Is there a real risk of stagflation in Spain in 2026?

The word stagflation that uncomfortable combination of economic stagnation and persistent inflation has made its way back into the economic debate. But is it really a likely scenario for Spain in 2026, or are we facing a more theoretical than immediate risk?

We start from a relatively favorable context: the Spanish economy is showing moderate growth, and inflation, after recent peaks, appears to be under control. However, as often happens in economics, apparent stability coexists with significant uncertainties.

The first element to watch is the price of energy. Although there has been some normalization, it remains an extremely sensitive factor to geopolitical tensions. Any escalation in international conflicts or disruption in supply could quickly reignite inflationary pressures.

Secondly, the global context continues to be marked by high uncertainty. Geopolitical tensions from open conflicts to trade rivalries affect both costs and business confidence, two key ingredients for growth.

Monetary policy also plays a role. The tightening implemented by the European Central Bank in recent years has been effective in containing inflation, but it has also made credit more expensive. If prolonged for too long, it could excessively cool investment and consumption, weakening economic activity.

Against these risks, there are factors that act as a buffer. One of the most important is the progress in renewable energy. Spain has accelerated its energy transition, reducing its dependence on imported fossil fuels and cushioning the impact of external shocks on energy prices.

The labor market has also shown notable resilience. Despite the international context, employment has held up better than expected, supporting household disposable income and preventing a sharp drop in consumption.

Domestic consumption itself is another key pillar. The Spanish economy, less dependent on heavy industry than other European economies, relies heavily on services and internal demand, giving it a certain degree of stability even in adverse external scenarios.

Comparisons with the stagflation of the 1970s are inevitable, but they should be made with caution. At that time, the oil shock caused a sudden increase in energy costs in economies highly dependent on crude oil, while economic policies were not well prepared to respond.

Today, the context is different. Economies are more diversified, central banks have greater credibility and more sophisticated tools, and the energy transition offers alternatives that did not exist back then.

Stagflation in Spain in 2026 does not appear to be the central scenario. Current fundamentals moderate growth, contained inflation, and a solid labor market point in another direction.

However, it cannot be completely ruled out. A simultaneous deterioration in the energy, geopolitical, and financial context could create an uncomfortable mix of low growth and rising inflation.

Ultimately, rather than a likely scenario, stagflation is currently a latent risk that should be monitored. The key will lie in the ability to adapt: of economic policies, the business sector, and the country’s productive structure itself.

Because, as economic history often reminds us, extreme scenarios are rarely inevitable… but they are almost always possible.