Coface: Spanish industry is more resilient than that of its EU partners. Competitive costs and renewable energy are driving growth

(Il Sole 24 Ore Radiocor) – Spanish industry is ‘more resilient than its main European partners’, who ‘are still struggling to make up ground following the energy and geopolitical shocks of recent years’. Spain’s manufacturing output, in fact, “has already surpassed pre-war levels in Ukraine, supported by a more diversified industrial base, competitive labour costs and strong growth in renewable energy”. However, some structural challenges remain, particularly in terms of productivity and electricity infrastructure. This is according to the latest analysis by Coface, one of the world’s leading providers of credit insurance and commercial risk management.

‘Whilst Europe’s industrial heartland continues to feel the impact of the shocks of recent years, Spanish industry is showing greater dynamism. Its resilience is underpinned by a diversified manufacturing base, competitive costs and significant energy potential. The real challenge now will be to transform these advantages into sustainable productivity growth,” says Laurine Pividal, Coface economist for Southern Europe.

“The greater resilience shown by Spanish industry highlights just how much production diversification, cost competitiveness and access to energy can make a difference at a particularly challenging time for the European manufacturing sector,” adds Ernesto De Martinis, CEO of Coface’s Mediterranean & Africa Region and Board Member. “Spain can count on favourable conditions, starting with strong growth in renewables and labour costs that remain lower than those of the continent’s major economies. However, these advantages cannot be taken for granted: the gap between wage growth and productivity, and the need to upgrade the electricity infrastructure, represent significant challenges. To consolidate this trajectory, it will therefore be essential to transform current strengths into greater productivity, investment capacity and long-term competitiveness.”

Since 2022, Spain has established itself ‘as one of Europe’s most dynamic economies, with annual growth rates two to six times higher than those of the European Union’, the report highlights, explaining that this trend is also reflected in industry: ‘Spanish manufacturing output has already exceeded pre-war levels in Ukraine, whilst Germany and Italia have not yet fully recovered’. A more favourable industrial structure is contributing to this performance. Germany and Italia remain heavily exposed to sectors particularly affected by the energy crisis, such as the automotive, mechanical engineering and metalworking sectors. Spain, on the other hand, benefits from greater diversification and the strong performance of high value-added sectors, including pharmaceuticals, electrical equipment and electronics, as well as certain energy-intensive sectors such as paper, plastics and chemicals. Spain’s dynamism is not limited to the domestic market. Since 2015, Spain has managed to maintain a stable market share in exports within the European Union, whilst Germany and France have seen a gradual decline.

One of the main strengths of Spanish industry continues to be labour costs. In 2025, in the manufacturing sector, the hourly cost was 40 per cent lower than in France and 43 per cent lower than in Germany. This gap enables Spain to remain competitive and, for the time being, to offset lower productivity. However, this advantage could diminish over time. Between 2022 and 2025, the hourly labour cost in the manufacturing sector rose by 15 per cent, whilst real productivity grew by less than 3 per cent. At the same time, new job creation has been concentrated mainly in sectors with lower value added. There is therefore a risk that, if wage growth continues to outpace productivity growth, one of the key factors underpinning the competitiveness of Spanish industry could gradually weaken.