Spain's economy grew faster than almost every country in the eurozone last year. Employment hit record highs. The GDP is comfortably above pre-pandemic levels. And yet, if you run a business here, freelance as an autónomo, self-employed worker, or depend on the local private sector for income, none of this feels like a boom.

That's because it isn't one. Not for you.

A Funcas analysis published on February 2 made it clear: public investment in Spain has risen by nearly 50% in real terms since 2019, fueled by Next Generation EU funds. Private business investment has gone the other direction. It has declined in real terms over the same period.

That's historically abnormal. In every previous Spanish expansion cycle, private investment outpaced GDP growth. This time, companies are sitting on cash, paying down debt, and waiting.

The overall investment rate, at around 14.8% of GDP, hasn't changed in five years and is below that of other advanced economies. Spain is growing, but not building.

It's not affordability. Corporate profits are up. Foreign direct investment keeps flowing in. Spain, from the outside, looks attractive.

The problem is uncertainty. The Chamber of Commerce's 2025 survey found that 40.8% of Spanish firms cite political and regulatory unpredictability as their top risk. After years of pandemic, inflation spikes, rate hikes, and geopolitical shifts, companies (especially the SMEs that form the backbone of Spain's economy) have gone defensive. They're hoarding cash instead of hiring. Strengthening balance sheets instead of expanding.

If you're an expat running a small business on the Costa del Sol, this isn't abstract:

Hiring is harder when everyone's hedging, including the people you're trying to hire.

Many expats moved here on a simple thesis: lower costs, good weather, manageable bureaucracy once you crack the code.

Here's what's shifting. Spain's headline growth, driven by public spending, creates an environment where prices tend to adjust to the appearance of prosperity. Rents climb. Service costs climb. Meanwhile, the private sector, the part of the economy most expats actually participate in, is flat.

Diario Sur reported on February 2 that poverty in Spain has become "structural." One in three children lives at risk of poverty or social exclusion. Working no longer guarantees a dignified life. That's not directly an expat problem, but it tells you something important about the economy underneath the GDP number: it produces growth that doesn't distribute evenly, and costs that do.

Spain is building an economy that looks excellent on paper. GDP growth, employment records, and EU fund absorption. Real achievements. But the growth depends on public money with a time limit (Next Generation funds won't last forever), and the private sector, the part that sustains things long-term, isn't participating.

The question worth sitting with: did you move to the Spain in the statistics, or the Spain on the ground?

Spain is booming in the statistics. On the ground here in Spain, there is frozen private investment, structural poverty, train operators refusing to compensate for delays on the Madrid-Málaga corridor, and a dozen new shopping centers planned for Andalucía by 2028, because retail construction and the broader economy operate on a different logic.

None of this means Spain is a bad bet. It means the bet is more nuanced than the headline.

Talk to your gestor about quarterly payment adjustments if income has shifted. Don't autopilot on last year's numbers.

Two phrases worth knowing if you're renegotiating a lease or talking to your gestor this week:

Spain's GDP is real. The growth is real. But it's built on public money with an expiration date, and the private economy you actually live in hasn't kept pace. If you run a business here, the smart move is the same one Spanish companies are making: tighten up, build reserves, and don't plan around the headline.

Also, the autónomo vs SL decision isn't about tax rates alone. Liability, hiring capacity, and how your costs flex with revenue all factor in. If the private-sector squeeze is affecting your business, this framework can help you pressure-test your structure.

→ The complete business structure guide for Spain, updated for 2026

PS: Know someone who just moved to Spain or is running a small business here? Forward this to them. They'll get the same newsletter, free. That's how Waypoint Sur grows, one useful step forward at a time.

Onwards — A. and the social liberal, but fiscally conservative WaypointSur team