Spain’s political paralysis is beginning to raise concerns about long-term economic consequences, according to Laurine Pividal, economist for Southern Europe at the credit risk management firm Coface. Speaking at the ‘Country Risk Conference’ in Paris on Tuesday, Pividal warned that the ongoing political uncertainty will impact industrial strategy and the public deficit.
While Pividal indicated that there is currently no direct, medium-term impact on the Spanish economy, she highlighted the energy sector as particularly vulnerable. “The Government is not approving reforms for the energy sector, nor is it voting on new investments or subsidies on electricity prices or network costs for industries,” she stated, according to reporting from 20minutos.
Pividal suggested Spain requires a more structural shift to improve productivity and address the public deficit, advocating for policies that support industry. She pointed to the discrepancy between Spain’s renewable energy subsidies and the high costs faced by energy-intensive industries due to network costs, comparing the situation unfavorably to Germany and France, where similar businesses benefit from greater support.
Despite these concerns, Pividal acknowledged Spain’s positive macroeconomic figures, but anticipates a slowdown in economic growth in 2026. This growth, she explained, is currently driven by strong domestic demand, fueled by increased purchasing power and wage increases that are outpacing inflation, with wage increases averaging around 3.5 percent. She also noted that immigration is contributing to economic growth, with 70 percent of the increase in the active population since 2022 coming from foreign nationals.
Pividal also addressed the allocation of funds from the European Union’s NextGenerationEU recovery plan. While acknowledging the positive impact of the recent influx of funds, she noted that the Spanish government has opted to forego approximately 67 billion euros in available loans, choosing instead to seek financing from the markets. She suggested this decision was motivated by a desire to avoid the reforms and investment conditions attached to the EU funds, characterizing it as a simpler option for the government.
According to Coface, as of January 8, 2026, 42 percent of the NextGenerationEU funds – over 270 billion euros – remain unspent, with a deadline for disbursement at the end of 2026. This delay, the firm states, risks both short-term economic growth and long-term structural reforms.
