fields 
with  more  moderate  labour-market  outcomes, 
such as business, administration and law, account 
for 19.3% of graduates, compared to engineering, 
which  accounts  for  only  11.0%  of  graduates,  or 
ICT, which accounts for 6.3% of graduates (2024). 
The  distribution  of  publicly  funded  university 
places  is  only  weakly  responsive  to  both  labour-
market  outcomes  and  student  demand,  as  rising 
overall  demand  has  not  been  accompanied  by  a 
systematic  reallocation  of  capacity  towards  high-
rigid  capacity 
employability  fields, 

reflecting 

(304) OECD, 2025, TALIS. 

(305) Ministerio de Educación, Formación Profesional y Deportes, 
Alumnado con necesidad específica de apoyo educativo. 
Curso 2023-2024. 

(306) Defensor Del Pueblo, Personas con discapacidad en el 

informe anual 2024. 

(307) 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). 

(308) SEPE, Informe de prospección y detección de necesidades 

formativas, 2025. 

(309) Fundación BBVA-Ivie, U-Ranking 2025 report. 

(310) CyD Foundation, La empleabilidad de los jóvenes en España, 

2025. 

106 

 
 
 
 
planning (311).  In  2025,  a  new  Skills  Intelligence 
Strategy for Higher Education has been developed 
with  Technical  Support  Instrument  support (312), 
but  it  is  yet  to  be  systematically  integrated  into 
evidence-based policymaking. 

is 

Further 

increasingly  valued  for 

Low  participation  in  medium-level  VET  and 
constraints 
in  dual  VET  provision  are 
reflected  in  persistent  skills  mismatches. 
Participation  in  medium-level  VET  remains  well 
below  the  EU  average  (40.2%  vs  52.9%  in  2024) 
and  only  10.1%  of  adults  hold  an  intermediate 
VET  qualification  in  2025  (EU  average:  34.6%). 
This 
limited  output  of  medium-level  VET 
contributes  to  structural  shortages  of  medium-
skilled  workers.  Still,  the  employment  rate  of 
people  who  have  recently  completed  VET  is  fairly 
low  (see  below)  which  hints  at  mismatches 
between  supply  and  demand.  At  the  same  time, 
VET 
its  practical 
orientation  and  employability  outcomes,  although 
reflected 
is  not  yet  fully 
its  potential 
in 
strengthening 
participation 
levels. 
pathways  between  different  VET 
levels  and 
expanding  provision  could  help  consolidate  these 
trends.  While  current  legislation  envisages  the 
generalisation  of  dual  VET  by  2025/2026,  in  line 
with  the  2025  CSR  on  strengthening  dual  VET, 
implementation varies considerably across regions. 
This  is  largely  due  to  the  limited  availability  of 
companies,  particularly  small  to  medium-sized 
enterprises, willing or able to offer training places, 
reflecting  the  costs  and  administrative  burden 
involved (313).  Although  enrolment 
in  public 
institutions  has  increased  by  31%  over  the  past 
decade,  VET  provision  has  expanded  unevenly: 
private  non-subsidised  providers  have  grown 
almost  sixfold,  largely  driven  by  the  expansion  of 
distance learning, where enrolment is around thirty 
times  higher  (314).  This  risks  widening  socio-
economic 
increasingly 
inequalities,  as  access 
depends on income. At the same time, salary data 
show  substantial  variation 
labour-market 
returns  across  VET  programmes,  with  many 

in 

(311) Funcas, Desafíos y oportunidades para el futuro de la 

educación superior, 2024. 

(312) Proposal for a new Skills Intelligence Strategy for Higher 

Education, including specific support with micro-credential 
design - Reform Support. 

students  concentrated  in  fields  associated  with 
weaker  employment  outcomes (315).  Capacity  is 
further  constrained  by  workforce  challenges: 
despite  a  48.1%  increase  in  teaching  staff  since 
2013,  acute  ageing  and  high  levels  of  part-time 
employment, particularly in private centres, where 
it reaches up to 46%, contribute to a generational 
renewal  need  of  nearly  37 000  young  teachers 
(316).  

tertiary 

graduates 

structural 

imbalances 

Disparities  in  VET  labour-market  outcomes 
reflect 
across 
pathways, regions and fields. People who have 
recently  completed  medium-level  VET  have  lower 
employment  rates  (69.2%  in  2025;  EU  average: 
80.2%),  while 
achieve 
employment rates close to the EU average (86.2% 
vs 87%). Regional  wage disparities among people 
who have recently completed upper-secondary VET 
are  wide,  ranging  from  14 %  below  the  national 
average  in  Extremadura  to  17 %  above  it  in  the 
Basque  Country,  alongside  a  7%  gender  pay  gap. 
(317).  STEM  fields  offer  the  best  employment  and 
wage outcomes but account for less than 25% of 
graduates.  The  share  of  VET  students  enrolled  in 
STEM  fields  was  significantly  below  the  EU 
average  in  2024  (29.0%  vs  36.6%)  and  most  of 
them  were  male  (12.0%  female  in  2024;  EU 
average:  15.9%).  Supported  by  its  recovery  and 
resilience plan (RRP), Spain is implementing a VET 
including  modular 
modernisation 
skills 
and 
qualifications, 
accreditations,  such  as  the  National  Plan  for 
Digital Skills or the Generation D Portal. 

agenda 
digital 

registries 

participation 

Shortages  of  STEM  and  ICT  professionals 
could  limit  progress  in  the  green  and  digital 
transitions.  STEM 
in  higher 
education  improved  slightly  (from  24.7%  in  2023 
to  25.3%  in  2024)  but  remains  below  the  EU 
average  (26.6%)  and  the  EU  2030  target  (32%). 
Women  are 
significantly  under-represented, 
accounting  for  29.0%  of  STEM  students  (EU 
average:  32.4%)  and  16.7%  of  ICT  students  (EU 
average:  20.6%).  At  the  same  time,  high  dropout 
rates in engineering programmes (12.4% for men 
and  8.6%  for  women)  further  undermine  the 

(315) Observatorio de la Formación Profesional (FP Análisis nº 33), 

2024. 

(313) Fundación Bertelsmann. Retos y desafíos de la prospección 

(316) Observatorio de la Formación Profesional (FP Análisis nº 41), 

en la FP Dual, 2025. 

2025. 

(314) Observatorio de la Formación Profesional (FP Análisis nº 34), 

(317) Observatorio de la Formación Profesional (FP Análisis nº 33), 

2024. 

2024. 

107 

 
 
 
formally 

to 
(EQF) 

referenced 
Framework 

was 
the  European 
in  2024, 
Qualifications 
completing  the  EQF  referencing  process  and 
strengthening 
transparency  and  cross-border 
recognition of Spanish qualifications. However, the 
national  qualifications  database  of  Spain  is  not 
connected  to  Europass  yet.  Under  the  RRP,  Spain 
has  introduced  a  permanent,  free  system  to 
validate basic competences acquired through work 
or  informal  learning,  potentially  covering  over 
10 million  people,  alongside  a  micro-credentials 
action  plan.  The  RRP  also  envisages  support  for 
the  provision  of  micro-credentials  by  universities. 
These  initiatives  could  help  widen  access  to 
lifelong 
individual 
targeting  older  workers, 
learning  accounts 
low-paid  or  vulnerable 
especially 
sectors (322). 

including  through 

learning, 

those 

in 

in  Spain 

intelligence 

Skills 
is  gradually 
expanding  beyond  traditional  labour-market 
forecasting.  While  the  national  labour  force 
survey  has  long tracked  employment  and  training 
trends,  newer  initiatives  combine  administrative 
records,  graduate  follow-up  surveys  and  expert 
opinion polls, with increasing attention to VET. Key 
Institute  of 
contributors 
include  the  National 
Professional 
public 
the 
employment  service,  FUNDAE  and  the  CaixaBank 
Dualiza  Observatory,  alongside  regional  initiatives 
such as the Catalan VET agency.  

(INCUAL), 

Skills 

few  highly 

future  availability  of  STEM  skills (318).  These 
constraints coexist with strong labour shortages in 
green  and  digital  fields,  where  vacancies  per 
worker  exceed  the  average  by  52%  and  212%, 
respectively (319). At the same time, Spain attracts 
foreign  workers, 
skilled 
very 
representing  only  around  1%  of  employment-
related  inflows (320).  Although  recent  migratory 
reforms  have  improved  labour-market  access  for 
and 
graduates, 
international 
credential-recognition  barriers  persist, 
risking 
undermining  productivity  and  progress  on  the 
green  and  digital  transitions  as  demand  for 
specialised skills grows (see Annex 11). 

administrative 

Adult learning participation remains low and 
uneven,  limiting  reskilling  opportunities  and 
perpetuating  early  disadvantages.  In  2022, 
only  34.1%  of  adults  had  participated  in  learning 
over the previous 12 months (EU average: 39.5%), 
target  of  60%. 
far  below  Spain’s  2030 
Participation rates are particularly low among low-
qualified  adults  (15.4%)  and  those  over  55 
(23.4%).  Although  more  recent  data  from  the 
labour  force  survey  show  a  modest  increase 
between  2022  and  2024,  progress  remains 
insufficient to meet labour-market needs linked to 
the  green  and  digital  transitions.  Based  on  the 
OECD’s  survey  of  adult  skills  (PIAAC),  Spain 
performs  below  the  EU  average 
literacy, 
numeracy and adaptive problem solving. In Spain, 
the proportion of adults with at least basic digital 
skills  exceeds  the  EU  average  (66.5%  vs  60.4%), 
but  progress  towards  the  2030  target  of  80% 
stagnated  between  2023  and  2025.  Spain  also 
has  a  larger  participation  gap  in  education  and 
training  between  prime-age  and  older  workers 
than the EU average . Employers report persistent 
shortages  of  job-ready  skills  in  high-turnover 
sectors  such  as  construction  and  hospitality  (321), 
while  limited  employer  training  for  older  workers 
and 
constrain 
reskilling  opportunities  for  employed  mid-  and 
late-career  workers.  Related  to  the  2025  CSR  on 
increasing 
Spanish 
Qualifications  Framework  for  Lifelong  Learning 

fragmented  public  provision 

learning, 

lifelong 

the 

in 

(318) CyD Foundation, Informe CyD, 2024. 

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

Country Notes: Spain. 

(320) OECD Economic Survey, Spain 2025. 

(321) SEPE, Informe de prospección y detección de necesidades 

formativas, 2025. 

(322) OECD Economic Survey, Spain 2025 

108 

 
 
 
 
ANNEX 14: SOCIAL SCOREBOARD 

Table A14.1:Social Scoreboard for Spain 

Update of 4 May 2026. 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 2026 for details on the methodology 
(https://employment-social-affairs.ec.europa.eu/joint-employment-report-2026_en). 
Source: Eurostat 

109 

34.112.866.511.59.55.2472.410.53.4103.925.733.823.222.67.256.81.6Critical situationTo watchWeak but improvingGood but to monitorOn averageDynamic 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, 2025)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2025)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2025)Self-reported unmet need for medical care (% of the population aged 16+, 2025)Disability employment gap (percentage points, population aged 20-64, 2025)Housing cost overburden (% of the total population, 2025)Adult 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 marketBest performersBetter than averageEarly leavers from education and training(% of  the population aged 18-24, 2025)Young people not in employment, education or training(% of the population aged 15-29, 2025)Gender employment gap(percentage points, population aged 20-64, 2025)Income quintile ratio (S80/S20, 2025)At risk of poverty or social exclusion (AROPE) rate (% of the total population, 2025)Employment rate(% of the population aged 20-64, 2025)Unemployment rate(% of the active population aged 15-74, 2025)Long term unemployment(% of the active population aged 15-74, 2025)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2024)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2025) 
 
 
 
  
 
 
ANNEX 15: HEALTH AND HEALTH SYSTEMS 

faces 

health 

system 

Spain’s 
some 
challenges, that negatively affect the health 
of 
its  population,  social  fairness,  and 
productivity.  Problems  in  access  to  healthcare 
persist,  driven  by  regional  disparities,  health 
workforce  shortages  and  investment  gaps.  The 
Spanish  health  system  has  some  untapped 
potential to make it more efficient.  

Graph A15.1: Life expectancy at birth, years 

Source: Eurostat (indicator: demo_mlexpec) 

relatively  good  health 
Spain  achieves 
outcomes.  Life  expectancy  at  birth  was  among 
the highest in the EU in 2024. In 2023, the leading 
causes  of  death  in  Spain  were  cardiovascular 
(CVDs)  and  cancer,  which  together 
diseases 
accounted  for  53%  of  all  deaths.  Preventable 
mortality is one of the lowest in the EU. Treatable 
mortality  is  also  one  of  the  lowest  in  the  EU, 
suggesting that the health system is effective. 

Smoking,  alcohol  consumption  and  growing 
obesity  are  the  main  risk  factors  in  Spain. 
The  share  of  Spanish  adults  who  smoke  daily 
remained  higher  than  the  EU  average  in  2020. 
Smoking among 15-year-olds is slightly below the 
EU  average  (17%),  but  vaping  among  Spanish 
teens  has  gained  some  traction,  with  13% 
reporting  e-cigarette  use  in  the  past  month  in 
2022.  Alcohol  consumption  has  risen  since  2010, 
reaching 11.1 litres per adult in 2023 and is above 
the EU average and one of the highest in the EU. 
Alcohol  consumption  among  15-year-olds  fell 
from 34% in 2010 to 24 % in 2022, close to the 
EU average. In 2022, 15% of adults in Spain were 
obese,  close  to  the  EU  average.  Among  15-year-
olds, 19% were either overweight or obese, below 
the  EU  average  but  higher  than  in  2018.  Low 
physical  activity  contributes  to  obesity.  The  share 
of  employed  people  on  temporary  sick  leave  rose 
from about 2.7% in 2019 to 4.4% in 2024, a trend 
regions.  This 
seen  across  age  groups  and 

significant  rise  in  temporary  sick  leave  has  a 
sizeable  economic  cost  of  over  EUR  15 billion  in 
2023 (1% of GDP) (323).  

Spain  has  recently  strengthened  its  public 
health policies. The 2022 Public Health Strategy, 
included  in  Spain’s  recovery  and  resilience  plan 
(RRP),  set  a  new  direction  for  public  health 
measures.  Linked  to  it,  a  stronger  surveillance 
system for public health was established in 2025, 
including  a  national  public  health  surveillance 
network and the State Public Health Agency. They 
ensure  extensive  public  health  monitoring, 
surveillance  and  health  impact  evaluation  across 
five  domains  (i)  communicable  diseases;  (ii)  non-
communicable  diseases;  (iii)  occupational  health; 
(iv)  environmental  health;  and  (v)  early  warning 
systems.  Furthermore,  multiannual  agreements 
between  the  Ministry  of  Health  and  the  Spanish 
Federation  of  Municipalities  and  Provinces 
promote  local  initiatives  to  improve  lifestyles  and 
prevent chronic conditions.  

tobacco 

regarding 

Some  policies  to  address  the  main  risk 
factors  have  been  developed.  The  2024-27 
tobacco  Control  Plan  contains  measures  such  as 
treating new tobacco products in the same way as 
traditional 
production, 
advertising,  plain  packaging,  expanding  smoke-
free  areas  and  increasing tobacco  excise taxes to 
fund cessation programmes. A draft law approved 
in March 2025 extends the existing ban on alcohol 
sales  to  those  under  18,  further  restricting 
advertising near schools. The 2022–2030 National 
Strategic  Plan  for  the  Reduction  of  Child  Obesity 
aims  to  reduce  child  obesity  by  25%,  and  the 
2025  School  Meals  Reform  Law  strengthens 
nutrition standards in schools. New policies include 
also an excise tax on sugar-sweetened beverages 
and the nutri-score food labelling system, as well 
as  planned  initiatives  on  public  procurement  and 
measures  addressing  processed  food  advertising 
and the protection of minors from energy drinks.  

Unmet  needs  for  mental  healthcare  have 
more  than  doubled  since  2021.  In  2024,  7.9% 
of  respondents  in  Spain  reported  forgoing  mental 
healthcare.  The  2025-27  Suicide  Prevention  Plan  
and  the  2025-27  Mental  Health  Action  Plan, 
address  the  social  determinants  of  mental  ill 
health  and  gaps  in  access  to  mental  health 
services. 

(323) Informe Annual, Banco de Espana, 2025. 

110 

82.383.383.284.084.0808080.681.481.520202021202220232024SpainEU 
 
       
 
 
 
Table A15.1: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 2023 data (or latest available). 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 Portugal (licensed to practice) and Slovakia (professionally active). Latest data 
update on nurses for Belgium and Sweden: 2022; for France: 2021; for Luxembourg: 2017. 
** latest available 10-year trend: ratio 2023/2014 or 2024/2013; a factor of 2.00 means that it has doubled in 10 years. 
***‘Available hospital beds’ covers somatic care, not psychiatric care. 
Source: Eurostat 

next 

over 

decades 

Spain’s  health  system  delivers  generally 
strong  health  outcomes  at  relatively  low 
cost,  but  national  averages  hide  important 
regional  differences  (see  Annex  18).  The  share 
of  total  public  spending  on  healthcare  and  health 
spending per capita stood below the EU average in 
2023.  Healthcare  costs  are  projected  to  increase 
as 
the 
significantly 
demographic changes place increasing pressure on 
public finances. Autonomous communities manage 
91% of public spending on health and the share of 
health  spending  was  well  above  30%  of  their 
annual  budgets.  There  were  some  variations 
across regions in 2024, ranging from EUR 1 423 to 
EUR 2 301 per capita (324).  The number of hospital 
beds  per  capita  is  among  the  lowest  in  the  EU, 
with  substantial  regional  disparities.  The  share  of 
expenditure on prevention is slightly below the EU 
average. Spain’s health sector has been supported 
by  significant  EU  funding.  Under  the  RRP,  Spain 
allocated  EUR  2.4  billion  with  investments  in 
renewal  and  expansion  of  high-tech  equipment, 
strengthening of preventive care, training of health 
space. 
professionals, 
Complementary  funds  from  the  2021-27  EU 
Cohesion Policy allocate EUR 1.6 billion to support 
infrastructure,  digital  health  services  and  health 
equipment with a marked variation across regions. 

health 

data 

and 

(324) OECD/European Observatory on Health Systems and Policies 
(2025), Country Health Profile 2025: Spain. State of Health 
in the EU. 

The  reform  of  primary  care  and  its  impact 
across  regions  require  further  assessment. 
Rates  of  avoidable  hospital  admissions  in  Spain 
are  among  the  lowest  in  the  EU,  particularly  for 
congestive heart failure and diabetes. This is partly 
due  to  the  country’s  robust  primary  care  system. 
Spain is working to improve quality and access to 
primary  care,  but  regional  disparities,  mainly 
caused  by  staff  shortages,  remain  a  significant 
challenge.  The 2025–27 Primary and Community 
Care  Action  Plan  adopted  by  the  Interterritorial 
Council  of  the  SNS,  aims  to  expand  primary  care 
capacity, support retention of health professionals 
and multidisciplinary work, reinforce continuity and 
coordination  of  care,  widen  the  benefits  package 
with dental care services, and reduce unnecessary 
referrals  to  specialised  and  hospital  care.  It  is 
implemented  through  regional  plans  and  an 
Evaluation Manual  approved by the Interterritorial 
Council of the SNS, but the effectiveness of these 
measures has yet to be evaluated. Progress in care 
integration  varies  across  regions  with  front-
runners  including  the  Basque  Country,  Andalusia 
and Aragon.  

There  are  sustained  improvements  in  acute 
care.  In  2023,  Spain’s  30-day  mortality  rates 
after  hospital  admission  stood  below  the  EU 
average  for  acute  myocardial 
infarction  and 
ischaemic  stroke  and  these  rates  have  dropped 
since  2000.  Recent  initiatives  include  the  2022 
focused  on 
Cardiovascular  Health  Strategy, 
promotion  of  healthy  lifestyles,  early  detection, 
management,  treatment  and  rehabilitation.  Spain 
also updated in 2024 its National Stroke Strategy, 

111 

2020202120222023202410-year change**EU average* (latest year) Cancer mortality per 100 000 population214.5213.3212.9210.0n.a.0.90233.1 (2023)Mortality due to circulatory diseases per 100 000 population 217.8 213.0 213.9 200.2n.a.0.82313.0 (2023)Current expenditure on health, purchasing power standards, per capita2 5992 8262 9783 137n.a.1.483834.9 (2023)Public share of health expenditure, % of current health expenditure 72.1 72.6 72.9 73.2n.a.1.0680.6 (2023)Spending on prevention, % of current health expenditure 3.64.24.43.4n.a.1.213.7 (2023)Available hospital beds per 100 000 population*** 261 260 258 253n.a.0.98440 (2023)Doctors per 1 000 population*4.64.54.34.4n.a.1.174.3 (2023)*Nurses per 1 000 population* 6.1 6.3 6.1 5.9n.a.1.157.6 (2023)*Mortality at working age (20-64 years), % of total mortality12.613.513.013.212.90.9614.3 (2023)Consumption of antibiotics in the community and hospital sectors,      defined daily doses per 1 000 inhabitants 19.7 20.0 23.2 24.1 24.2n.a.20.3 (2024) 
 
 
       
 
in  response  to  the  increase  in  stroke  cases 
especially among young people. It aims to reduce 
stroke  cases  by  10%,  expand  treatment  in  stroke 
units, and strengthen continuity of care by 2030.  

Graph A15.2: Out-of-pocket payments: share in 
healthcare spending and categories, 2023 

Household out-of-pocket payment: direct payment for 
healthcare goods and services from the household primary 
income or savings, where the payment is made by the user at 
the time of the purchase of goods or the use of the services 
(Eurostat). VHI: voluntary health insurance. 
(1) Others: eyeglasses, hearing aids, lab tests... 
Source: Eurostat and Country Health Profiles - Dashboard 

in  access 

Although  healthcare  coverage  is  broad,  gaps 
remain 
to  dental  services, 
alongside  territorial  disparities  in  service 
availability.  Coverage  of  dental  care  remains 
limited.  According  to  the  EU-SILC  survey,  the  rate 
of  self-reported  unmet  needs  for  dental  care 
among  those  who  reported  having  medical  care 
needs was above the EU average (7.9% versus the 
EU  average  of  6.3%)  and  much  higher  than  EU 
average  for  people  at  risk  of  poverty.  In  June 
2024,  EUR  68  million  was  allocated  to  improve 
dental  health,  targeting  some  vulnerable  groups. 
Spain’s share of out-of-pocket payments in health 
spending was above the EU  average in 2023 and 
patients  pay  directly  mainly  for  dental  care  (see 
Graph  A15.2).  There  are  significant  differences  in 
waiting time across regions. According to the 2023 
Health Barometer (325)  33.9% of respondents said 
that  waiting  times  had  worsened  in  the  previous 
12  months,  38.2%  had  experienced  more  than  a 
three-month  wait  between  referral  from  the 
primary care physician and specialist consultation, 
and  69.8%  reported  that  it  took  more  than  24 
hours  to  obtain  an  appointment  with  a  family 

general  practitioner  (GP), with  an  average  waiting 
time  of  nine  days.  Waiting  times  for  hip  or  knee 
replacements  and  cataract  procedures  increased 
during  the  COVID-19  pandemic  and  remained 
above  pre-pandemic  levels.  A  Working  Group  on 
Waiting  Lists  established  in  2024  aims  to  bring 
together  management 
across 
autonomous 
its  outputs 
submitted 
Interterritorial  Council  for 
in  2025,  a  first-ever 
approval. 
multisectoral  state  agreement  was  adopted  to 
improve  early  intervention  and  reduce  waiting 
times  for  children  under  six  with  developmental 
disorders.  

to 
the 
In  addition, 

communities,  with 

data 

and 

across 

professionals 

Spain  faces  significant  health  workforce 
include  the  age  structure, 
challenges.  They 
unequal  distribution  of  health  professionals,  and 
forecasted shortfalls of GPs, and other specialists. 
The  number  of  doctors  per  1  000  population  in 
2023 was slightly above the EU average. However, 
the density of nurses, stood below the EU average. 
There  are  significant  disparities  in  density  of 
health 
autonomous 
communities. In 2022, the number of primary care 
physicians  ranged  from  0.6  to  1.1  per  1  000 
population,  and  primary  care  nurses  from  0.5  to 
0.9  per  1  000.  For  specialists,  the  figures  ranged 
from  1.6  to 2.7  per 1  000  for  doctors  and  3.3 to 
6.9  per  1  000  for  nurses  (326).  Compounding 
challenges posed by an ageing workforce (60% of 
GPs  are  aged  50  or  over).  Spain  has  one  of  the 
lowest numbers of doctor and nurse graduates per 
100  000  population 
in  the  EU.  Government 
projections  indicate  a  9%  increase  in  long-term 
physician needs by 2035, with potential shortfalls 
in  family  medicine,  anaesthesiology,  geriatrics, 
psychiatry,  and  radiology.  Working  conditions 
remain  challenging,  with  temporary  contracts 
accounting  for  41.9%  of  health  workers  in  2020, 
up  from  28.5% 
in  2012.  To  address  these 
imbalances,  a  2023  technical  document  (327) 
defined  13  criteria  for  identifying  hard-to-fill 
positions. If a primary care post meets at least five 
of these criteria, it qualifies for incentives such as 
financial  bonuses,  housing 
career 
development  opportunities  and  better  work-life 
balance  measures.  Building  on  these  efforts,  the 
2025-27 Primary and Community Care Action Plan 
aims  to  increase  the  primary  care  workforce  with 

support, 

(326) Country Health Profile 2025: Spain - see Footnote 2. 

(327) Technical guidance, Comisión de Recursos Humanos del 

(325) Barómetro Sanitario 2023, Ministerio de Sanidad. 

Sistema Nacional de Salud (2025). 

112 

73%21%6%24%10%7%27%32%1%Gov. & CompulsoryOut-of-pocket (OOP)Voluntary (VHI)PharmaceuticalsOutpatient careLong-term careOthersDental careInpatient careShare ofspendingOOP BreakdownOOP share -EU-27 average:15% 
       
 
 
and 

roles, 

professionals 

new 
boosting 
multidisciplinary teams, and reducing unnecessary 
referrals  to  specialists.  Spain  benefits  from  the 
EU4Health  Joint  Action  on  health  workforce 
planning  and  the  Technical  Support  Instrument 
supporting health workforce reforms. 

the 

support 

care  and 

impact  on 

improving  access 

The  uptake  of  digital  health  tools  in  Spain 
has  been  higher  than  the  EU  average.    There 
has  been  substantial  progress  between  2020  and 
2024,  particularly in making appointments online 
and  accessing  health  records.  Spain’s  2021-26 
Digital Health Strategy  focuses on (i) empowering 
individuals,  healthcare  professionals  and  service 
providers  through  digital  transformation;  and  (ii) 
improving  interoperability  and  collection  of  data. 
The  Ministry  of  Health  put  in  place  a  system  to 
monitor  the  implementation  of  the  strategy  and 
assess 
to 
healthcare  across  regions  (taking  into  account 
data  on  status  of  health,  demographics,  health 
system  resources).  The  strategy  is  implemented 
through  action  plans.   The  Digital  Health  services 
plan  focuses  on  improving  access  to  healthcare, 
to 
including  preventive 
professional reintegration.  It prioritises vulnerable 
groups  and  underserved  areas.  It  will  develop  the 
interoperable  virtual   basket  of  health  services. 
the 
Plan 
The 
interoperable  electronic  health  record,  the  State 
Registry 
the 
interoperable  electronic  prescription  system.  In 
addition, projects are underway for pharmaceutical 
services,  data  analytics,  expanding  the  digital 
capabilities  of  healthcare  facilities,  and 
the 
integrated  management  and  analysis  of  medical 
images.  The  Digital  Transformation  Plan  for 
Primary  and  Community  Care  promotes  smart 
healthcare  centres,  facilitating  processes  and 
developing  the  Primary  Care  Clinical  Database, 
which  collects  coded  and  standardised  clinical 
information  on  care.  The  plan  also 
includes 
measures  to  develop  the  service  portfolio  of 
health centres focused on patient groups requiring 
personalised, continuous, and systematic care. The 
Health  Data  Space  Plan  will  facilitate 
the 
implementation of the EHDS.  

of  Healthcare 

Professionals, 

Sustainability 

focuses 

on 

can 

and 

therapeutic 

prescriptions 

in  hospitals  has 

categories.  While 

through  community  pharmacies  (328).  Spain  has 
room  to  improve  biosimilar  adoption  rates  across 
some 
retail 
pharmaceutical  expenditure  per  capita  as  a  share 
of total pharmaceutical spending has fallen - from 
77%  in  2020  to  72%  in  2023  -  spending  on 
medicines  dispensed 
risen, 
reaching 28% in 2023 (329). Addressing disparities 
in  pharmaceutical  spending  and  unjustified 
regional  differences  in  the  costs  of  medical 
procedures 
create 
opportunities  to  improve  efficiency.  The  use  of 
antibiotics  remains  a  challenge.  Spain’s  antibiotic 
consumption  has  increased  since  2021  and  was 
well  above  the  EU  average  in  2024,  despite  the 
national  target  to  reduce  total  consumption  by 
18.2% between 2019 and 2030 (330). This is linked 
to  underlying  prescribing  behaviours,  which  have 
not  yet  changed  fundamentally.  Spain’s  latest 
National  Plan  for  Antibiotic  Resistance  was 
published  in  2025,  establishing  a  One  Health 
strategy.  A  draft  Law  on  Medicines  and  Health 
Products,  pending  approval  by  the  Council  of 
Ministers, 
Spain’s 
pharmaceutical  legislation,  enhance  fair  access, 
rational  use,  promote  prescription  by  active 
ingredient,  environmental  sustainability,  public 
oversight and alignment with EU regulations. 

to  modernise 

aims 

Employment 

significance. 

(23.9)  of  clinical 

trade  and  commercialisation, 

Spain’s  pharmaceutical  sector  shows  clear 
economic 
in 
pharmaceutical  manufacturing  was  above  the  EU 
average.  The  country  is  a  significant  hub  for 
clinical  research.  In  2024,  Spain  reported  a  high 
number 
trials  per  million 
population,  above  the  EU  average  of  18.3. 
Regarding 
the 
industry  maintains  a  modest  but  fairly  stable 
share of extra-EU exports (7.2% in 2025 vs 13.9% 
for  the  EU  average).  To  boost  innovation,  the 
government 
2024-28 
Pharmaceutical  Industry  Strategy,  which  aims  to 
improve  access,  foster 
innovation,  strengthen 
biomedical  R&D  investment  and  reduce  foreign 
dependence, while promoting growth, employment 
and the sector’s role as a key economic driver. The 
RRP  also  supports 
innovative 
medicines. 

investments 

launched 

the 

in 

More rational use of medicines is a potential 
source  of  efficiency  gains.  Use  of  generic 
medicines  has  remained  stagnant  in  the  past 
decade.  In  2024,  generic  medicines  constituted 
47%  of  all  pharmaceutical  units  dispensed 

(328) Country Health Profile 2025: Spain - see Footnote 2. 

(329) Country Health Profile 2025: Spain - see Footnote 2. 

(330) Council Recommendation on stepping up EU actions to 

combat antimicrobial resistance in a One Health approach, 
2023/C 220/01 

113 

 
 
the 

standard 

European 

contrast, annual growth for the period 2015-2019 
showed  a  moderate  average  increase  of  about 
2.5%  (see  Graph  A16..1).  In  2025,  house  prices 
show sign of overvaluation of around 18% (based 
on 
Commission 
methodology).  The  upward  trend  recorded  from 
2023  countrywide,  marked  by  some  significant 
regional heterogeneity, reflects the overall revived 
demand  for  housing,  which  is  underpinned  by 
demographic  pressures,  as  well  as  the  solid 
economic performance of the country. The decade-
long increase of the price-to-income ratio came to 
a halt in 2022 and has since stabilised. In terms of 
evolution  of  rent  prices,  they  increased  by  2.3% 
year  on  year  in  December  2025,  after  seven 
consecutive months growing over 2%. 

Housing  transactions  have  shown  a  robust 
trend  in  recent  years,  fuelled  by  sales  of 
existing  houses.  Throughout  2024,  house  sales 
in Spain rose by 9.7% to 640 401 units compared 
with  one  year  earlier.  Data  until  November  2025 
show  a  strong  increase  in  house  sales,  by  11.8% 
year  on  year,  to  659  953  units,  according  to  INE 
data,  with  existing  homes  accounting  for  most  of 
housing transactions (331) (see Graph A16.2).  

Graph A16.1: House prices, rents and price-to-
income evolution in ES and EU27 since 2005 

ANNEX 16: HOUSING 

in 

Spain 

challenges 

Housing 
remain 
significant,  notably  due  to  the  persistent 
mismatch  between  demand  and  supply,  the 
lack  of  a  substantial  stock  of  both 
affordable  and  social  housing,  a  lack  of 
accessibility,  as  well  as  tensions  on  the 
rental  market  driving  up  prices.  These  issues 
are particularly acute in some geographical areas, 
including  the  main  urban  centres,  the  island 
territories and coastal areas (see also Annex 19). A 
country-specific  recommendation  was  addressed 
to  Spain  in  2025  to  ‘increase  the  housing  supply 
by completing the reform of the land law, reducing 
eliminating 
permitting 
processing 
administrative  bottlenecks,  addressing 
labour 
the  construction  sector’.  The 
shortages 
to 
recommendation  also 
‘strengthen(ing) 
the  provision  of  social  and 
affordable housing’.  

called  on  Spain 

times, 

in 

to 

access 

(Casa47) 

facilitating 

contribute 

recommendation. 

initiatives  undertaken  or 
A  number  of 
announced  at  national  level  over  the  past 
year  are  expected 
to 
addressing  the  challenges  set  out  in  the 
country-specific 
These 
include  the  approval  of  the  state  housing  plan 
2026–2030,  the  setting  up  of  a  public  housing 
to 
company 
affordable  rental  housing  contracts,  the  PERTE 
(strategic  project  for  economic  recovery  and 
transformation) 
industrialised 
construction, the new ‘España Crece’ fund and tax 
measures  aimed  at  stabilising  prices  in  the  rental 
market.  At  regional  level,  several  regions  have 
reprogrammed  Cohesion  Funds 
increase 
spending  on  social  and  affordable  housing.  Yet, 
additional efforts are needed to fully comply with 
the  recommendation,  specifically  regarding  the 
provision  of  ready-to-build  land,  and  to  maximise 
the  impact  of  some  of  the  measures  already 
adopted,  like  those  concerning  the  strengthening 
of social housing Housing market developments. 

instrument 

for 

to 

Spain’s  housing price growth is  accelerating, 
driven  by  robust  property  demand.  The 
nationwide  house  price 
index  showed  strong 
nominal  growth  of  12.7%  year  on  year  in  2025. 
This  data  marks  the  sharpest  annual  increase 
since  2007.  House  prices  have  risen  consistently 
over  the  past  decade  since  the  record  low  point 
reached  in  2014,  picking  up  gradually  in  2021-
2023  from  the  slight  fall  registered  during  the 
pandemic  period.  The  cumulative  growth  for  the 
period  2023-2024  alone  amounted  to  12.7%.  By 

Source: Eurostat 

The  increased  demand  is  grounded  in  the 
demographic  change  and  the  increase  in  the 
together  with 
number  of  households, 
increased  demand  from  foreign  homebuyers. 
Spain’s  population  increased  significantly  in  2024 
increase  of 
(0.9%)  and  has  a  cumulated 

(331) INE  

114 

751001251501752000507091113151719212325Index (2005 = 100)Nominal prices ESNominal prices EU27Rental prices ESRental prices EU27Price-to-income ratio ESPrice-to-income ratio EU27 
 
     
 
 
 
in 

urban 

areas(332). 

2.7 million  inhabitants  since  2016,  with  a  bigger 
On 
concentration 
1 January 2026, Spain’s population exceeded 49.5 
million  inhabitants(333)  for  the  first  time.  Between 
January  2025  and  January  2026  alone,  the 
number of households in Spain increased by more 
than  200 000(334).  Over  the  past  15  years,  house 
purchases  in  Spain  by  foreigners  have  been 
soaring  steadily  and  have  further  accelerated 
recently. In 2024, the share of houses acquired by 
foreigners 
represented  14.6%  of  all  sales, 
compared  with  an  historical  average  of  10.5%  in 
the period 2006-2024. Housing sales to foreigners 
tend  to  concentrate  in  some  geographical  areas 
while  the  share  has  been growing  continuously  in 
most regions. In particular, in 2024, foreign buyers 
large  share  of  property 
accounted 
transactions  in  the  Balearic  Islands  (32.6%),  the 
Community  (28.9%),  and  the  Canary 
Islands 
(27.2%),  led  by  British,  German  and  Moroccan 
nationals. 

for  a 

the  country,  with 

the  total  social  housing  stock.  This  remains  well 
below the EU average of 6-7%. This is partly due 
to the relatively short protection periods (from 10 
to  15 years  on  average)  during  which  social 
housing is bound by affordability conditions. Once 
these  conditions  expire,  the  social  housing  units, 
which  were  sold  at  subsidised  prices,  enter  the 
private  market.  Moreover,  the  distribution  of  the 
existing  stock  of  social  housing  is  highly  uneven 
the  vast  majority 
across 
concentrated  in  Andalusia,  the  Community  of 
Madrid, the Basque Country, Catalonia, the Canary 
Valencian 
Islands, 
Community. Some  positive  signals  were  observed 
in 2024 (e.g. the number of social and  affordable 
houses  qualified  as  such indefinitely increased  by 
totalling  some  14 500(337). 
5 500 
Accessibility, however, remains a major barrier, as 
nearly 70% of housing is not adapted and only 0.6 
% 
independent 
living(338). 

is  fully  accessible,  restricting 

Extremadura 

in  2024, 

and 

the 

The  total  housing  stock  in  Spain  reached 
27 million  units  in  2024  (335),  up  by  0.4% 
from  2023  and  4.8%  higher  than  a  decade 
ago,  with  social  housing  remaining  limited 
and  only  gradually  expanding.  Andalusia 
accounted  for  the  biggest  share  of  the  total 
housing  stock  in  2024,  at  17.6%,  followed  by 
Catalonia 
(14.7%),  the  Valencian  Community 
(12.3%),  and  the  Community  of  Madrid  (11.2%). 
Social housing stock, on the other hand, has been 
on  a  steady  declining  trend  in  the  last  15  years. 
There  are  over  318 000  publicly  owned  rental 
dwellings,  covering  only  1.5-1.7%  of  households. 
Of these, around 197 000 dwellings are owned by 
the autonomous communities and their dependent 
entities,  while  a  further  121 000  dwellings  are 
owned  by  municipalities  and  their  dependent 
that 
include  all 
entities.  Broader  estimates 
protected  or 
(rental  and 
regulated  housing 
sale) (336)  raise  the  share  to  around  2.5-3.4%  of 

(332) Banco de España, Annual Report 2024. 

(333) INE, Continuous Population Statistics, 2026. 

(334) INE, National Institute of Statistics. 

The supply of housing has picked up in recent 
quarters,  but  is  struggling  to  catch  up  with 
housing needs. Building permits in 2024 totalled 
over  127 500 (339),  accounting  for  the  highest 
number since 2008, while investment in dwellings 
(as  a  percentage  of  GDP)  exhibited  a  surge  from 
2023,  building  on  the  upward  trend  initiated  in 
2017  and  interrupted  only  by  a  stark  decline  in 
2021-2023. On the basis of the data available for 
the  first  half  of  2025,  building  permits  last  year 
are  projected  to  edge  up  towards  the  number 
reached in  2024.  While  the  year-on-year  increase 
was 16.7% in 2024 and is expected to be  similar 
in 2025, its level remains relatively low compared 
to  current  overall  housing  needs.  Looking  ahead, 
housing investment needs will  remain substantial, 
including  for  accessibility,  with  the  Commission 
estimating the additional housing investment need 
for  2025-2035  to  be  about  750 000  dwellings  in 
Madrid (340). 

The mismatch between supply and demand is 
particularly  acute  in  urban  centres  offering 
more job opportunities, thus affecting labour 

(335)https://apps.fomento.gob.es/BoletinOnline2/?nivel=2&orden=

(337) Banco de España. Annual Report, 2024. 

33000000  

(336) Article 3 of Law 12/2023 defines the social housing stock as 
all publicly owned dwellings that are made available through 
tenure 
rental,  use  agreements  or  other 
arrangements,  subject  to  limits  on  rent  or  sale  prices,  and 
intended  for  individuals  or  households  who  have  difficulties 
accessing housing on the open market. 

temporary 

(338) Accessible and sustainable housing for persons with 

disabilities: Spain, Cristina Jenaro and Miguel Ángel Verdugo, 
European Disability Experts, to be published.  

(339) Banco de España. Annual Report 2024. 

(340) See also Balouktsi et al. (2026) Housing investment needs in 

the EU. JRC Technical Report 144419.  

115 

 
 
 
mobility. Increasing rent costs are also impacting 
labour  mobility,  especially  in  the  most  stressed 
areas.  The  Community  of  Madrid  and  Catalonia 
alone account for almost 40% of job vacancies in 
Spain (341). At the same time, in the 12 months up 
to  September  2025,  the  total  number  of  new 
construction permits in Madrid and Barcelona was 
only  around  17 000  and  11 000  respectively, 
while  the  growth  in  the  number  of  households  in 
the  two  cities  surged  by  considerably  more,  by 
around 43 000 and 18 000, respectively(342). All in 
all, Spain is one of the EU Member States with the 
highest  increase  in  permits  between  the  first 
quarter of 2021 and the third quarter of 2025. 

Graph A16.2: House supply indicators in ES since 
2005 

Source: ECB and Eurostat 

faces 

sector 

construction 

The 
some 
challenges which may further slow down the 
response  of  the  supply.  Employment  in  the 
Spanish  construction  sector  has  grown,  reaching 
1.66  million  workers 
in  2025.  Nonetheless, 
productivity has been stagnating, remaining at one 
of  the  lowest  levels  of  the  Spanish  economy(343), 
and  labour  shortages  and  recruitment  difficulties 
persist, due to a lack of candidates with sufficient 
experience  and  skills.  Labour  market  tensions  are 
especially acute among small firms, with 82.1% of 
vacancies concentrated in companies with 1 to 25 
employees, and more than half (56.7%)  in micro-

(341) INE, Number of job vacancies by Autonomous Community 

(342) See Caixabank analysis 

enterprises with fewer than five workers (344). Skills 
forecasts  indicate  that  the  sector  will  account  for 
around  5.2%  of  all  job  opportunities  expected  to 
arise between 2023 and 2035. 

Structural policies 

Housing  is  a  shared  competence  of  Spanish 
governments  and  regions.  The  central  level 
provides  the  general  legal  framework  (Housing 
Law), is competent to set certain tax regimes (like 
VAT  or  the  taxation  of  incomes  stemming  from 
rents),  and  sets  the  national  housing  plans  to 
financially  support  housing  access  and 
the 
construction of social and affordable housing. The 
the 
responsible 
Spanish 
development 
this 
implementation 
level  has 
framework.  Historically,  the  central 
strongly contributed to the financing of social and 
affordable housing.  

regions  are 
and 

for 
of 

to 

and 

regards 

land-use 

accelerate 

reducing  processing 

permitting 
As 
regulation,  in  2024  the  Spanish  government 
introduced  a  proposal  to  revise  the  Land 
Law, which has since remained blocked in the 
Parliament.  The  reform  of  the  Land  Law  was 
proposed 
productionof 
the 
land  and  boost  new  housing 
developable 
development  by 
times, 
litigation  with  regard  to  urban  planning  and 
unnecessary  administrative  bottlenecks,  but 
remains on hold. The lack of progress in adopting 
this legal text restricts supply and puts at risk the 
achievement  of broader  housing  policy  objectives. 
In  parallel,  some  regions  are  also  revising  their 
own  land  laws.  In  view  of  the  state  Land  Law 
revision,  it  will  be  important  to  simplify  and 
mainstream  regulations  while  maintaining  the 
level  of  environmental  protection  and  social 
housing ambition.      

A  positive  step  towards  modernising  the 
construction sector and addressing its labour 
challenges  was  taken  when  the  Spanish 
government  adopted  the  PERTE  (strategic 
project 
and 
transformation) instrument for industrialised 
initiative  aims  to  provide 
construction.  This 

economic 

recovery 

for 

(343) Own calculation based on Eurostat data [nama_10_a10_e, 

(344) Observatorio Fundación Laboral de la Construcción, Informe 

nama_10_a10]. 

sobre el sector de la construcción, 2024. 

116 

024681012140204060801001201401601800507091113151719212325% of GDPIndex (2005 = 100)Residential building permits in m2, indexResidential buildings producer prices, indexInvestment in dwellings (right-hand side axis) 
     
 
 
affordable,  quality  and  energy-efficient  housing 
units  each  year.  The  total  investment  is  expected 
to reach EUR 1.3 billion over 10 years and is set to 
mobilise 1.4 euro of private investment for every 1 
euro  of  public  investment.  The  PERTE  instrument 
also includes actions on training and upskilling, as 
well  as  on  encouraging  greater  participation  of 
young  people  and  women  in  the  sector.  Further 
upskilling  and  modernisation  efforts  will  be 
needed  to  address  the  significant  labour  gap  and 
low productivity. 

from 

funds 

together 

in  2023, 

Spain  has  adopted  ambitious  policies  to 
expand  the  public  housing  stock,  focusing 
particularly  on  the  rental  market.  The 
affordable rental housing plan (PVAA), launched in 
focuses  on 
2022  and  expanded 
developing  around  15 000  affordable  homes  per 
year across Spain on land belonging to the public 
housing  company  SEPES  (replaced  in  2025  by 
CASA  47),  especially  in  areas  with  high  rental 
pressure  or  experiencing  population  growth.  The 
plan  brings 
several 
programmes, including the recovery and resilience 
plan.  CASA  47  aims  to  offer  long-term  rental 
contracts (renewable up to 75 years) and set rents 
at  ~30%  of  tenants’  income,  far  below  market 
prices. In April 2026, the Spanish government also 
approved  a  state  housing  plan  2026–2030 
(totalling  EUR 7 billion)  to  increase  funding  for 
social  and  affordable  housing  with  an  indefinite 
the 
and 
protection 
rehabilitation  of  the  existing  housing  stock.  These 
measures at state level complement the initiatives 
undertaken by the regions. For instance, European 
Regional  Development  Fund  programmes  have 
increased  their  allocation  to  housing  investments 
by EUR 117 million in the context of the cohesion 
policy mid-term review. 

promote 

regime 

to 

Challenges  remain  regarding  the  effective 
implementation of these plans for the public 
housing  stock  and  their  future  financial 
sustainability.  The effectiveness of the recently 
adopted  State  Housing  Plan  2026–2030  will 
depend on adequate co-financing (it relies on 40% 
co-financing  by  the  regions),  and  strong  inter-
administrative  coordination.  The  plan  does  not 
provide for any mechanism to ensure financing for 
the renovation and expansion of the public housing 
stock  beyond  2030.  Spain  would  benefit  from  a 
long-term  strategy  on  social  and  affordable 
inclusive  housing.  In  terms  of  beneficiaries,  the 
plan addresses access to housing for young people 
and  vulnerable  households,  but  does  not  include 

poverty  reduction  objectives,  in  particular  child 
poverty.  Moreover, persistent gaps and  barriers to 
to  housing  for  persons  with 
equal  access 
disabilities 
structural 
inaccessibility  of  the  existing  housing  stock  and 
limited availability of suitable housing options.  

notably 

remain, 

a 

the 

While  Spain  has  introduced  measures  aimed 
rental  market  and 
at  stabilising 
regulating  rents  in  stressed  areas,  their 
effective  implementation  is  uneven  across 
the Spanish regions. For this reason, the Housing 
Law  (12/2023),  adopted  under  the  recovery  and 
resilience  plan  and  intended  to  expand  social  and 
affordable  housing  and  regulate  rents in  stressed 
areas,  is  not  applied  by  some  regions,  thus 
potentially  creating  distortions  in  the  housing 
market and undermining its effectiveness.  

Vulnerable groups 

costs 

impact 

increase 

exacerbate 

tight  housing  markets.  The 

poverty 
Housing 
significantly,  with  strong  heterogeneity 
across  tenure  status,  regions  and  income 
groups.  Evidence  by  the  Commission’s  Joint 
that  accounting  for 
Research  Centre  shows 
housing  costs  would 
incidence  and 
markedly  deepen  poverty,  particularly  in  regions 
and  among vulnerable  population  groups  exposed 
is 
to 
systematically  stronger  for  children  and  for 
persons  with  disabilities (345),  reinforcing  existing 
social  inequalities.  The  analysis  highlights  a  clear 
divide  between  tenants  and  owners:  tenants, 
especially  those  paying  market  rents,  experience 
the largest increases in poverty and poverty depth, 
while  owners  are  comparatively  more  insulated. 
Geographically,  housing  costs  have  the  strongest 
poverty  impact  in  regions  characterised  by  high 
housing  pressure,  notably  the  Balearic  Islands, 
Madrid,  Catalonia,  the  Canary  Islands  and  Melilla, 
while the effects are more limited in regions with 
lower  housing 
cost  burdens.  Urban  areas 
consistently  show  stronger  housing-cost-induced 
rural  areas.  From  a 
poverty  effects 
distributional 
costs 
housing 
substantially  deepen  poverty  among  the  lowest 

perspective, 

than 

(345) Accessible and sustainable housing for persons with 

disabilities: Spain, Cristina Jenaro and Miguel Ángel Verdugo, 
European Disability Experts, to be published. 

117 

 
 
bottom  quintile  receives  housing  benefits,  against 
26.7% in the EU (351). 

and 

is  on  the  rise. 
aged  18 

In  2024, 
Homelessness 
34 145 people 
over  were 
accommodated  daily  in  centres  providing  care  for 
people  experiencing  homelessness  (57.5%  more 
than  in  2022).  Centres  offering  catering  services 
provided  an  average  of  71 121  services  per  day 
(38.4%  more  than  in  2022) (352).  The  relevant 
support services remain regionally fragmented and 
limited  coordination 
unevenly  developed,  with 
emergency, 
regions 
across 
transitional  and  long-term  support  structures (353). 
The  absence  of  detailed  and  regular  national 
statistics makes it difficult to assess the full scale 
of  the  problem  or  design  effective  responses.  To 
address these challenges, in 2024, Spain published 
the  national  strategy  for  the  fight  against 
homelessness 2024-2030 (354). 

between 

and 

income deciles and push a non-negligible share of 
households in the lower-middle part of the income 
distribution  into  poverty,  particularly  families  with 
children(346).  

rate  and  was  29.9% 

The  housing  cost  overburden  and  arrears 
disproportionally  affect  households 
in  a 
situation  of  vulnerability,  as  do  housing 
deprivation  and  energy  poverty.  The  housing 
cost  overburden 
for 
households  at  risk  of  poverty,  compared  to  just 
2.4%  for  those  not  at  risk.  In  2025,  the  national 
housing  cost  overburden  rate  stood  at  7.2%  (EU: 
7.7%),  but  with  notable  disparities:  3.9%  in  rural 
areas and 8.2% in cities (347) . Moreover, Spain has 
one of the highest rate of arrears on mortgage or 
rent  payments  than  the  EU  (5.2%  vs  3.0%  in  the 
EU in 2024), which affects in particular individuals 
at  risk  of  poverty  or  social  exclusion  (11.5%  vs 
3.7% of individuals not at risk) and single parents 
with dependent children at risk of poverty or social 
exclusion  (16.6%).  Housing  deprivation  is  notably 
high  (23%  in  2023),  with  the  country  having  the 
third highest rate in the EU, above the EU average 
(15.6%).  Spain’s  housing  stock  is,  on  average, 
relatively  old  (348)  and  requires  energy  efficiency 
upgrades  and  accessibility  improvements  needing 
significant  investment (349).  Spain  also  has  the 
among  the  highest  energy  poverty  rate  in  the  EU 
(15.9% in 2025) with 28.3% of households at risk 
of  poverty  or  social  exclusion  unable  to  afford 
to  12.9%  of 
adequate  heating 
households not at risk) (see Annex 12).  

(compared 

Housing  support  as  part  of  social  protection 
remains limited. Expenditure on housing benefits 
in  Spain  is  low:  at  0.11%  of  GDP  compared  with 
0.37% in the EU, and they represent only 0.44% of 
social  protection  spending  compared  to  1.37%  in 
the  EU.  Housing  support  coverage  is  very  limited, 
reaching only 2.2% of the population and 4.4% of 
people  in  poverty  in  2024 (350).  Only  3.3%  of  the 

(346) The simulation was performed by the European Commission, 
Joint Research Centre, based on the EUROMOD model, J2.0+. 

(347)The overburden rate should be read together with the tenure 
structure (homeowner, tenants), that may differ across 
country and regions.   

(348) Royal Decree 853/2021, of 5 October, regulating the aid 

programmes for residential rehabilitation and social housing 
of the Recovery, Transformation and Resilience Plan. 

(351) OECD Affordable Housing Database, Recipients and 
payments rates of housing allowances, 2025 

(352) INE, 2025 

(349) Ministry of Housing and Urban Agenda (MIVAU),  Real 

(353) OECD Affordable Housing Database, Population experiencing 

Decreto 853/2021, de 5 de octubre, 2021 

homelessness, 2025 

(350) EAPN, El Estado de la pobreza, 2025 

(354) Government of Spain, Strategy_PSH20232030.pdf 2023 

118 

 
 
 
Graph A16.3: Housing supply selected indicators 

Source: Eurostat and European Commission calculations.  The overburden rate should be read together with the tenure structure 
(homeowner, tenants), that may differ across country and regions. 

live 

Roma  people  in  Spain  continue  to  face 
significant  housing  challenges,  despite  some 
gradual  improvements.  Around  30%  of  Roma 
people 
in  housing  deprivation,  broadly 
unchanged since 2016. Overcrowding affects 71% 
of  Roma  households  compared  with  just  9.1%  of 
the overall population. Although perceived housing 
discrimination  has  declined,  nearly  one  in  three 
Roma  still  report  discriminatory  treatment 
in 
housing.  Progress  has  been  made  in  reducing 
shantytowns  and  substandard  housing  and  in 
to  basic  amenities  and 
improving  access 
neighbourhood 
these 
forms of inadequate housing persist and remain a 
structural issue for many Roma families (355).  

infrastructure.  However, 

(355) FRA, Roma survey country data: Spain, 2025 and 

Government of Spain, National Strategy for Roma Equality, 
Inclusion and Participation 2021-2030, 2021 

119 

 
 
 
HORIZONTAL 
ANNEX 17: 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 

Graph A17.1: Progress towards the SDGs in Spain 

them  (SDGs 8  and  9).  It  has  a  high  percentage 
of  households  with  a  high-speed 
internet 
connection  (SDG 9;  95%  of  households  in  2024; 
EU average: 82.5%). In addition, the percentage of 
adults  with  at  least  basic  digital  skills  (SDG  4; 
66.5% in 2025) is above the EU average of 60.4%. 
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  (11.1%  in  2024).  In  addition,  the 
Spanish  research  and  innovation  system  suffers 
from  underinvestment,  as  shown  by  gross 
domestic  expenditure  on  R&D  (SDG 9;  1.5%  of 
GDP in 2024 against an EU average of 2.24%) and 
R&D personnel (1.22% of the active population in 
2024; EU average: 1.59%, 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 

For a detailed progress assessment towards the various SDGs, see the annual Eurostat report ‘Sustainable development in the 
European Union’; for extensive data on the short-term SDG progress of EU countries, see Key findings – Sustainable development 
indicators; for an interactive visualization of SDG progress of EU countries, see SDG country overview. 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 or six 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 29 April 2026. Data refer mainly to the period 2019-2024 or 2019-2025. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

120 

 
 
 
 
 
 
EU average of 9.2% (SDG 7). It increased from 
7.5%  in  2019  to  17.5%  in  2024.  The  severe 
housing  deprivation  rate  (SDG 1)  increased,  from 
1.5%  in  2015  to  2.9%  in  2023,  which  indicates 
poorer  living  conditions.  This  adds  to  more  acute 
housing  affordability  challenges  for  the  most 
vulnerable,  including  young  people,  low-income 
households 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 

on 

Spain 

improving 

While 
SDG 
indicators related to macroeconomic stability 
(SDGs  8)  and  performs  well  on  SDG  17,  it  is 
still  below  the  EU  average  and  is  moving 
away from its targets on SDG 16. Spain’s real 
GDP  per  capita  has  been  recovering  after  the 
pandemic  (SDG 8).  It  increased  from  EUR 26 930 
in  2019  to  EUR 27 800  in  2024,  but  remains 
below the EU average of EUR 33 650. Spain has a 
lower  investment  share  of  GDP  (SDG 8)  than  the 
EU average (20.3% of GDP vs 21.7% for the EU in 
2024). Spain faces challenges on the sustainability 
of  public  finances.  The  Spanish  RRP  includes 
several  measures 
the 
on 
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  2025,  39%  of  the 
Spanish population perceived the independence of 
the justice system as ‘very good’ and ‘fairly good’, 
compared to an EU average of 54% in 2025. 

taxation 

and 

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

complemented by Cohesion Fund investments (see 
Annex 10). 

While  Spain  is  improving  on  several  SDG 
indicators  related  to  sustainability  (SDGs 2, 
7,  9,  11,  12,  13,  14),  it  is  moving  away  on 
others  (SDGs  6,  15)  and  needs  to  catch  up 
with  the  EU  average  on  many  of  these 
(SDGs 2,  6,  7,  9,  12,  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  25.4%  in  2024,  slightly  above  the  EU 
average  of  25.2%).  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,  by  significantly  reducing  nitrates  in 
groundwater,  phosphate  in  rivers  and  improving 
excellency  in  inland  bathing  waters.  Water  stress 
and scarcity are part of why Spain is moving away 
from the targets for SDG 15 (Life on land) too. The 
drought impact on ecosystems is 36% higher than 
the  EU  average  (5.8%  in  2024  in  Spain  against 
3.7% at EU level) 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. 

(SDGs  3,  4,  5)  and 

Spain performs well in some SDGs related to 
is 
social  fairness 
improving  on  some  SDGs  (SDGs 1,  7,  8,  10), 
but is still below the EU average on some of 
them (SDGs 1, 7, 8, 10). Spain has improved on 
several  fairness-related  indicators  such  as  people 
at  risk  of  poverty  or  social  exclusion  (SDG 1; 
25.8% in 2024 vs 26.2% in 2019), the in-work at-
risk-of-poverty rate (SDG 1; 8% in 2024 vs 10.9% 
long-term  unemployment  rate 
in  2019),  the 
(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, 
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. 

exclusion, 

social 

On  the  negative  side,  the  percentage  of  the 
Spanish  population  unable  to  keep  their 
homes adequately warm is almost double the 

121 

 
Map A18.1:  GDP per head compared with the EU 
average 

ANNEX 18: COMPETITIVE REGIONS 

Regional development trends 

Over  the  past  two decades,  GDP  per  head in 
most  regions  has  generally  remained  below 
the  EU  average,  reflecting  long-standing 
structural  constraints  despite  convergence 
phases.  Labour  productivity  remains  a  challenge. 
It remains below the EU level in almost all regions 
and  has  grown more  slowly than  the  EU  average. 
Depopulation  affects  much  of  the  country,  with 
population  growth  concentrated  mainly  in  coastal 
areas  and  in  and  around  the  capital  region, 
reinforcing  territorial  imbalances  in  labour  supply, 
service provision and growth potential. 

regions  and 

the  Mediterranean 

Between  2004  and  2024,  most  Spanish 
regions  showed  a  slight  trend  towards 
convergence, though their trajectories varied 
significantly.  This  period  can  be  broken-down 
into two parts: the first between 2004 and 2014, 
in  which  the  country  diverges  significantly  from 
the EU average because of the dramatic impact of 
the  2008  financial  crisis.  While  it  impacted  all 
regions, 
the 
Canarias were most hit. Since 2014 and until 2024 
Spain’s economy  was on a path towards recovery 
but 
that 
the  COVID-19  pandemic  stopped 
trajectory. In 2024, Spain was at similar levels  of 
GDP  per  head  compared  with  2014.  Yet,  the 
regions  in  the  North  and  Centre  of  the  country 
displayed  better  convergence  trends  than  the 
Mediterranean  and  island  regions.  As  a  result, 
Canarias  and  Murcia  have  lagged  behind  the  EU 
average  as  the  average  GDP  per  head  in  2021-
2023  was 
less  than  75%  of  EU  average. 
Andalucía, Extremadura, Castilla-La-Mancha, Ceuta 
and Melilla were already less than 75% of the EU 
average  before 
In 
relation  to  GPD,  only  four  regions  (Madrid,  País 
Vasco, Navarra and Cataluña) had a GDP per head 
above  EU  average  (Map  18.1).  Overall,  this 
suggests  that  recent  convergence  gains  remain 
fragile,  structural  gaps  persist  and  may  intensify 
for regions facing slower growth.  

the  COVID-19  pandemic. 

2021 - 2023 average GDP per head in purchasing power 
standard compared to the EU average. 
Source: Commission calculations based on Eurostat 16 July 
2025 data 

Regional gaps in GDP per head remain closely 
linked to regional labour productivity gaps. In 
2024, national labour productivity (GDP in PPS per 
hour worked) stood at 96% of the EU average, but 
only three regions exceeded it: País Vasco (114%), 
Navarra  (107%)  and  the  capital  region  of  Madrid 
(106%).  Other  regions  remained  below  the  EU 
average,  reflecting  persistent  structural  gaps  in 
productive  capacity  (Graph  A18.1).  While  some  of 
the  least  productive  regions  have  shown  signs  of 
gradual  catch-up,  the  overall  pattern  continues to 
point  to  marked 
internal  gaps,  with  Murcia, 
Canarias,  Ceuta  and  Melilla  recording  a  decline  in 
productivity in 2015-2024 and ranking among the 
bottom 20% of EU regions in terms of productivity 
growth  performance.  Additionally,  regional  gaps 
persist  despite  some  convergence,  with  extremely 
low employment rates in Melilla (55%) and Ceuta 
(58.3%). In 2025, employment rates (20-64) in all 
other  regions  range  from  65.8%  in  Andalucía  to 
77.9% 
total 
unemployment  rates  across  regions  are  also 
substantial.  In  2025,  unemployment  rates  varied 
from  24.9%  in  Melilla  to  7.3%  in  Cantabria  and 
Pais  Vasco.  In  2025,  youth  unemployment  also 
remained  a  key  driver  of  regional  gaps,  with 
particularly  acute  challenges  in  less  developed 
regions. 
persistent 
difficulties  in  integrating  young  people  into  the 

in  Madrid.  Differences 

situation 

reflects 

This 

in 

122 

 
 
 
 
 
 
labour  market,  with  implications  for  their  future 
prospects and the long-term development of these 
regions,  in  turn  amplifying  gaps  between  the 
regions (see Annex 11). 

Graph A18.1: Labour productivity growth (2015 - 
2024) and labour productivity (2024), Spain 
(NUTS 2 regions) 

Sectoral  specialisation  varies  greatly  across 
regions.  Industrial  employment  above  the  EU 
average is confined to a small number of regions 
(La  Rioja,  País  Vasco,  Navarra  and  Aragon),  while 
above-average  employment  in  ICT  and  financial 
services  is  limited  to  Madrid  and  Cataluña.  The 
automotive sector, an important pillar in a handful 
of  regions  (Castilla  y  León,  Aragón,  Navarra  and 
Galicia), increased their exposure to sector-specific 
and  transition  shocks.  Tourism-related  activities 
(accommodation and food services) accounted for 
around  28%  of  employment  in  industry  and 
services  nationally  in  2023,  rising  to  42%  in 
Canarias  and  51%  in  Illes  Baleares  (356).  While 
tourism has supported employment growth across 
most regions since 2016, the reliance on tourism-
driven  employment,  particularly  in  coastal  and 
island  regions,  increases  exposure  to  external 
shocks  and  constrains 
long-term  productivity 
growth. The national Tourism Strategy 2030 seeks 
to 
tourism 
destinations  and  to  accelerate  the  dispersion  of 
visitors  flows  in  a  way  that  yields  economic  and 
social  benefits  at  regional  level  (i.e.  to  tackle 
depopulation).  

strengthen 

resilience 

the 

of 

Source: Commission calculations based on JRC data 

(356)DG REGIO elaboration, based on Eurostat Structural Business 
Statistics (Accommodation and food service activities, sector I). 

123 

0.70.41.20.90.80.70.60.60.60.50.50.40.30.30.30.20.20.20.0-0.2-0.91009610593939596100828499849310710611410390838070EUSpainIlles BalearsGaliciaCastilla-La ManchaPrincipado de AsturiasCantabriaAragónRegión de MurciaExtremaduraLa RiojaAndalucíaCastilla y LeónComunidad Foral de NavarraComunidad de MadridPaís VascoCataluñaComunitat ValencianaCanariasCiudad de CeutaCiudad de MelillaAverage annual growth2024 (%)Productivity in 2024GDP/hour, EU27 = 100 
 
 
   
 
 
Table A18.1:Main development trends, challenges and the concentration of resources. 

Source:  European Commission based on Eurostat data; categories of regions based on Map A18.1 

Key challenges for regional 
competitiveness 

Most  regions  rank  below  the  EU  average  in 
terms  of  competitiveness.  Only  Madrid,  País 
Vasco  and  Cataluña  achieve  above-average 
performance  according  to  the  2022  Regional 
Competitiveness  Index  2.0.  There  is  also  a  link 
innovation  capacity  and  economic 
between 
the  Regional 
development 

levels.  Based  on 

Innovation  Scoreboard  2025(357)  all  four  more 
developed  regions  and  one  transition  region 
(Comunidad  Valenciana)  are  classed  as  strong 
innovators  (see  Annex  4),  while  the  remaining 
regions  are  all  considered  moderate  innovators, 
except  for  the  autonomous  cities  of  Ceuta  and 
Melilla, which are emerging innovators. 

Investment  in  R&D  remains  low  in  many 
regions, 
innovation 
performance.  R&D  intensity  stood  at  1.5%  of 

harming 

Spain’s 

(357) Source:  European innovation scoreboard 2025 - Research 

and innovation 

124 

 Main development trends Less developed regions (population 15.8 million)Theseregions(i)score persistentlylower in productivitylevels;(ii) tendtohavea limitedinnovationcapacity; and(iii)weakprivateR&Dinvestment.Thisis mainlydueto theireconomicstructuresconcentratedinlow-value-addedactivities(withslowuptakeofdigital andgreeninfrastructures,incontrastwithsufficientendowmentoftransportinfrastructure). Mostoftheseregionssufferfromademographicdecline in theirworking-agepopulation(exceptsomecoastalareasofAndalucía),which jeopardisestheaddedvalueofhumancapital.  CanariasandMurciahavelaggedbehindtheEUaverage,astheiraverageGDPperheadin2021-2023hasfallenbelow75%ofEUaverage.Increasing climate pressures, including drought,water stress or floods, affect agricultural andtourism-dependent economies.Transition regions (population 14.9 million)Productivity growth in these regions remains subdued, with uneven uptake of digital tools and innovation among SMEs. High economic dependence on tourism in island regions exposes them to external shocks and seasonal volatility. Skills shortages in high-tech, digital, and green sectors limit the capacity for economic diversification. Ageing populations and sustained depopulation in inland and rural territories (notably, Asturias and Castillla y León) weaken the labour force. More developed regions (17.9 million)Despitestrongeconomicperformance,competitivenessgaps remain acrosssectorsduetouneveninnovationdiffusion. Innovationsystemsarewell-developedbutconstrainedbyfragmentationandbarrierstoknowledgetransfer. Housingaffordabilityconstraintsinmajorurbanareas(Madrid,Barcelona)affectlabourmobilityandsocialinclusion. Persistentlabourmarketmismatchesandshortages in STEM, health and green skills limit the potential for growth. Specific territories Outermostregions(Canarias)experiencestructuralvulnerabilitieslinkedtoinsularity,highertransportcosts,dependenceontourismandheightenedexposuretoclimaterisks. ThesupportfortheCanariasneedstobesufficienttocontinuetotakeaccountofthestructuralsocialandeconomicsituationinthisregion,compoundedbyitsremoteness,insularity,smallsize,difficulttopographyandclimate,andeconomicdependenceonafewproducts.Sparselypopulatedareas(interiorCastillayLeón,Aragón,Castilla-LaMancha)experienceseveredemographicdecline,ageingpopulationsandlimitedaccesstoessentialservicesincrease territorialimbalance. Coastalareasandislandsaresusceptibleto environmentaldegradation,waterstressandintensivelanduseunderminesustainabledevelopmentinareaswithhighpopulationdensityandtourismpressure.  Justtransitionregionsexperiencecumulativesocio-economicimpactsfromcoalmineandpower-plantclosures.Thisincludesjoblosses,demographicdeclineandtheneedtorestructurelocaleconomies,requiringsustainedsupporttotranslatethetransitionintodurabledevelopmentoutcomes.AsforCeutaandMelilla,theirsmallterritorialscale,locationonthenorthAfricancoast,constrainedeconomicstructure,notbelongingtotheEUsinglemarket,connectivitychallengesandpersistentsocialvulnerabilities-takentogether-resultinthetwoSpanishautonomouscitiessystematicallydiverging from national performance averages. 
 
 
     
 
healthcare  facilities  (see  Annex  15).  In  Spanish 
rural  areas,  only  12.3%  of  the  population  live 
within a 10-minute drive from the nearest hospital 
(scoring well below the EU average in rural areas - 
30%),  while  in  urban  areas  nearly  all  inhabitants 
(97.3%) can access a hospital within a 10-minute 
drive. These patterns put at risk both the “right to 
stay” of young people and the ability of rural and 
peripheral  territories  to  harness  their  future 
workforce  and  point  to  weaknesses  in  promoting 
entrepreneurship  as  well  as  in  investing  social 
infrastructure  and  services  in  those  areas.  In 
addition, the just transition is particularly pressing 
where  mine  closures  and  coal  plant  phase-outs 
intensified  demographic  decline  and 
have 
employment  vulnerability 
in  former  coal  and 
carbon-intensive areas of Asturias, Castilla y León, 
Aragón  and  Andalucia,  although  it  has  been 
recognised  as  good  practice  by 
international 
organisations  including  the  International  Energy 
Agency.  On  the  positive  side,  (i)  high-speed 
broadband  coverage  in  rural  areas  is  among  the 
highest  in  the  EU;  (ii)  public  higher  education 
institutions  exist  in  all  regions,  providing  local 
training  opportunities;  (iii)  targeted  programmes 
for 
business 
incubation  help  stimulate  local  employment;  and 
the  combination  of  strong  community 
(iv) 
natural 
heritage, 
networks, 
environments  can  contribute  to  retaining  young 
people  and  strengthening 
rural  communities. 
Socio-economic  vulnerabilities  further  exacerbate 
territorial  imbalances  in  Spain,  particularly  for 
people  at  risk  of  poverty  and  social  exclusion, 
where  marked  gaps  persist  across  regions.  These 
differences are particularly pronounced in the case 
of child poverty (see Annex 12). 

entrepreneurship 

cultural 

youth 

and 

and 

GDP, standing well below the EU average of 2.2%, 
although  it  has  reached  an  all-time  high  (see 
Annex  4).  Only  País  Vasco  surpassed  the  EU 
average, with R&D intensity reaching 2.4% of GDP 
and  business  R&D  representing  1.8% 
(Table 
A18.2).   According to the latest regional trends in 
R&D  investment  observed  between  2022  and 
2024,  the  Spanish  regions  that  have  experienced 
the  strongest  growth  in  investment  (between 
+14% and +38%), include Madrid and Navarra, as 
well as Melilla and Ceuta. 

Other regions have experienced weak growth 
or  even  stagnation  (between  −1.1%  and 
−6.6%),  such  as  Canarias,  Castilla‑La 
Mancha,  and  Illes  Balears  (358).  By  contrast, 
Castilla-La  Mancha,  Ceuta  and  Melilla  are  among 
the  bottom  20%  of  EU  regions  in  total  R&D 
expenditure,  and  Extremadura,  Illes  Baleares  and 
Melilla  fall  into  the  bottom  quintile  for  both  total 
and  business  R&D.  This  trend  correlates  with  the 
low  number  of  patents  per  inhabitant  in  these 
regions,  while  Navarra,  Madrid  and  Comunidad 
Valenciana  record  the  highest  figures.    Possible 
drivers  are  the  specialisation  of  some  regional 
economies  in  low  value-added  sectors  such  as 
construction or tourism. Increasing the productivity 
of  those  sectors  remains  a  major  challenge  in 
which R&D and innovation may have a role to play. 
This  uneven  expansion  of  innovation  points  to  a 
territorially  imbalanced  concentration  of  R&D  and 
innovation that, if sustained, may further increase 
gaps  in  regional  competitiveness  in  the  years 
ahead.  Such  an  increase  would  be  a  major 
challenge  for  the  less  developed  and  transition 
regions in the country. 

Demographic  change  is  a  major  risk  factor 
for  the  competitiveness  of  some  territories 
and  the  capacity  of  rural  areas  to  secure 
residents’ “right to stay”. In 2015–2024, most 
regions  experienced  positive  net  migration  of 
people  aged  15–39,  but 
inflows  have  been 
concentrated  in  coastal  regions  and  major  cities, 
while regions such as Ceuta and Extremadura saw 
declines in this key age group. Census data (2011–
2021) confirm this polarisation: cities (+2.1%) and 
towns  and  suburbs  (+3.6%)  continued  to  grow, 
whereas rural areas underwent a steep population 
decline  of  4.4%  -  twice  the  rate  observed  in  EU 
rural  areas.  Rural  areas  continue  to  suffer  from 
to  basic  services,  especially 
lower  access 

(358)Source: Informe Fundación Cotec “Evolución de la I+D 2024”. 

125 

 
 
Map A18.2:  Average annual population change at 
NUTS 3 level (2015 - 2024) 

Source: Eurostat and JRC 

Cantabria 

challenges. 

Both  Mediterranean  and  Atlantic  coastal 
regions play  a  growing  economic  role  but 
deal  with  specific  economic,  social  and 
Atlantic 
environmental 
and 
regions such as Galicia, 
Asturias experience 
ecosystem 
degradation, coastal erosion and ageing sanitation 
and  port  infrastructures. On  the  Mediterranean, 
Murcia face 
Catalonia, 
challenges in scaling 
biotechnology, and 
blue 
addressing  rising  dependence  on  energy-intensive 
desalination.  Desalination  also  poses  a  major 
challenge in the Canarias, where it accounts for 10 
to 15% of primary energy consumption.(359)  

Valencia 

marine 

and 

broader 

challenges 

average (361). Housing affordability gaps are stark. 
In  parts  of  the Canarias,  Illes  Baleares  and in  the 
city  of  Málaga,  households  can  afford  less  than 
40 m²  to  buy  or  rent  with  one  third  of  their 
income,  compared  with  over  100 m²  in  inland 
areas  such  as  Ciudad  Real,  La  Rioja  or  Teruel. 
Overall, housing pressures are most acute in major 
cities,  around  which  the  economic  activity  is 
concentrated, and tourism-intensive coastal areas, 
growth 
posing 
sustainability in regions where housing demand is 
highest and being a significant constraint to labour 
mobility  within  the  country.  In  addition,  limited 
access  to  social  housing  is  a  key  source  of  social 
vulnerability.  Its provision is highly uneven among 
regions,  exacerbating  territorial  gaps,  housing 
insecurity,  and constraints on labour mobility (see 
Annex 16). Key drivers of housing affordability are 
lack  of  coordination  at  various  administrative 
levels,  poor  building  stock,  weak  policies  in  terms 
of  controlling  short-term  rentals  and  shortages in 
access to social housing (see Annex 16).  

for 

Map A18.3:  Energy-intensive industries 2021: 
Country Study Spain 

Source: Syndex based on data from AEGE, UNESID, FEIQUE, 
FICEMEN, AEA, MITECO 

Access  to  housing  is  problematic  in  some 
regions  and  may  increase  Spain’s  territorial 
and  socio-economic  gaps  (360).  This  challenge 
was  already  highlighted  in  last  year’s  CSR  5.  In 
2025,  the  housing  cost  overburden  rate  stood  at 
7.2%  nationally,  but  remains  particularly  high  in 
Melilla 
(9.9%)  and  Valencia 
(8.5%),  with  Cataluna  also  above  the  national 

(13.8%),  Madrid 

(362)(363).  While 

Many less developed and remote regions are 
vulnerable  to  floods,  forest  fires  and  water 
shortages 
regions  such  as 
Cataluña  and  País  Vasco  benefit  from  dedicated 
water  agencies  (like  the  ACA  and  URA)  and  more 
autonomous  management  models,  regions  like 
Castilla  y  León  and  Extremadura  show  greater 
dependence  on  the  central  government,  which 

(359) Source: Gobierno de Canarias. OCEA - PS7. Desalación 

(360) Eurostat Data_ Housing cost overburden -  EU-SILC (Survery 
on Income and Living Conditions). 

(362) Source: JRC, see 9th Report on economic, social and 
territorial cohesion, Map 4.5. 

(363) Source: CSR 2025.4, and Annex on Climate.  

(361)The overburden rate should be read together with the tenure 
structure (homeowner, tenants), that may differ across 
country and regions.  

126 

 
 
 
 
 
 
 
 
 
(365).  These  gaps 

reflecting  variations 

Similarly, obtaining a building permit ranges from 
around  four  months  in  Gijón  to  over  a  year  in 
Palma  de  Mallorca, 
in 
administrative  capacity,  staffing, 
inter-agency 
coordination,  and  the  availability  of  digital  tools. 
The  average  time  required  to  pay  suppliers 
exceeds  30  days 
(in  Murcia,  Comunidad 
Valenciana,  and  slightly  longer  in  Asturias  and 
Baleares 
regional 
differences  in  the  key  drivers  of  administrative 
efficiency, such as regulatory clarity, simplification 
of  administrative  tasks,  process  design,  and 
digitalisation or in the use of simplified procedures 
including the use of Declarations of Responsibility.  
Here,  the  Regime  20th  framework  could  offer 
guidance  and  practical  solutions  to  simplify 
procedures,  improve  compliance,  and  promote 
efficiency  by  reducing  regulatory  fragmentation 
between 
and 
municipalities. 

communities 

autonomous 

reflect 

Administrative  capacity  challenges  hit  less 
developed  regions  further.  Regional  gaps  are 
made  worse  by  weaknesses 
in  multi-level 
governance:  limited  vertical  coordination  between 
national, regional and local authorities and uneven 
horizontal  cooperation  across  regions  increase 
coordination 
slow  down  policy 
implementation  (366).  Such  shortcomings  have 
become  more  visible  during 
crisis 
management  episodes,  including  recent  extreme 
weather  events,  highlighting  the  need  for  more 
consistent  coordination  mechanisms  to  ensure 
effective policy delivery across the territory. 

costs  and 

recent 

lead 

(364). 

In  many 

to  discontinuous 

limits  their  operational  capacity  and  long-term 
less  developed  and 
planning 
predominantly  rural  regions,  these  governance 
constraints 
investment 
pipelines,  delayed  infrastructure  upgrades  and 
non-compliance  with  EU  water  and  wastewater 
standards. 
regions,  poor 
less  developed 
compliance  with  EU  wastewater  regulations,  an 
excessive  number  of  operators, 
insufficient 
investment  continuity  and  stability  and  a  lack  of 
coordination  in  investment  planning  are  the  main 
drivers behind this challenge.  

In 

Skills  shortages  and  persistent  gaps 
in 
educational  outcomes  are  major  barriers  to 
the  long-term  competitiveness  of  Spain’s 
least developed and transition regions. This is 
covered in CSR.2025.6 subparts 2 and 3. In Spain, 
the  rate  of  early  leavers  from  education  and 
training varies highly among regions and is highest 
in Murcia (Table A18.2, see also Annex 13). All less 
developed  regions  yield  PISA  scores  below  the 
national  average  for  mathematics  and  reading. 
While  immigrant  students  generally  score  lower 
than  their  non-immigrant  peers,  País  Vasco, 
Murcia, Aragón, la Rioja, Illes Baleares and Galicia 
show  the  highest  gaps  between  these  two 
categories.  Skills  and  educational  achievements 
are  key  factors  to  strengthen  human  capital  in 
those  regions  and  thus  those  weaknesses  remain 
a  significant  challenge  for  their  long-term  growth 
and  productivity.  Policies  on  education  and  skills 
provisions  fall  mostly  under  the  powers  of  the 
regions.   

Many Spanish cities face challenges in terms 
of deadlines to deliver building or occupancy 
permits  and  to  comply  with  payments 
deadlines. The World Bank’s Subnational Business 
Ready  Report  (2026)  highlights  differences  in 
business  environments  across  cities.  Median 
processing  times  for  occupancy  permits  reflect 
both legally defined deadlines and local practices. 
In  cities  such  as  Barcelona,  Madrid,  Sevilla,  and 
Valladolid,  a  Declaration  of  Responsibility  allows 
immediate  occupancy,  whereas  in  others,  formal 
occupancy  licenses  require  a  full  administrative 
review,  resulting  in  deadlines  of  up  to  135  days 
(Bilbao)  or  more  than  300  days  (Pamplona,  Vigo, 
Las  Palmas,  Murcia,  Valencia). 
Santander, 

(364) Source: AMI Report Red2Red “Evaluation of Cohesion Policy-
Supported Investments in Spain during 2014-2020: Challenges 
and Bottlenecks”, page 11. 

(365)https://www.hacienda.gob.es/es-
ES/Prensa/Noticias/Paginas/2025/20250722-NP-PMP-MAYO-
2025.aspx 

(366) Alda-Fernández & Ramos, 2024, pp. 56–57, 69, 72 

127 

 
 
 
Map A18.4:  Differences in time for obtaining 
building permits by Spanish city 

Source: World Bank subnational b-ready report for Spain 
(2026) 

Administrative  simplification,  digitalisation 
and  capacity  also  show  uneven  progress. 
regions  have  burden-reduction 
While  many 
in  place  are  and  expanding  e-
frameworks 
procurement  and  e-invoicing  systems,  preliminary 
evaluations,  systematic  monitoring  and  full  end-
to-end  digital  processing  remain inconsistent  (367). 
There  are  challenges  in  regional  procurement 
offices  to  fill  competency  gaps,  moving  toward  a 
single-window  business  registration  system  and 
completing  digital  back-offices  with  a  single 
cross-border 
citizen 
functionality to improve user services. It is mainly 
the 
regions, 
alongside a select few developed regions that face 
these  specific  governance  and  digitalisation 
challenges.  Administrative  frictions  also  lengthen 
project  cycles,  reduce  the  effectiveness  of  public 
investment  and  risk  widening  regional  gaps  in 
innovation, digitalisation and productivity.  

less  developed  and 

enhanced 

transition 

folder 

and 

(367) Ministerio para la Transformación Digital y de la Función 
Pública (MAETD) / Secretaría General de Administración 
Digital (SGAD), 2024, pp. 18–19; 22–24. 

128 

 
 
 
 
 
Table A18.2:Key regional indicators (at NUTS 2 level) for Spain 

Dark green - the indicator is 120% or more of the EU average. 
Light Green - the indicator is 100% or more, but less than 120% of the EU average. 
Yellow - the indicator is 90% or more, but less than 100% of the EU average.  
Light red – the indicator is 75% or more, but less than 90% of the EU average. 
Dark red – the indicator is below 75% of the EU average.   
This colour scale applies to ‘positive’ indicators, where higher values are favourable. 
For ‘negative’ indicators (where higher values are unfavourable), the colours are reversed. 

Source: Eurostat and JRC 

129 

GDP per head (PPS, index)Real GDP per head growthEmployment in high-technology sectorsEmployment in knowledge-intensive servicesYouth unemployment rateEarly leavers from education and trainingAt-risk-of-poverty or social exclusion rate (AROPE)Employment in industryR&D expenditureR&D expenditure in business enterprise sector (BERD)EU27=100Average annual % change% of total employment% of total employment% of labour force aged 15-24% of population aged 18-24% of population% of total employment% of GDP% of GDP20242014-202420252025202520252025202420232023EU1001.45.141.715.29.121.015.32.241.51Spain911.64.638.024.912.825.711.41.500.84Galicia842.03.435.824.710.422.113.81.240.60Principado de Asturias832.03.539.027.910.622.413.10.980.55Cantabria841.53.337.819.88.919.215.20.960.35País Vasco1151.34.742.318.63.614.719.42.381.79Comunidad Foral de Navarra1091.33.035.920.97.816.524.41.791.20La Rioja951.12.231.125.515.522.819.00.930.37Aragón1031.83.636.324.112.319.116.71.160.69Comunidad de Madrid1251.68.545.719.39.619.46.22.041.18Castilla y León861.83.338.224.710.224.114.71.380.83Castilla-La Mancha731.93.734.127.615.734.014.80.630.35Extremadura702.42.242.237.415.030.48.40.710.19Cataluña1051.36.638.019.113.521.313.71.891.22Comunitat Valenciana771.23.333.430.514.430.713.71.230.57Illes Balears1011.72.634.617.115.215.25.10.480.20Andalucía691.73.036.432.714.534.78.11.150.39Región de Murcia751.62.332.125.420.632.513.01.070.51Ciudad de Ceuta640.761.757.514.640.83.10.23Ciudad de Melilla590.657.960.214.243.71.50.36Canarias721.32.134.829.515.931.24.70.570.16  
 
 
 
 
 
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 19: TRANSPORT 

This  Transport  Annex  presents  the  state  of 
play,  and  the  challenges  Spain  faces  with 
the  implementation  of  the  trans-European 
transport  network  (TEN-T),  the  European 
railway 
system 
traffic  management 
(ERTMS), the roll-out of sustainable aviation 
fuels (SAF) and road safety. 

Two  European  transport  corridors  cross 
Spain  (Atlantic,  Mediterranean).  The  TEN-T  in 
Spain  comprises  14 672 km  of  rail  (9 878 of 
which are on the core network) and 12 162 km of 
road (5 770 of which on the core network). Spain 
has 92 km of inland waterways, 39 TEN-T airports 
(including 10 core airports), 42 ports (including 15 
core ports) and 49 urban nodes (368). 

Spain  is  well  advanced  in  its  TEN-T  high-
speed  rail  projects,  with  an  annual  average 
rail  investment  of  EUR 1.1 billion  between 
2018  and  2024,  reaching  EUR 3 billion  in 
2025.  Spain  also  has  also  been  modernising  its 
conventional  network  which 
is  built  with  a 
different  track  gauge,  and  migration  towards  EU 
nominal  standard  track  gauge  is  a  significant 
challenge. The migration of the entire high-speed 
rail network to standard gauge, including the lines 
to Portugal is an important part of completing the 
TEN-T. 

and 

systems, 

improving 

cross-border 

to  modernising 

The  ERTMS  is  essential  to  digitalising  the 
railways 
and 
harmonising 
railway  operations  across 
Europe.  The  ERTMS  ensures  the  safety  of  rail 
networks by providing a unified signalling system 
that  significantly  reduces  the  risk  of  accidents.  It 
also  provides  interoperability  between  national 
rail 
train 
movements. 
that  existing 
crossborder  operational  agreements  on  border 
stations (especially with France) are complete and 
clearly 
predictable  and 
ensuring 
transparent  conditions  for  railway  undertakings. 
The  completion  of  missing  links  in  neighbouring 
countries,  in  particular  France  and  Portugal,  is  a 
critical  element  for  enhancing  the  attractiveness 
of 
railway 
undertakings and for incentivising the provision of 
cross-border passenger transport. 

international 

important 

services 

defined, 

rail 

for 

is 

It 

The  ERTMS  was  in  operation  on  20%  of 
Spain’s  TEN-T  rail  network  by  the  end  of 
2024 (369). To meet its national plan’s ERTMS roll-
out  target  by  2035,  Spain  aims  to  deploy  the 
ERTMS  on  an  additional  length  of  2 131 km,  for 
an  estimated  cost  of  EUR 511 million.  A  plan  for 
decommissioning  of  the  legacy  signalling  system 
is lacking. 

In northern Spain, the priority is to complete 
the  Atlantic  European  transport  corridor, 
including  the  cross-border  connections  with 
Portugal  and  France,  and  connect  it  to  the 
Mediterranean  corridor  in  European  track 
gauge.  The  full  development  of  the  high-speed 
rail  network  in  northern  Spain  and  southern 
France  will  enable  a  modal  shift  in  the  area  and 
stimulate regional growth. 

line 

On  the  Mediterranean  coast, the  completion 
of the high-speed Almería-Murcia-Cartagena 
and  Valencia-Castellón  lines,  together  with 
the  completion  of  the  new  cross-border 
high-speed  Montpellier-Perpignan 
in 
France,  will  create  a  continuous  high-speed 
rail  axis  along  the  entire  Franco-Spanish 
Mediterranean  coastline.  This  will  serve 
tourism, passenger mobility, and freight transport 
by 
cross-border 
connectivity  and  capacity.  In  southern  Spain,  the 
modernisation  of  the  Algeciras-Bobadilla  line  will 
include 
deployment, 
enabling  740-metre-long  trains,  and  a  greater 
loading gauge. 

electrification, 

significantly 

enhancing 

ERTMS 

Spain  does  not  yet  have  a  roadmap  for  the 
transition to the European railway standard 
gauge  which  gives  priority  to  cross-border 
segments and foresees measures to support 
the  open  access  to  operators  in  adapting 
their  rolling  stock  and  facilities.  Additionally, 
during  the  migration  of  infrastructure  –  which 
implies  temeporary  line  closures  and  alternative  
transport  plans  –  compensating  additional  track 

(368)TENtec Information System, according to Reg. 2024/1679. 

coordinator Matthias Ruete.  

(369) Based on ERTMS – Third work plan of the European 

130 

 
 
 
 
 
Table A19.1:ERTMS deployment in Spain. 

Source: Based on ERTMS – Third work plan of the European Coordinator Matthias Ruete. 

access  charges  could  be  considered  to  ensure  a 
fair  adaptation  process  and  maintain  service 
continuity.  

As  the  rail  network  (including  high-speed 
rail)  continues  to  age,  efficient  monitoring 
and  maintenance,  including  the  purchase  of 
maintenance  vehicles  for  inspections  under 
real  conditions  to  ensure  performance  and 
safety,  are  essential.  Harmonising  technical 
and  operational  rules  with  the  minimisation  of 
national rules in line with the EU directives on rail 
interoperability  and  safety  remains  critical  to 
ensure seamless cross-border rail transport. 

Spain  has  a  strong  industrial  base  for  the 
production  and  deployment  of  sustainable 
aviation  fuels  (SAF)  both  of  biological  origin 
(bioSAF)  and  from  green  hydrogen  and  captured 
CO2  (eSAF)  due  to  the  lower  cost  of  energy, 
thanks to its large renewable energy capacity and 
the  abundance  of  raw  materials  for  feedstocks.. 
Five  facilities  have  demonstrated  the  viability  of 
co-processing  renewable  feedstocks  to  produce 
SAF and half of them are currently producing bio-
SAF  via  HEFA  pathway.  Solar  and  wind  energy 
availability and a large pipeline of green hydrogen 
projects  (pre  and  post  FID)  are  are  leading  to  a 
pipeline  of  eSAF  projects under  development  and 
with  commercial  operation  dates  starting  from 
2030-2032.  However,  some  plans  to  expand 
biofuels production have been paused and several 
synthetic  aviation  fuel  projects  currently  under 
development  (ranging  from  60kt  to  150  kt  per 
year  of  output  per  facility)  failed  to  yet  reach 
Final  Investment  Decision  (370).  Furthermore,  due 
to  high  dependency  of  Spain  of  maritime 
transport  there  is  also  a  need  to  develop  and 
scale up e-fuels (ammonia and methanol) for the 
maritime  sector  which  could  initially  focused  on 

green corridors).  Targeted investments to enable 
SAF commercialisation can be made through pilot 
investment  structures 
(such  as  double-sided 
auctions).  Making  use  of  existing  EU  revenue 
opportunities 
to  aviation’s  energy 
transition  (e.g.  EU  ETS),  and  penalty  revenue 
generated  by  ReFuelEU  Aviation  and  FUELEU 
maritime are important intruments to deriske SAF 
and maritme e-fuels projects. 

related 

Road  crashes  impose  an  enormous  social, 
economic  and  health  burden  on  the  EU 
economy.  The  external  socio-economic  costs  of 
fatal,  serious  and  minor  injuries  have  remained 
persistently  high  despite  the  progress  made  in 
reducing  crash  frequency  and  severity.  These 
innovation, 
resources 
education,  healthcare  and  other  crucial  public 
investments (371). 

could  otherwise 

fuel 

In 2024, Spain performed better than the EU 
average  (45),  with  37  fatalities  per  million 
inhabitants. An increase of 2% in road fatalities 
compared  was  observed.  In  2023,  9 265  people 
were  seriously  injured  in  road  crashes,  which  is 
8%  higher  than  the  respective  figure  in  2019.   
Compared  to  the  EU  average,  Spain  shows  a 
relatively high proportion of powered two-wheeler 
fatalities  (27%)  and  fatalities  on  motorways 
(19%). 
users 
(pedestrians, cyclists and motorcyclists) exceeded 
50% of total fatalities for the first time ever. The 
most  frequent  causes  of  crashes  were  driver 
distraction  and  driving  under  the  influence  of 
alcohol or drugs. 

In  2019, 

vulnerable 

road 

(370) EASA ReFuelEU Aviation Technical Report (2025).  

framework at the Mid-Point, COM(2026) 77 final. 

(371) Report on the implementation of the EU Road Safety Policy 

131 

 
 
 
 
 
 
Map A19.1:  TEN-T Cross-Border & National Priority Sections in Spain 

Graph A19.1: Spain's road fatalities per million, 2024 

Source: Report at the Mid-Point - Spain, SWD(2026) 58 final. 

Based on  the  latest  available  data,  Spain is 
currently not on trajectory to meet the 2030 
targets. A possible way to address this could be 
to review the extent to which  actions in the road 

safety  strategy  have  been  implemented  so  far 
and  and  consider  reinforcing  the  measures 

132 

 
 
 
  
 
 
 
 
 
 
 
 
 
accordingly. (372)  The  map  below  presents  the 
roads  where  the  safety  of  the  infrastructure  is 
poor and thus where urgent action is required. 

Map A19.1:  Spain's road safety map 

Source: TENtec Information System and TEN-T map library - 
European Commission 

(372) More details in Report on the implementation of the EU 
Road Safety Policy framework at the Mid-Point – Spain, 
SWD(2026) 58 final. 

133