Spain has the highest real GDP growth among major economies while Germany lags behind. Euronews Business takes a closer look at the figures, with experts explaining the key drivers.
In 2025, the EU’s real gross domestic product (GDP) grew by 1.5%. This was higher than the 1.1% recorded in 2024 according to Eurostat.
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So, which countries recorded the highest real GDP growth? And what factors explain the large differences in growth across Europe?
Ireland is a clear outlier with 12.3% growth, which experts link to the presence of large multinational companies in the country.
“Ireland's GDP growth is entirely disconnected from what goes on in Ireland itself. It's entirely driven by the invoicing processes or practices of large, mostly US multinationals and their subsidiaries in Ireland,” Jacob Funk Kirkegaard, senior fellow at Bruegel, told Euronews Business.
Apart from Ireland, two other EU island members, Malta and Cyprus, recorded the highest growth at 4% and 3.8%, respectively.
North Macedonia (3.5%), Croatia (3.2%) and Bulgaria (3.1%) also grew by more than 3% in real terms. That means they show the evolution of GDP after removing the effect of inflation.
“Generally speaking, the figures show an expected outcome in the sense that initially poorer countries grew faster than richer ones. This is normal as some of these economies capitalise and absorb technology,” Miguel León-Ledesma from University of Exeter told Euronews Business.
Spain highest, Germany lowest
Among the EU’s Big Four economies, Spain recorded the highest real GDP growth at 2.8% while Germany had the lowest at 0.2%.
Germany also shared the last position with Finland (0.2%) among 32 European countries with available data.
Italy was also close to the lower end with 0.5% growth while France recorded a moderate increase of 0.8%.
Kirkegaard emphasised the impact of the “ongoing effects of the second China shock” on growth figures. This refers to the sharp rise in Chinese exports globally, not only to the EU but also to the rest of the world.
“What that means is that the traditional European export powerhouses, first and foremost, of course, Germany, to a lesser extent, Italy, but also some of the other northern European countries, are feeling the effect of this,” he said.
He noted that it is therefore not surprising that in recent years Germany has been the laggard among the large economies in the euro area, which is very different from the situation a decade ago.
Kirkegaard pointed out that Spain’s growth model is also relatively insulated from the effects of the shock from China.
“But also the Spanish government is able politically to carry out a very expansive, or open immigration policy. So the Spanish population and working-age population continues to grow rapidly. And that is another source of growth here,” he added.
Population expanded through migration in Spain
León-Ledesma noted that a lot of the growth observed in some of these economies happens through employment creation.
Productivity, output per worker or per hour worked, is stagnant in some of these major economies. This also implies stagnant wages.
“Again in Spain, which is the best performing large economy in the EU on paper, output per worker declined 0.3% and output per hour worked increased only 0.4%,” he said.
He also added that the population expanded significantly through migration, which affects GDP per person.
According to OECD projections, Spain’s economy will grow by 2.2% in 2026 in real terms.
This would be the highest among Europe’s five largest economies, far ahead of the UK at 1.2%.
Kirkegaard said that a successful rise in Spanish tourism has supported growth, a trend seen across Mediterranean countries.
Italy, similar to Spain, has also benefited significantly from NextGenerationEU, the EU’s post-pandemic spending package.
But it is also a country that has suffered some of the consequences of the China shock in global export markets.
He underlined that despite ongoing political instability in France, the country has been surprisingly resilient.
Nordic growth diverges
While Denmark recorded strong growth of 2.9%, other Nordic countries had lower rates, with Finland ranking last.
Sweden (1.5%) matches the EU average, while Iceland (1.3%) and Norway (1.1%) recorded lower growth.
Does growth benefit households?
Growth figures do not necessarily reflect the impact on household economic conditions, which are measured by GDP per capita.
Kirkegaard pointed out that a significant part of Spain’s growth comes from a rising population. That is why the national economy is expanding.
“That doesn't necessarily translate into a higher income for individual Spaniards. They may get the same wage, the same income, and they certainly don't feel it. So, there is very much a risk that you have higher GDP growth from larger populations, but actually falling,” he said.
