Basque Economy Poised for Stability in 2026 Amid Employment Strength and Housing Concerns
The Basque economy is projected to remain stable in 2026 with growth driven by strong employment, though housing affordability and labor disputes pose challenges.
- • Basque economy expected to grow around 2% in 2026 with stable employment rates.
- • Unemployment projected to drop to about 6%, supported by record Social Security affiliations.
- • Inflation forecast to moderate to around 2.1% nationally and 3.2% regionally in November.
- • Housing prices continue to rise, raising affordability concerns despite increased property sales.
- • Labor negotiations involving 90,000 metal sector workers and a planned general strike highlight potential social tensions.
Key details
The Basque Country's economy, comprising the provinces of Araba, Bizkaia, and Gipuzkoa, is forecasted to maintain stable growth in 2026, largely supported by robust employment levels. Experts predict an economic expansion of around 2%, with institutions like BBVA and Confebask projecting a 2.1% growth rate, while the regional government estimates 1.9%. Employment figures are expected to remain strong, with unemployment anticipated to fall to approximately 6%. This optimistic outlook is supported by a record number of Social Security affiliates, which in turn buoy income, consumption, and tax revenues.
Inflation, currently at 3.2% in November for the Basque region, is expected to moderate gradually to around 2.1% by year-end in Spain, helped by government measures such as transport subsidies. The European Central Bank's recent decision to reduce the key interest rate to 2% and a decline in the Euribor rate are projected to ease mortgage pressures.
However, challenges persist, particularly in housing affordability. Despite a 5% increase in property sales, rising prices continue to worry residents. Moreover, uncertainties around Europe's economic recovery raise concerns about the sustainability of Basque exports, especially in the automotive and electric vehicle sectors.
Labor relations are also under scrutiny, with upcoming negotiations for collective agreements affecting 90,000 workers in the metal sector. A general strike is scheduled for March 17, 2026, reflecting potential tensions in labor markets. Meanwhile, the minimum interprofessional salary (SMI) in Spain, now the most common wage bracket, reached 1,184 euros monthly in 2025 and is expected to rise to 1,221 euros in 2026, though disagreements remain between employers advocating a 1.5% increase and unions pushing for 7.5%. This wage dynamic has significant implications for the workforce in the Basque Country.
Overall, while the Basque economy stands on solid footing with stable growth and employment prospects, housing affordability and labor negotiations present ongoing challenges as the region navigates the coming year.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.
