Spain | Reducing the deficit without slowing down public investment

Summary

Spain faces the challenge of consolidating its public accounts without compromising potential growth. Public investment acts as a key production factor for productivity, but its persistent decline following the financial crisis and current pressure from current expenditure pose risks to European convergence.

Key points

• Key points:
• Public capital, which includes transport infrastructure and networks, boosts the productivity of private capital, labor, and technological capital.
• Following the financial crisis, net investment was zero in several years, meaning that it barely compensated for the wear and tear of the existing infrastructure stock.
• Between 2007 and 2025, current expenditure per capita grew well above GDP, while public investment plummeted relative to previous levels.
• In 2025, public investment in Spain stood at 2.9% of GDP, remaining below the European Union average, which reached 3.6%.
• Although Next Generation EU funds have boosted activity, public investment per employed person in 2025 was still lower than that recorded in 2003.

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