Is Spain growing? Productivity, industry and other risks

The initiative is part of a structural debate that has firmly moved to the center of the Community agenda: productivity as a basic condition for supporting growth, competitiveness and strategic autonomy of the European Union. Not as a political shipment, but as an economic necessity.

Despite a significant decade of policies aimed at macroeconomic stability and large-scale job creation, it is difficult to elicit a diagnosis: The production process is one of the main pillars of European growth.

Spain, además, no game with the fan. Our industrial production is below the village average and its production structure is still not very intensive in innovation, technological capital and advanced knowledge.

Industrial productivity is not just an internal variable or an academic debate: whether it has turned into a global strategic career. Europe is about bridging the gap that separates the United States and China, two economies advancing at great speed thanks to a combination of corporate scale, massive inversion in key technologies and decisive industrial policy. Meanwhile, the European margin is narrowing.

Spanish industry is not only producing fewer workers; it also incorporates less technology, less capital, and less knowledge into its production processes

The United States has successfully strengthened the relationship between innovation and the market through direct incentives and a clear growth orientation. For its part, China continues to seek technological breakthroughs in strategic industries by addressing planning, volume and economies of scale.

Faced with both, Europe runs the risk of falling into a situation of utter irrelevance if it does not speed up its industrial production. For Spain, this task is even more difficult because It overcomes structural weaknesses that remain unresolved for a long time.

The decline in the weight of industry in GDP has been a common trend in the EU since the 1990s. However, their consequences are very clear in the country. Economies such as Germany or the Nordic countries compensated for the decline in industrial weight by substantially increasing production. Spain, in turn, combined deindustrialization with productive exhaustion: a double penalty.

The problem is not only in volume, but in quality: A less efficient industry has less capacity to hold back the rest of the economy. The data show that both labor productivity and the total factor productivity of Spanish industry are systematically below the European average.

The 2025 report of the Observatorio de Productividad y Competitividad de la Fundación BBVA confirms that this deficiency has been reduced only in the last few decades, which largely supports growth and weakens external competitiveness.

Spanish industry is not only producing fewer workers; It also incorporates less technology, less capital and less knowledge into its production processes. The causes are well identified and you do not accept any possible excuses: overly atomized sales teamindustry specialization centered on low-value activities and chronic deficits in innovation.

By the same token, smaller firms face major barriers to R&D turnaround, adoption of advanced technologies, and expansion within international value chains. There is no production without scaling; no productivity, no competitiveness.

European tour: from diagnosis to implementation

Before this panorama, the EU started an explicit path of industrial policy focused on competitiveness, innovation and production capacity. This change in focus was forced by the presidencies of the United States and China, combined with the fragmentation of global ministries.

However, the European debate is more directed towards the proposal of specific instruments and points to a fundamental question. While other powers have come together with a clear path, Europe continues to search for a shared narrative of why they want to be and how they want to compete in the big league.

BusinessEurope notes that the main challenge for the EU is not only the loss of its industrial base, but also the recovery of manufacturing due to its inability to transform innovation at enterprise scale.

The fragmentation of herramientas, administrative completion and subsequent growth orientation dilute the real impact of public policies. In economics like Spanish, with less capacity for technological absorption, these problems are amplified.

European funds, like Next Generation EU, assume a previous recursive movement. However, the structural impact on industrial output remains uncertain. If the inversions are not explicitly oriented towards improving efficiency, innovation and scale, the impact on the Spanish manufacturing model will be disappointing to say the least.

In this context, the España Crece fund can be transformed into a relevant platform that will lead to a large-scale turnover in strategic sectors and strengthen the national manufacturing base, but its impact on industrial production is not guaranteed.

It will only contribute to bridging the gap if it is used to help companies increase scale, finance applied innovation, strengthen technological capital and facilitate the integration of Spanish industry into higher value chains. It is clear that this cannot be a cost that replaces private financing or long-term inefficient structures.

Spain is located before the search. The European debate on productivity and industry has taken on unprecedented urgency, and the Spanish announcement introduces an element of strategic potential.

However, neither the European funds nor the new European fund will be sufficient unless they are integrated into a coherent, demanding and connected national vision with the European competitiveness circle. Correcting the real trajectory requires more than the current ones: it requires placing industrial productivity at the real – and not rhetorical – center of economic strategy.

*** Pilar Martínez is Director of Public Asuntos de Europe and Latin America at BME – Grupo SIX.