The Bank of Spain presented its 2025 Annual Report to a congressional committee, saying Spain's economy remained comparatively strong in 2025, with gross domestic product growth of 2.8% and a favorable banking-sector position, but arguing that the main challenges are structural rather than cyclical. The report puts the strongest emphasis on housing access problems caused by persistent supply constraints, the need for more credible medium-term fiscal planning while public debt remains above pre-pandemic levels, and the slow pace of productivity convergence with the rest of the euro area. On housing, the Bank estimates an accumulated shortfall of about 750,000 homes since 2021, with house prices and rents rising faster than household income and a very small public housing stock that cannot absorb affordability pressures. It says real estate-related financial stability risks remain contained because mortgage lending standards are far below past peaks, even as it continues to assess possible borrower-based mortgage limits. More broadly, the report notes that unemployment remains above European peers, public debt stood at 100.7% of gross domestic product in 2025, and the new fiscal framework has not been used to set sufficiently ambitious medium-term adjustment plans. It also says total factor productivity has improved since 2013, helped by stronger performance from more productive firms, better credit allocation and growth in alternative finance, but that at the current pace the productivity gap with the euro area would close only around 2050. The Bank also used the presentation to outline progress under its Strategic Plan 2030. Measures highlighted include artificial intelligence tools for supervision and payments oversight, continued work on retail and wholesale digital euro projects, a 34% reduction in required financial reporting from supervised entities with a 50% cumulative reduction target, and conduct supervision focused on fraud, tied sales of ancillary products, consumer overindebtedness and fair treatment of account holders.
Bank of Spain2026-06-23
Bank of Spain presents 2025 annual report highlighting a 750000 home shortfall and less ambitious fiscal planning
The Bank of Spain's 2025 Annual Report says Spain outperformed the euro area in 2025, but its main vulnerabilities are structural, especially housing shortages, weak medium-term fiscal planning and slow productivity convergence. It estimates a housing shortfall of about 750,000 homes since 2021, while public debt remained above pre-pandemic levels at 100.7% of gross domestic product. The Bank also highlighted progress on artificial intelligence-enabled supervision, digital euro work and a 34% cut in financial reporting requirements for supervised entities.