Spain’s investment appeal slumps as country falls over debt and jobs fears

Spain has fallen to 15th place in a global ranking of the countries considered most attractive for foreign direct investment, according to the 2026 Foreign Direct Investment Confidence Index published by consultancy Kearney. The country was ranked 11th a year earlier, marking a four-place decline. 

The index is based on a survey of more than 500 senior executives from large international companies and measures where businesses expect to invest over the next three years. It reflects investor sentiment rather than confirmed capital flows.  The United States retained first place for the 14th consecutive year, followed by Canada and Japan. China moved into fourth place, ahead of Germany. The United Kingdom, France, Singapore, the United Arab Emirates and Saudi Arabia completed the top ten. 

Debt, unemployment and regulation cited as concerns

Kearney said Spain’s weaker position was linked to several long-standing economic concerns. These included public debt, unemployment and tighter rules affecting foreign takeovers in strategic sectors. 

Spain’s public debt stood at 103 per cent of gross domestic product at the end of 2025, according to figures cited in the report. Investors also pointed to the country’s persistently high unemployment rate, which remains above many European peers. 

Another issue highlighted was the extension of Spain’s screening mechanism for foreign investment in strategic industries until the end of 2026. The controls were introduced during the pandemic and allow the government to review certain acquisitions involving overseas investors.  The report said these measures had increased regulatory demands for some investors considering new projects or purchases.

Areas where Spain continues to perform strongly

Despite the drop in the ranking, Spain was recognised for strengths in several sectors. Kearney pointed to renewable energy, where the country has become one of Europe’s leading markets for new capacity and infrastructure.  The report also noted Spain’s role in freight transport and logistics, helped by its geographic position between Europe, Africa and Atlantic trade routes. Strong transport links and port capacity have supported investment in warehousing and supply chains. 

Among the reasons investors still choose Spain, respondents cited economic performance, technological innovation and institutional quality.  Separate research published this year by IESE Business School found that 89 per cent of foreign-owned companies operating in Spain planned to maintain or increase investment during 2025, despite concerns over taxation, bureaucracy and labour costs. 

Official investment figures show weaker year

The change in ranking follows a decline in actual foreign investment into Spain last year. Official data reported by Spain’s Ministry of Economy showed foreign direct investment fell by 21.8 per cent in 2025 to €30.76 billion, down from €39.35 billion in 2024. It was the lowest annual total since 2021. 

After accounting for disinvestment, the net fall was 10 per cent. The decline came during a year in which global foreign investment rose, widening the gap between Spain and several competing economies. 

The United States was Spain’s largest foreign investor in 2025, contributing around €10 billion. France, the United Kingdom and Germany were the next biggest sources of capital. 

Madrid remained the main destination

Madrid attracted the largest share of investment within Spain, receiving close to €16 billion, more than half of the national total. Cataluña was second with €4.51 billion, followed by Aragon with €3.39 billion, supported by renewable energy and data centre projects. Andalucía ranked fourth with €1.33 billion. 

No other region exceeded €1 billion during the year. The figures underline how foreign investment in Spain remains concentrated in a small number of regions with established business hubs, logistics networks and large-scale industrial projects.

Outlook remains mixed

Spain’s fall in the ranking does not mean investors are leaving the country, but it does suggest stronger competition from other markets. The Kearney survey found that many companies still intend to expand overseas despite geopolitical tensions and slower global growth. 

For Spain, the challenge will be to preserve its strengths in energy, infrastructure and market access while addressing the concerns that continue to weigh on investor confidence. Whether the country climbs back up the ranking is likely to depend on economic stability, labour market performance and the ease of doing business over the next few years.