Brussels confirms that Spain is the economic engine of the EU, with a growth of 2.9% this year

The Spanish economy continues being the engine of Europe. This was confirmed by the autumn economic forecasts, presented on Monday by the European Commission, which raised the country's growth for this year to 2.9%, in line with the Spanish government's update to be made public today. The figure is above Spain's forecasts this past spring, which placed the number at 2.6%.

The Spanish economy is also the fastest growing among the large economies of the EU. This year's growth will double the European average, which stands at 1.4%, and exceed the forecast for Germany (an increase of 0.2%) and France (+0.7%).

In a context of great uncertainty, with geopolitical tensions such as the war in Ukraine and trade disputes between the US and China, the European economy is expected to maintain a growth of 1.4% of its gross domestic product (GDP) this year and next year and grow by 1.5% in 2027.

The European Commission says that the region's economy has advanced more than expected in the first three months of the year, "mainly due to the increase in exports in anticipation of the increase in tariffs". Europe has maintained growth between June and August and economic activity is expected to "continue moderately expanding" until 2027. Eurozone data is slightly worse, with growth of 1.3% this year, 1.2% in 2026 and 1.4% in 2027.

Estimates for Spain, however, are much better than average, with "robust" growth of 2.9% this year and "gradually moderating" to 2.3% and 2% in 2026 and 2027, respectively. Private consumption, domestic demand and investment will drive economic activity.

In part, Spain's good data can also be explained by its "low exposure" to the US market. As for inflation, it is expected to moderate from 2.5% at the end of this year to 2% next year, 0.1% more than forecast in May. EU sources point out that there are risks for the Spanish economy, such as a possible fall in tourism, due to the reduction in growth in other European countries such as France and Germany, although such decreases have not yet been noticed. Moreover, the Commission's technical teams note that the composition of tourists has changed, which has diversified the sector: fewer Americans and more Asian tourists.

As for the domestic public deficit, the European Commission expects it to be further reduced from 2.5% in 2025 to 2.1% in 2027, thanks to the tax package adopted last year, the withdrawal of energy subsidies and favourable economic developments. The debt ratio is also expected to fall below 100% of GDP. The reduction in these two areas is important to comply with the sustainability path set by Brussels and to avoid an excessive deficit or debt procedure, which is triggered by exceeding the 60% ratio of government debt to GDP and recording a deficit above 3%.

The domestic labour market will remain strong and the unemployment rate is expected to fall further to 10.4% this year. The Commission forecasts that it will fall below 10% over the next two years - levels of unemployment not seen for ten years, but still among the highest in the EU bloc. Commission sources recognise "the clear contribution" of migration to the Spanish labour market and growth, but expect this flow to slow down due to the moderation of economic growth and the lack of affordable housing in large cities.

Meanwhile, in the rest of Europe, there is little to be optimistic about. The French economy is expected to slow to 0.7% growth this year and expand by 0.9% next year, due to the impact of political uncertainty and the fiscal adjustments needed because of the country's high debt, which will grow to 120% of GDP this year.

Economic activity in Germany will stagnate in 2025, before growing by 1.2% in 2026 and 2027. The Commission notes that the positive effects of increased public spending will be counterbalanced by trade tensions, which are expected to impact the country's exports. Germany is the country most exposed to this type of conflict due to the large weight of its exports.