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The government’s measures arrive on time and can cushion part of the war’s impact on economic activity and prices if the shock is temporary. If energy prices continue to rise, more targeted measures will be needed—ones that do not distort price signals.

Social Security affiliation increased by 211,500 people and unemployment dropped by 22,900. On a seasonally adjusted (SA) basis, job creation is estimated to have accelerated to 76,000 contributors, while the number of unemployed fell by 17,400. For 1Q26, employment grew 0.6% q/q (SA) and unemployment contracted by 1.8%.

Spain’s renewable-based power model has increased resilience to external energy shocks, especially at the wholesale level, but incomplete grid readiness, limited storage and high non-energy costs constrain how much of that advantage reaches final consumers.

Economic activity grew again in 4Q25 (0.8% q/q), driven by domestic demand and despite the drag from net external demand. GDP growth was supported by an increase in hours worked, as productivity per hour fell. Overall, GDP grew by 2.8% in 2025.

The quote “it is difficult to make predictions, especially about the future” is attributed to Niels Bohr. Today, it is even more so in an environment of high uncertainty. The increase in costs caused by the war between the U.S. and Israel against Iran will have negative effects on the Spanish economy.

Housing demand in Spain will remain solid driven by employment, wages, and immigration. However, the shortage of new supply will limit sales and maintain strong upward pressure on prices. Furthermore, the profitability of the construction sector remains low compared to Europe.

The recent military escalation in the Middle East represents a new energy crisis for the global economy. Although higher resource prices will put upward pressure on inflation, for now, a temporary slowdown rather than a deep global recession is expected.