Public investment grew by 9.1% in 2025, but the weight of infrastructure in this investment dropped to 38% in the past five years, the lowest share since 1995
The BBVA Foundation and Ivie have updated their database on investment and capital stock, warning of the need for additional infrastructure investment to offset the increasing damage caused by climate change
Total gross investment (private and public) in Spain increased by 5.1% in real terms in 2025, reaching €347 billion. This marks five consecutive years of growth following the recovery from the economic shock caused by the 2020 pandemic. Public investment, which accounts for 10.7% of the total, benefited from the boost provided by the EU’s Next Generation funds and grew by 9.1% in 2025, accumulating an increase of 56% compared with 2019. Private investment has also continued the upward trend that began after the pandemic, growing by 4.6% in 2025, exceeding its 2019 level by 8.6%.
However, EU funding after COVID-19, which focused mainly on green and digital transition, has not reversed the decline in the share of investment in public infrastructure (roads, railways, water, ports, airports and urban infrastructure) over total public investment in Spain. In 2009, investment in these infrastructures accounted for 61% of total public investment, but by 2025 this share did not even reach 38%, where it remained stagnant since the pandemic. In real terms, public infrastructure investment was 25% lower than in 2000 and stands at 60% below the 2009 peak. In some cases, it does not cover the ordinary depreciation of the high levels reached by the stock of accumulated public capital, which, as a result of low investment, is shrinking.
The lack of investment in infrastructure coincides with mounting evidence of the effects of climate change on public and private assets across numerous regions, particularly in Spain. Natural disasters, especially floods, cause significant destruction to all types of physical assets. The book El stock de capital en España y sus comunidades autónomas (1995-2025). Los desastres naturales y la medición del stock de capital (Capital Stock in Spain and its Autonomous Communities 1995–2025. Natural Disasters and the Measurement of Capital Stock), published by the BBVA Foundation and Ivie, highlights the importance of maintaining existing capital stock by adequately covering both ordinary depreciation–particularly in infrastructure–and the extraordinary depreciation caused by natural disasters.
The study, which includes an update of the ‘Capital Stock and Services’ database up to 2025, shows that despite the recent positive trend in investment in Spain, real investment (i.e. investment measured in constant euros adjusted for inflation to capture volume changes) remains below the peak reached in 2007. Following a period of strong growth in gross fixed capital formation between 1995 and 2007, investment fell sharply during the Great Recession (2008-2013). It subsequently recovered between 2014 and 2019, before being severely affected by the pandemic in 2020. From 2021 onwards, investment was set to return to a growth trajectory, continuing until 2025. However, despite this positive trend in recent years, the investment ratio (investment as a percentage of GDP) remains around 20%, well below the high average of the first decade of the century (26%–30%). By 2025, this ratio has risen slightly to 20.6%, approaching the level of the major European economies (22%), but without quite reaching it.
Composition of investment by asset class
By asset category, Spanish investment has shifted towards a pattern more similar to that of developed countries, i.e. one that is more intensive in productive assets such as ICT, intangible assets (software and R&D) and machinery. At the same time, the share of real estate investment, which is less productive, has declined. Spain and the United States are the countries that have increased their investment in ICT and intangible assets the most between 1995 and 2024, multiplying them by a factor of 4.7 and 5.9 respectively, although Spain’s starting point was very low.
Real estate investment, which includes residential (housing) and non-residential (warehouses, commercial premises, offices, infrastructure) assets, accounts for over 50% of aggregate investment in Spain, but its share has fallen significantly from the 68% accounted for in the years prior to the Great Recession. The decline in residential investment was particularly sharp from 2007 onwards, with a cumulative fall of 52.7% by 2013. Although a recovery in housing investment has begun over the last decade, it remains low and insufficient to meet the demand for new homes resulting from strong population growth and an increase in the number of households. Thus, while around 88,000 new homes were built in Spain in 2025 (Source: Ministry of Transport and Sustainable Mobility), the creation of new households, according to the INE’s (Spanish Statistics Institute) Continuous Population Statistics, exceeded 226,000.
As for investment in other non-residential construction–both private (industrial units, retail premises, offices and business premises) and public (healthcare, educational, social, sports and cultural facilities, and infrastructure)–the decline has also been sharp, and the recovery has been even slower, only becoming apparent from 2018 onwards. Against a backdrop of reduced investment, other construction investment has lost ground, weighed down largely by the weak trajectory of public investment throughout the second decade of the 21st century and the prior accumulation of unused private assets.
Public investment in infrastructure
Public investment suffered the sharpest decline during the Great Recession, as cuts were used as a key instrument to meet the fiscal adjustments imposed by the financial markets and the European Union. After remaining at very low levels between 2012 and 2020, it has grown over the last five years, driven by Next Generation EU funds, but remains far from the peak investment figures of the final years of the property boom. Specifically, public investment in Spain stood at €37.177 billion in 2025, 9.1% higher in real terms than the previous year, but still 34% below its 2009 level.
Public investment includes funds allocated to improving productive capacity and maintaining water, road, rail, port and airport infrastructure, as well as urban infrastructure, and also funding for education, healthcare, social services, etc. Investment in public infrastructure covered by the project includes both that carried out directly by the public sector and that allocated to transport infrastructure implemented by bodies such as ADIF, Renfe, Enaire, Puertos de Estado, river basin authorities, whose funding depends in part on public administrations.
In total, investment in infrastructure in 2025 amounted to €16.114 billion, 6.8% more than the previous year. However, this is still 60% lower than in 2009. Investment in public infrastructure plummeted from 2010 onwards, much more so than investment in social services, leading to a substantial decline in its share. Productive infrastructure accounted for 61.2% of total public investment in 2009, but this share has been steadily falling to just 37.9% in 2025. Over the last five years, it stagnated at around 38%, more than 20 percentage points below its level at the start of the century.
Differences by type of infrastructure
The sharp decline in investment is reflected across all types of infrastructure, although with variations that highlight changes in the relative weight of each type within the total. Investment in rail infrastructure has seen the sharpest decline since 2009, having plummeted by 66.7%–in other words, by two-thirds since then. Even so, in 2025 it ranks as the second-largest type of infrastructure in terms of investment, with €4.589 billion, 7% more than the previous year, accounting for 28.5% of total infrastructure investment. Rail infrastructure has gained significant weight in investment compared with the 11% it accounted for in 1995, and over the last 20 years it has consistently exceeded 25%, peaking in 2011 when it absorbed more than 40% of total infrastructure investment.
Road infrastructure has accounted for the largest share of total infrastructure investment, although its proportion fell relative to rail investment between 1995 and 2008. By 2025, investment in roads in Spain accounted for over 30% of total infrastructure investment. In absolute terms, €4.952 billion was invested in road infrastructure in 2025, 0.6% more than the previous year, but this figure represents only 41% of the 2009 peak.
Water infrastructure, the third most significant sector, has gone from accounting for 24% of investment at the start of the period analyzed to stabilizing at around 15% during the 21st century, ending 2025 below 14.3%. In real terms, investment in water infrastructure has fallen by 61.7% since 2009. A significant proportion of this infrastructure is carried out by river basin authorities and is dedicated to flood prevention and other works related to the water cycle.
Together, these three types of infrastructure—rail, road and water—account for 73.5% of total infrastructure investment and have experienced a combined fall of 62.5% in constant euros since the peak reached in 2009.
The report also highlights a downward trend in three other categories of infrastructure: urban, port and airport infrastructure. Although their share of total investment is significantly smaller than that of the previous categories, they too suffered declines during the Great Recession and have yet to return to 2009 investment levels. Urban infrastructure (carried out by local authorities) has tended to lose importance. Although it has rebounded over the last decade, it still accounts for less than 10% of total investment, a share it exceeded during the 1995–2009 period. After increasing in the years following the pandemic, investment in urban infrastructure reached €1.434 billion in 2025, 38.8% more than the previous year.
Meanwhile, port infrastructure currently accounts for 10.1% of the total, its highest level since 1995, while airport infrastructure remains at around 7%, with a lower share than port and urban infrastructure. In 2025, investment in port and airport infrastructure grew by 3.6% and 18.2%, respectively, reaching €1.626 billion and €1.216 billion, respectively.
The trend in infrastructure investment since 2009 can be divided into two distinct periods. The first was characterized by a sharp decline, marked by the Great Recession, while the second began in 2014, as the economy started to recover from the crisis and the pace of decline in investment slowed. However, during this second period, investment has remained at such low levels that in some years it has not been sufficient to cover depreciation and ensure its proper maintenance. This is the case with water infrastructure, which has recorded negative net investment (below the level required to maintain accumulated assets) from 2012 to the present day. The same occurred in rail infrastructure between 2016 and 2022, and in road infrastructure between 2017 and 2022.
These low levels of investment in public infrastructure have meant that the real value of some of these assets has been declining for years. This is reflected in the trend in public capital stock and its two main components: productive infrastructure and social infrastructure. The stock of both has stagnated or declined following a period of strong expansion. In Spain, productive infrastructure assets (water, transport and urban) have fallen by nearly €11 billion since 2014, a decrease of 2.3%, to the current €583.331 billion. During this period, accumulated capital has declined in water infrastructure (-4.8%), rail infrastructure (-0.7%), port infrastructure (-3.5%), airport infrastructure (-19.1%) and urban infrastructure (-3.7%), whilst road infrastructure has seen slight growth (0.2%), which has not been sufficient to offset the decline in the other sectors.
Effects of climate change: Additional investment required
The report highlights that the decline in investment and depreciation of public infrastructure coincide with an increase in the frequency of events that underscore the growing threat posed by high-intensity natural disasters linked to climate change. When such events occur, they reveal both the inadequacy of preventive infrastructure investment and destruction of existing facilities.
The report emphasizes that the capital losses caused by these increasingly extreme natural phenomena are not taken into account when analyzing disaster-related losses in terms of GDP. However, disasters severely weaken infrastructure assets wherever they strike. For this reason, the authors of the study stress the need for additional investment to cover these extraordinary capital losses.
To this end, the study explores a methodology for estimating losses associated with flooding, the type of disaster that has proven to be the most destructive in Spain. Drawing on evidence accumulated over the last half-century and a detailed study of the October 2024 storm over Valencia, they consider alternative scenarios involving varying degrees of disaster severity and the progression of climate change, estimating the additional investment required to offset such damage. For Spain as a whole, the necessary investment would amount to between 0.2% and 1.1% of cumulative annual investment over the 50-year period. However, if this investment had not been planned and had to be made in a single year, the damage caused would require an increase in investment of between 5.4% and 38.3%, depending on the scenario. Thus, the additional investment needed to offset the effects of flooding on capital stock is not excessively high if expenditure is planned in advance and assessed in relation to national investment.
Financial burden increases at regional level, as these events are highly localized. While preventive investment spread over many years substantially reduces the annual cost, concentrating the response in the year of the disaster dramatically increases the financial impact. For example, in the province of Valencia, covering in advance the possibility of events such as those already experienced would require increasing annual investment by 3.3% and 23.2%, depending on the climate scenario. However, if the cost of covering the damage had to be borne in a single financial year due to a lack of foresight, the percentages would rise between 119.7% and 848.2% of the investment in a normal year.
In conclusion, the authors underline the risks of maintaining low levels of public investment over extended periods. First, insufficient investment to cover depreciation leads to the deterioration of infrastructures and affects their ability to provide services. Second, it is essential to recognize and anticipate the growing risks posed by climate change through additional investment in preventive infrastructure, spreading the required effort over time and across the regions most exposed to these threats.
