The President of the Spanish Government, Pedro Sánchez, will face the snap elections on 29 November hoping that the strong economic figures that have marked much of his time in office will help him overcome a widespread feeling across the country: macro-level growth is not enough.
Spain’s gross domestic product (GDP) grew by 2.8% in 2025 and is expected to continue expanding at a relatively brisk pace, with growth forecast at 2.4% for 2026, as the European Commission’s country report on Spain points out (source in Spanish). Since the pandemic, moreover, Spain has grown faster than the main economies of the euro area.
However, as the protests over the housing crisis that have gripped the country for weeks make clear, that growth has not translated into an improvement in Spaniards’ quality of life. The Commission attributes part of this to a sharp increase in the population, driven by migration flows, but also to weak labour productivity.
Hourly productivity has improved since 2019, but productivity per employee and per full-time worker has remained virtually flat. That is one of the main reasons why aggregate growth is not being reflected to the same extent in per capita income in a Spain that Sánchez has governed since June 2018.
Immigration, in fact, has become one of the engines of the Spanish labour market. While employment grew by 2.6% in 2025, the number of jobs filled by people born abroad accounted for 7.9% of all the posts created that year.
The latest consolidated figures nevertheless show that the labour market still has a strongly seasonal pattern. In August, unemployment rose by 44,419 people, to 2,355,918, although this was the lowest figure recorded in that month since 2007. In September, the jobless total increased again, by 23,587 people, which was also a low for that month since 2007.
The main pillar of Spanish growth has been the services sector, and specifically exports of services and tourism. Spain received 58.1 million international tourists between January and July 2026, an unprecedented figure and 4.6% more than a year earlier. Tourist spending rose by 7.8%, reaching a record 82.054 billion euros, according to the Frontur and Egatur data published (source in Spanish) by the National Statistics Institute (INE).
The European Commission stresses that the increase in exported services has helped widen the current account surplus and improve the country’s international investment position. But it also warns that a significant share of activity remains concentrated in sectors with relatively low productivity, such as agriculture. More than 82% of the jobs created were in low-productivity activities, limiting the scope for wage growth.
Inflation adds another layer of tension. In September, annual inflation in the country stood at 5%, well above the 3.8% recorded on average in the euro area, and only behind Lithuania (6.1%), Bulgaria (5.6%), Cyprus and Luxembourg (5.2%) and Greece (5.1%).
In September, inflation in Spain stood at 4.9%. The INE mainly attributed the Spanish spike to rising fuel prices and the behaviour of package holidays.
Housing, the big problem
If there is one issue that sums up the imbalance between economic growth and quality of life, it is housing. Here, Spain faces a serious mismatch between supply and demand, both for buying and renting, especially in large cities and tourist areas.
“The severe rate of housing deprivation increased, which indicates poor living conditions”, says the Commission’s country report. Social housing accounts for barely between 1.5% and 1.7% of the total stock, compared with an average of between 6% and 7% in the European Union.
On top of that, prices have been rising steadily since 2014 and have accelerated in recent years, while high costs are also making labour mobility more difficult.
This is precisely where the economy and politics collided on Monday. After the Government failed to ratify two decrees last week to tackle the housing crisis because it lacked the support of its partners in Congress, Prime Minister Sánchez dissolved parliament and called elections for November.
Thus, the economic balance sheet of Sánchez’s term in office so far has two sides: one in which Spain is growing, creating jobs and benefiting from the arrival of foreign workers and the strength of the tourism sector; and another, which GDP growth alone cannot solve, weighed down by low productivity, the loss of purchasing power and the difficulty of accessing housing.