Government of Spain revises up growth forecast for 2025 to 2.7%

Moncloa Palace, Madrid

The Minister for Economy, Trade and Business, along with the Ministers for Education, Vocational Training, and Sports, for Housing and Urban Agenda, and for Inclusion, Social Security, and Migration, at the press conference after the Council of Ministers (Pool Moncloa/José Manuel Álvarez)

The Minister for Economy, Trade and Business, Carlos Cuerpo, has presented to the Council of Ministers the update of the macroeconomic framework. The growth forecast for 2025 has been raised by one tenth of a percentage point to 2.7%.

"Despite the complex international context, the Spanish economy continues to show clear signs of strength in both the short and medium term and we continue to accumulate, day after day, good news," said Cuerpo, who described the forecast for this year as "prudent".

New macroeconomic forecast framework

The Minister for Economy stressed that, in the third quarter of the year, following the pace of previous quarters, growth will be around 0.7%, as anticipated by industrial production and Social Security affiliation figures, among other indicators. In year-on-year terms, the growth rate will be around 2.8% in the third quarter. As in previous years, the estimate has been improving throughout 2025, Carlos Cuerpo pointed out.

"The Spanish economy has recovered from COVID without scars", said the minister, who explained that the evolution of Gross Domestic Product (GDP) has returned to the trend it would have followed had it not suffered that impact as well as the subsequent impacts of the war in Ukraine and the tariff disputes.

The Minister for Economy, Trade and Business, Carlos Cuerpo, at the press conference after the Council of Ministers | Pool Moncloa: Cesar Porras

Mr. Cuerpo also stressed that this is a balanced and sustainable growth, thanks to the modernisation process the Spanish economy is undergoing. GDP growth is forecast to exceed 2% in the coming years, well above that of neighbouring countries. "Spain was the fastest growing advanced economy in the world in 2024 and, according to forecasts for 2025, this is expected to continue to be the case," he said.

Less unemployment and deficit, more purchasing power and private investment

As a reflection of this structural change in the pattern of growth, the Minister for Economy, Trade and Business pointed to the evolution of the labour market: having exceeded 22.4 million employed people in the second quarter of 2025, the government expects the number to increase by 480,000 people annually in the coming years. It is also about creating higher quality jobs, with a drastic reduction in temporary employment, compatible with an increase in the active population and a progressive fall in the unemployment rate. "We are progressively denting our structural unemployment rate," he said.

The minister also pointed out that the unemployment rate is similar to that recorded in 2004, but the percentage of school dropouts is now 13%, compared to more than 30% at the time. Two other signs of the changing pattern are the continued improvement in hourly productivity and the redistribution of growth in the form of purchasing power gains.

A further indicator of the health of this pattern is that growth this year and for the next three years will be based on the evolution of private consumption and private investment. For Carlos Cuerpo, this is a "guarantee of sustainability", even more so in a context where the main risk is the international scenario. The positive evolution of private investment is due, in part, to the efficient use of the funds from the Recovery, Transformation and Resilience Plan (PRTR), he said.

Minister Carlos Cuerpo with Ministers Pilar Alegría, Isabel Rodríguez, and Elma Saiz, during the press conference after the Council of Ministers | Pool Moncloa/José Manuel Álvarez

The Minister for Economy explained that the "virtuous circle" of the Spanish economy is completed with the positive figures from the foreign sector and with fiscal responsibility: Spain will continue on the path of public debt and deficit reduction in relation to GDP. The outlook, therefore, is positive until 2028, with growth that is "robust, balanced and based on solid foundations, despite the complex international context", he concluded.

More funding for extreme weather events

Also at the level of the Ministry of Economy, Trade and Business, the Council of Ministers has approved an addendum to the PRTR to respond to the impact of the DANA of October 2024. The measure involves mobilising 1.241 billion euros of these funds for "high-impact" and "fast-track" actions. The addendum, Cuerpo added, not only serves to repair this damage, but also to reinforce the capacity to face "external shocks, in this case extreme weather events which, as we have seen in recent times, are increasingly frequent and have a greater impact".

The addendum is structured around six major blocks of action: green mobility infrastructures, local employment, water and environmental restoration infrastructures, prevention for extreme weather events through the deployment of a satellite network, support for the internationalisation of companies and a special ICO line with a non-refundable component to strengthen productive resilience.

Future State Housing Plan 2026-2030

The Minister for Housing, Isabel Rodríguez, outlined the progress made in this area since Pedro Sánchez became President of the Government of Spain and set out the lines of the future State Housing Plan 2026-2030. The Executive is committed to a comprehensive policy based on the conviction that only the public sector can guarantee and consolidate the right to decent housing at affordable prices, according to the minister.

The Minister for Housing and Urban Agenda, Isabel Rodríguez, at the press conference after the Council of Ministers | Pool Moncloa/José Manuel Álvarez

Rodríguez announced that the government is working on three strategic lines "with absolute social, academic and also increasingly political consensus": greater permanent public housing supply, better regulation and more support.

The future State Housing Plan addresses the housing issue without losing the perspective from which it started: previous executives had reduced the construction of social housing to a minimum and now the construction of public housing has been restarted and must be consolidated. Thus, in the last year, "60% more social housing has been built compared to 13% more free market housing", the minister remarked. In addition, the housing shortfall is being reduced from 600,000 dwellings to between 400,000 and 450,000.

However, Isabel Rodríguez maintained that it is necessary to go faster, which is why she has urged all public administrations, especially the autonomous communities and town councils, to help to speed up the construction of the public housing stock by streamlining, among other measures, the administrative processing of building permits.

What's new in the future law

The minister announced that the next State Housing Plan will have funding of 7 billion euros, tripling the investment of the current plan. "We need a lot of resources to build the houses our country needs. Therefore, we propose an effort consistent with the distribution of powers indicated in the Spanish Constitution: 60% from the State, which is fully involved, and 40% from the Autonomous Communities, which have this power", she stated. The government's aspiration, added Isabel Rodríguez, is to reach the European standard of 8% permanent social housing as soon as possible.

The Minister for Economy, Trade and Business, along with the Ministers for Education, Vocational Training, and Sports, for Housing and Urban Agenda, and for Inclusion, Social Security, and Migration, at the press conference after the Council of Ministers | Pool Moncloa/José Manuel Álvarez

On the other hand, the minister advocated making an effort in the field of renovation: "Our public housing stock and our housing stock in general is old and in need of renovation, based on energy efficiency and accessibility parameters".

Other actions are aimed at addressing the housing needs of the younger population to reduce the age of emancipation, ensuring that households do not spend more than 30% of their income on housing and reversing stressed market areas.

In order to achieve these objectives, Isabel Rodríguez explained that the plan will allocate 40% of the total budget to increase social and affordable public housing. A total of 30% will be aimed at housing renovation and neighbourhood renewal programmes. The other 30% will go to support the emancipation of young people, to reduce the rate of financial strain faced by households and to reverse stressed areas.

The minister also announced that support for renting with the option of buying will be included in the public housing stock: "It will never be possible to speculate with these homes and we will be giving peace of mind and security to those who definitively acquire a property within the public housing stock".

Rodríguez also pointed out that the lines of aid for renovating and buying homes in rural areas will be stepped up as it has been detected that in these areas many empty homes are not suitable for immediate occupation.

The Minister for Housing concluded by reiterating to public administrations, housing developers and social agents the need for them to participate in improving the document so that it can be ready by the end of December and come into force in 2026.

Improved retirement conditions for forest firefighters

The Council of Ministers has approved a reduction coefficient to bring forward the retirement age of forest firefighters, a measure that fulfils the mandate set out in the Forest Firefighters Act in July 2024. The Minister for Inclusion, Social Security and Migration, Elma Saiz, recalled that this regulation established a basic regulatory framework for this group in order to standardise their functions and conditions at national level and that the regulation was approved by a large majority.

The Minister for Inclusion, Social Security and Migration, Elma Saiz, at the press conference after the Council of Ministers | Pool Moncloa/José Manuel Álvarez

The reduction coefficient, she explained, responds to the "arduous, toxic, dangerous and unhealthy" nature of the work carried out. The processing of this measure began in April, before this summer's wave of fires, and it means "settling a debt" with this group by bringing their retirement conditions into line with those of the rest of the firefighters, who have enjoyed these coefficients since 2008.

From now on, the specific coefficient for forest firefighters will be 0.20, provided that the person proves a minimum contribution period of 15 years as a forest firefighter. For example, a professional with this number of years will see his or her pensionable age reduced by 3 years. Access to retirement may be brought forward by a maximum of 5 years. By way of exception, it could be brought forward by up to 6 years for those with a contribution period of more than 35 years as a forest firefighter.

Instructions for companies and administrations

The General Treasury of Social Security has published instructions for companies and administrations to facilitate the application of these coefficients. Elma Saiz appealed to the responsibility of the autonomous communities, administrations and companies employing forest firefighters to use the occupation code specifically created in the Social Security contribution bases. Firefighters will not have to make an express request for the coefficient when they reach retirement age, but it will be the National Social Security Institute that will apply it ex officio, once it has verified that the worker meets the requirements. In addition, Social Security will facilitate the recognition of these workers by means of a certificate attesting to the period during which they have carried out this activity.

Saiz stressed that the fires "have shown, once again, that a strong public system is what saves, protects and unites". It is necessary, she added, to have a strong, stable and protected fire brigade, "because caring for the public is caring for life, for the land we share and for the dignity of the people who serve it".

46 million euros for health policies

The Minister for Education, Vocational Training and Sports and Government Spokesperson, Pilar Alegría, during her speech at the press conference after the Council of Ministers | Pool Moncloa: Cesar Porras

The Minister for Education, Vocational Training and Sports and Government Spokesperson, Pilar Alegría, announced that the Council of Ministers has approved the distribution to the autonomous communities of 46 million euros offunds provided by the pharmaceutical industry for the development of health policies..

These funds, she explained, come from the obligatory contributions made by pharmaceutical companies to the State for their sales of medicines financed by the National Health System. The communities will be able to allocate these resources to areas such as the training of healthcare professionals in the public health system and the promotion of the rational use of medicines.

In addition, 3.33 million euros have been allocated to finance the National Bone Marrow Donation Plan, the National Umbilical Cord Blood Plan and other initiatives led by the National Transplant Organisation, in cooperation with the autonomous communities.

Non official translation