Brussels confirms Spain is EU’s fastest-growing major economy

Spain is once again expected to be the European Union’s fastest-growing major economy next year. Brussels has raised its 2025 GDP forecast to 2.9 per cent, matching the Spanish Government’s own prediction and keeping Spain well ahead of the EU average.

The European Commission also says Spain will meet EU fiscal rules, with the public deficit set to fall to 2.5 per cent in 2025.

Spain stays ahead thanks to strong domestic spending

The Commission explains that Spain’s economy is being powered mainly by domestic demand – in other words, people living in Spain are continuing to spend, invest, and drive growth.

The expansion is supported by a “continued strong labour market performance upholding private consumption” and ongoing investment.

A key driver is Spain’s growing population and steady migration, which is expanding the workforce.

Growth will ease after 2025, dropping to 2.3 per cent in 2026 and 2 per cent in 2027, but Spain is still expected to outperform both the eurozone and EU averages over the next three years.

Spain’s deficit is falling

Spain’s public finances continue to move in the right direction. Brussels expects:

• Deficit: 2.5 per cent in 2025 → 2.1 per cent in 2026 and 2027
• Debt: falling from 100 per cent of GDP in 2025 to 98.2 per cent in 2026 and 97.1 per cent in 2027

Spain’s deficit has been helped by:

• The phase-out of energy support measures
• A 2024 tax package, including changes to corporate tax and new taxes on e-cigarettes and financial income
• Stronger-than-expected growth

By contrast:

• Germany is forecast to exceed the EU deficit limit, hitting 4 per cent next year.
• France is projected to stay around 5 per cent for several years.

Jobs in Spain

Brussels says the expected employment gains are “mainly attributable to continued migration inflows, which are considerably expanding the labour force.”

Unemployment is forecast to keep falling:

• 10.4 per cent in 2025
• 9.8 per cent in 2026
• 9.6 per cent in 2027

These will be Spain’s lowest unemployment rates in more than a decade, but the country will still have the highest unemployment in the EU, compared with the EU average of 5.9 per cent.

Inflation easing

Spain’s inflation rate is expected to fall steadily:

• 2.6 per cent in 2025
• 2 per cent in 2026 and 2027

For expats already living in Spain, or those thinking of moving, the forecast provides several useful takeaways:

• Job opportunities remain solid, especially in services, construction, tourism, and care sectors, strengthened by population growth.
• Falling debt and deficit levels suggest economic stability, which can influence tax policy and social spending.
• Spain continues to outperform much of Europe, making it one of the EU’s more resilient destinations for workers, investors, and retirees.
• However, unemployment remains the highest in the EU, meaning competition for jobs can still be tough – especially for those without Spanish or industry-specific skills.
• With inflation falling, living costs may stabilise, offering more predictability for households.

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