Beyond growth: Building Spain's economic resilience

Imagine a software entrepreneur in Valencia whose firm has secured export agreements with new clients in Germany and France. She can now hire five additional software engineers. This scenario reflects Spain’s economic success. In fact, it has one of Europe’s fastest-growing economies. However, there’s a caveat. When the entrepreneur tries to lease larger office space, she struggles to afford anything suitable. Likewise, her new employees have difficulty finding housing near their new jobs. This can stall the growth of the business. Customer demand isn’t the problem. Structural barriers are.

This is the essence of Spain’s current challenges. While Spain can certainly celebrate its economic performance in recent years, it may prove challenging to sustain it. According to The Europe We Need: Building Capabilities for a Hostile World, an EsadeEcPol economic and financial report written by Omar Rachedi, Jorge Galindo, Josep Mª Comajuncosa and Manuel Hidalgo Pérez, Spain's future prosperity will increasingly depend on balancing growth with productivity, openness with security, and competitiveness with democratic resilience.

Spain's success story—and its hidden challenge

The report highlights what is going well for Spain: “Financing capacity was 4.0% of GDP in 2025 and is projected at 3.3% for 2026–2027, according to figures from the Bank of Spain. In the previous cycle, the country accumulated current account deficits exceeding 9% of GDP, financing growth with external debt. Today, the flow is exactly the opposite.”

These figures demonstrate that Spain's economy is in a much stronger position now than during previous periods of rapid growth. Solid job creation and competitive exports, particularly in tourism and professional services, are supporting today’s growth. Investors and policymakers have good reason to feel optimistic, as Spain’s GDP growth has consistently outperformed the eurozone average.

However, strong headline figures don't tell the whole story.

Spain's recent success has been mostly powered by employment growth. “Spanish growth remains largely extensive: around 60% of the recent expansion is explained by increased employment, and only a smaller part by efficiency improvements,” according to the report.

In simple terms, this means that the economy is expanding because more people are working, not because each worker is producing significantly more value. This places limits on how far this current model can take the country.

The consequences are already becoming apparent. “Forty-eight percent of companies report being affected by a labor shortage; the housing market is experiencing a growing mismatch between supply and demand; productivity per hour worked remains stagnant overall; and the fiscal adjustment path imposed by the new European rules will constrain the scope of economic policy from the second half of 2026 onward,” say the report’s authors.

Without sufficient affordable housing, workers struggle to relocate. A shortage of skilled workers leaves technical jobs unfilled. And the many small firms that comprise Spain’s business landscape lack the resources to scale and invest heavily in innovation, advanced technology, or productivity-enhancing equipment.

This doesn’t take away from what Spain has achieved. It does spotlight a real challenge: turning strong economic growth into lasting gains in productivity and competitiveness.

Why Spain's future depends on Europe

The Spanish economy is not operating in isolation. Open markets, international investment, and global supply chains are all linked to its prosperity. The risk, though, is that these areas are increasingly exposed to geopolitical tensions.

“We live in a context where geopolitics has returned to the forefront, and with it, hybrid warfare: disinformation campaigns, cyberattacks, sabotage of critical infrastructure, financial manipulation, technological coercion, and exploitation of strategic dependencies,” the authors say.

Economic openness has benefited Europe for many decades. Rachedi and his co-authors argue that the international environment today has changed. Economic security can no longer be separated from economic policy because of the growing use of cyberattacks, disinformation, trade restrictions, energy supplies, and financial systems as tools of geopolitical influence.

Spain’s highly open economy is now more exposed to external shocks than ever before. If crucial supply chains are disrupted or access to key technologies becomes restricted, the country's economic performance will pay the price. Remaining open to international trade therefore also requires building greater resilience.

Building the capabilities for long-term prosperity

The report acknowledges that Spain must protect itself, but refrain from retreating behind barriers. The key for Europe as a whole, and Spain, is to enhance strategic capabilities and reduce critical vulnerabilities, while remaining economically open.

To respond to this challenge, Spain could make structural changes such as simplifying regulations in order to help innovative companies grow more easily. At the same time, deepening European capital markets could present opportunities for businesses seeking investment. Continued investment in research, innovation, and skills will also be essential if Spain wants to move towards a more productive economy.

Europe as a whole could also benefit from increasing capabilities in strategically important sectors such as semiconductors, advanced energy technologies, and critical raw materials. For Spain, participating in these efforts is about lessening dependence on a small number of suppliers while bolstering its own competitiveness within the European economy.

“The Spanish economy shows considerable resilience, underpinned by genuine structural changes, including a current account surplus, private sector deleveraging, and a boom in non-tourism service exports, but at the same time, it faces supply constraints that cannot be ignored,” acknowledge the report’s authors.

An essential aspect of resilience is the presence of strong public institutions and sustainable public finances. A government seen as having fiscal credibility is in a far better position to deal with future crises without destabilizing the economy or democratic institutions.

Combining openness with security

Spain is performing well economically, giving it a chance to address structural weaknesses before they become obstacles to future growth.

The country's long-term prosperity will increasingly depend on the ability of both Spain and Europe to navigate an increasingly uncertain world while remaining open, competitive, and resilient. In that future, the strongest economies will not simply be those that grow the fastest, but those that are best prepared to keep growing when conditions become more challenging.