Spain

Private consumption and investment continue to drive growth

In 2026, Spanish growth will continue to moderate while remaining solid and significantly higher than that of the major European economies. The economy will once again be driven by robust private domestic demand. Household consumption (representing nearly 55% of GDP) is supported by increased purchasing power thanks to moderate inflation, a dynamic labour market and, consequently, an increase in real gross disposable income. Wage increases negotiated in collective agreements averaged 3.5% in 2025, once again outpacing inflation. The unemployment rate fell below 10% in Q4 2025 for the first time since the financial crisis. In addition, the strong job market is accompanied by an increase in the working population on back of the arrival of immigrants. Since 2022, the foreign population has contributed more than 70% to the increase in the working population. In the third quarter of 2025, the household savings rate stood at 12% of disposable income, a historically high level (2015-2019 average of 7.3%) despite its gradual decline over the past year, after reaching 13.1% in Q3 2024.

On top of this, net foreign trade is expected to once again contribute negatively to growth due to slowing exports combined with strong imports to meet domestic demand. While Spain once again recorded a record year for tourism in 2025 thanks to foreign visitors (97 million arrivals, up 3% year-on-year, after +10% in 2024), normalisation of the sector's recovery will bring about a more limited contribution. Exports of services will nevertheless continue to benefit from the strength of tourism, which will remain a fundamental pillar of the country's growth (representing 16% of its GDP and 14% of total employment in 2024). In addition, goods exports will be exposed to the appreciation of the euro against the US dollar and fragile demand from neighbouring countries, since nearly 65% (mainly consisting of cars, machinery, refined oil, pharmaceuticals, plastics and food) is destined for the rest of the European Union (71% including the UK). However, Spain is less exposed to US tariffs than other European countries, with the US accounting for less than 5% of its goods exports.

The recovery in private investment (representing just over 20% of GDP) should continue thanks to the gradually improving financial conditions. However, it could be hampered by companies' risk aversion, particularly in view of persistent uncertainty clouding the international economic and geopolitical landscape. Investment will also be supported by the acceleration of European fund disbursements under the National Recovery Plan, with nearly EUR 80 billion in grants and EUR 83 billion in loans for the period 2021-2026. At the beginning of 2026, Spain had received barely 44% of the total amount. With funding requests due to expire in August 2026, disbursements could therefore accelerate in the first half of the year. However, in December 2025, the government announced that it intended to waive nearly EUR 60 billion in loans, arguing that its improved credit profile allowed it to borrow directly on the market at similar or even more advantageous rates, allowing it to sidestep the conditions and implementation deadlines attached to European funds. It will therefore simply release the remaining EUR 25 billion in grants, which will reduce the total fund package to 8% of 2019 GDP. A modest contribution from public spending is also expected in the absence of a new budget.

Gradual consolidation of public finances

The consolidation of public finances should be confirmed despite the fact that it unlikely that the 2026 Budget will be passed, which will result in the renewal of the 2023 Budget for a third consecutive year. However, the public accounts will remain in deficit after having deteriorated significantly during the health and energy crises. The narrowing of the deficit will be supported by the easing of aid for flooding linked to DANA (October 2024) and the positive impact of strong consumption and labour market dynamics on revenues. Spain is thus expected to post a primary surplus in 2026 (i.e. excluding debt interest) for the first time since 2007. However, while the government has withdrawn most of the support measures adopted during the energy crisis, it has extended the social electricity voucher, which reduces electricity bills for the most vulnerable consumers until the end of 2026. Although Spain manage to avoid the excessive deficit procedure in 2024 despite the reinstatement of European fiscal rules, the sustainability of its heavy public debt remains one of the country's medium-term challenges. While the renewed budget contains public spending increases, the lack of structural reforms is slowing down fiscal consolidation and debt relief. Despite the downward trend in recent years, Spain’s net external public debt remains among the highest in the European Union (44.2% of GDP in Q3 2025).

The current account surplus recorded since 2013 has quickly recovered from the health and energy crises and is expected to stabilise in 2026. This marked improvement is mainly due to the significant surplus in the services balance (more than 6.3% of GDP in 2024), which has rebounded thanks to foreign tourism. The surplus compensates for the structural deficit in the goods balance, largely attributable to energy dependence (although the bill has fallen since 2022), and in the income balance (remittances from Latin American and Moroccan diasporas to their countries of origin).

Divided coalition blocks the rollout of major reforms and jeopardises governmental stability

Following the snap general elections in July 2023 and in the absence of a viable alternative on the right, outgoing Socialist Prime Minister Pedro Sánchez (PSOE) managed to remain in power despite coming second. Despite the absence of an absolute majority (121 seats out of 350), the left-wing party was still in a better position to form a government than the Popular Party (right-wing) led by his rival Alberto Núñez Feijóo. Sánchez was therefore once again forced to form a coalition with 179 votes, including those of his main left-wing ally Sumar (31), EH Bildu (6), ERC (7), Junts (7), PNV (5), BNG (1) and the Canarian Coalition (1).

The patchy coalition, which includes Catalan and Basque separatist parties, immediately underscored the government’s fragility and thwarted the leadership despite prior negotiations and controversial concessions. The passing of the Amnesty Act pardoning Catalan separatists involved in the 2017 independence attempt does not, however, apply to Junts leader Carles Puigdemont, who is still in exile in Belgium. This fragility was made clear when the Catalan separatist party Junts announced in October 2025 that it was breaking ties with the PSOE, thus placing Sánchez's government in a minority position and forcing political paralysis, as demonstrated by the rejection of the 2026 Budget. Prime Minister Pedro Sánchez’s failure to obtain support for the budget for the third consecutive year once again calls into question his ability to govern due to the dependence on regional independence parties. The government is unable to pass wide-sweeping reforms and is forced to govern by decree, negotiating on a case-by-case basis. However, Junts seems to have ruled out the idea of supporting a motion of no confidence with the PP and Vox, thus avoiding another snap election for the time being. The regional elections taking place in the first half of 2026 could spell a change in voting trends ahead of the general elections scheduled for the summer of 2027.

Payment

Cheques are widely used for corporate transactions in Spain. They offer similar legal safeguards under the juicio cambiario (Civil Prodecures Code) in the event of default. The same is true of promissory notes (pagaré), which, like bills of exchange and cheques, are instruments enforceable by law. If unpaid, they are recorded in the registry of unpaid acceptances (RAI, Registro de Aceptationes Impagadas). Attached to the Centre for Interbank Cooperation, the RAI is the country’s most important registry. It records all commercial payment defaults of over €300, thus allowing banks and other deposit institutions to verify a company’s payment record before extending?credit.

In contrast, bills of exchange are rarely used commercially. In the event of defaults, they offer creditors certain safeguards, including access to special collection proceedings with instruments for negotiation under the civil procedures code (juicio cambiario). Bills of exchange that have been guaranteed by a bank can be somewhat difficult to obtain, but they do limit the risk of payment default by offering creditors recourse to the endorser of the bill of exchange.

Electronic transfers via the SWIFT network, widely used by Spanish banks, are a fast, fairly reliable and cheap payment instrument, provided the purchaser orders payment in good faith. If the buyer fails to order a transfer, the legal recourse is to institute ordinary proceedings, based on the unpaid invoice. Banks in Spain have also been implementing SEPA standards for euro-denominated payments.

Debt Collection

Unless there are special clauses included in the commercial contract, the applicable rate of interest is that applied by the European Central Bank in its most recent refinancing operation (performed prior to the first calendar day of the half year concerned), with an additional eight percentage points. The rate is published by the Finance Minister every six months, in the Boletín Oficial del Estado. The statute of limitations for ordinary claims is five years.

Amicable phase

There are no formalities or conditions for the dispatch of a reminder to the debtor, but it is advisable to send a claim to the debtor first. The creditor can obtain guarantees for the payment of the debt.

Legal proceedings

If no settlement agreement is reached with the customer, the creditor can initiate a legal collection process, using civil procedure law (ley de Enjuiciamento civil).

Exchange proceedings

Exchange proceedings are used for claims based on bills of exchange, promissory notes and cheques. A judge of the first instance (juzgado de primera instancia) verifies that the ‘exchange title’ has been correctly implemented and then orders the debtor to make payment of both the principal amount and the late interests and costs, within ten days. The judge will also order a seizure for security (embargo preventivo) on the debtor’s assets, equivalent to the outstanding amount. The debtor has ten days to dispute the ruling.

If there is no payment received or opposition within the prescribed time, the judge will order enforcement measures. If necessary, the judicial representative will carry out attachment. When claims are contested, a court hearing is held to examine both parties’ arguments and a judgement should be handed down within ten additional days. Although this is time frame that is prescribed under Spanish law, it is rarely adhered to by the courts.

Ordinary proceedings

In addition to the juicio cambiario, creditors unable to reach a payment settlement out of court can enforce their rights through a civil procedure (juicio declarativo). Civil procedures are divided into ordinary proceedings (juicio ordinario) for claims of over €6,000 and oral proceedings (juicio verbal) – a more simplified system – for smaller claims. Both proceedings are initiated with a lawsuit served on the debtor.

The claimant is required to explain the facts of his claim and provide all supporting documents – either originals, or copies that have been certified by a public notary – on filing its initial petition. Prior to the investigation of the case, the judge will summon the parties during a first hearing (audiencia previa), using ordinary proceedings, to encourage a conciliation. If this is unsuccessful, the lawsuit will be pursued. The court can then order specific measures to clarify issues or facts that remain unclear, before passing judgment.

Monitory proceedings (Juicio monitorio)

For monetary, liquid and overdue claims, whatever the outstanding amount (previously limited to up to €250,000), creditors can now benefit from a more flexible summary procedure. The filing of a petición inicial is directly submitted to the judge of first instance (juzgado de primera instancia) where the debtor is located. After reviewing the supporting documents, the judge can order the debtor to pay within 20 days.

If the debtor does not respond, the judicial representative will inform the judge and request confirmation of the decision in favour of the initial request. The judicial representative then hands down a ruling confirming the conclusion of monitory proceedings, which is transmitted to the creditor. This allows the creditor to contact the Enforcement Office for the next phase. If the debtor disputes the ruling and provides motivated arguments for this within a written statement signed by a barrister and a solicitor, a full trial on the case will be instigated.

Enforcement of a Legal Decision

When all appeal venues have been exhausted, domestic court decisions become enforceable. If the debtor fails to satisfy the judgment within 20 days, the Court Clerk, upon request, can seek out the debtor’s assets and seize them.

Decisions on foreign awards rendered by EU countries benefit from enforcement conditions, such as EU Payment orders and the European Enforcement Order. Judgements rendered by non-EU countries are recognised and enforced, provided that the issuing country is party to a bilateral or multilateral agreement with Spain. If no such agreement is in place, Spanish exequatur proceedings will be followed.

Insolvency Proceedings

Pre-insolvency proceedings

A debtor has the possibility of negotiating a formal refinancing agreement (acuerdo de refinanciacion formal) with his creditors. This agreement must be signed by the court. Within this agreement, the parties are free to write off as much of the debt as they deem necessary.

Bankruptcy proceedings

Bankruptcy proceedings are launched by filing a petition for an insolvency order. After examination of the petition, the judge makes an insolvency order. Creditors are expected to notify their claims within one month of publication of the insolvency order. The court appoints an insolvency manager, who examines the debtor’s financial situation and establishes a report on its debts. If there is no opposition to the report, the insolvency manager submits the final version to the judge. The judge subsequently orders the commencement of the arrangement phase with its repayment schedule, viability plan and alternative proposals for repayment.

During these proceedings, the debtor may file for liquidation: upon petition of the debtor, at any time; when the debtor is no longer able to make the scheduled payments or the obligations incurred, as defined in the arrangement; upon petition of a creditor, for breach of the arrangement; upon petition of the judicial administration, upon termination of professional or commercial activity.

The judicial administration draws up a liquidation plan in order to realise (sell) the assets, consisting of the bankruptcy estate, which is submitted to the judge for approval.

Liquidation

Liquidation in Spain aims to sell the company’s assets. During this phase, the company retains its legal persona. Liquidators are appointed to execute the process and they can also take over the function of administrative body and company representative.

The liquidator cannot redistribute the company’s assets among its associates until all of its creditors have been paid and payment demands against the company have been settled. Aggrieved creditors can contest transactions that they believe may have taken place illegally during the allocation of the assets.

Last updated: February 2026