Spanish Economy Grows 0.7% in Q2 2025, Government Prepares 2026 Budget
Spain's economy grew by 0.7% in Q2 2025, prompting measures for the 2026 budget.
Key Points
- • The Spanish economy grew 0.7% in Q2 2025, driven by consumption and investment.
- • Over 22 million people are employed; unemployment rate down to 10.29%.
- • The government plans to process the 2026 budget in September with a focus on maintaining a primary surplus.
- • Support for businesses impacted by US tariffs is being developed.
The Spanish economy has shown resilience with a reported GDP growth of 0.7% in the second quarter of 2025, propelled by strong household consumption and business investment. This growth marks an acceleration from the previous quarter's 0.6% and continues a trend of eight consecutive quarters of positive growth, as stated by Spain's National Institute of Statistics (INE). Year-on-year, the economy has grown by 2.8%, making it the most dynamic economy in the Eurozone at a time when others face significant challenges.
Internal demand significantly contributed to this growth, adding 0.9 points to the quarterly increase, with household spending being the principal driver. Employment figures were also positive, with over 22 million people employed in Spain during this period, resulting in an unemployment rate dropping to 10.29%, the lowest since 2008, albeit still above the European average.
In parallel to these growth figures, the Spanish government is gearing up to process the 2026 budget starting in September. Economic Minister Carlos Cuerpo underscored the importance of crafting a budget that balances continued economic growth with deficit reduction and is committed to presenting it with guarantees. Cuerpo anticipates that Spain will maintain a primary surplus, which will help fulfill social and investment commitments made in previous years.
The government is also developing a plan to support businesses affected by the new tariffs imposed by the United States, ensuring the least exposure to these tariffs for Spain. Cuerpo noted that, while Spain is not expected to face significant direct effects from the tariffs, there is a need for targeted aid, especially for small enterprises at risk.
Moreover, housing remains a significant challenge, with Cuerpo acknowledging that there is no simple solution available. He reaffirmed the government's commitment to protecting jobs and ensuring financial inclusion amid ongoing discussions about the BBVA-Sabadell merger, emphasizing that economic decisions should contribute positively to society.
As Spain's economy continues to grow amidst external pressures, the government's focus on prudent fiscal planning and support measures for vulnerable sectors is set to be a crucial aspect of its economic strategy in the upcoming year.