Spain has fallen out of the top 10 most attractive countries for foreign direct investment (FDI), according to the latest FDI Confidence Index compiled by Kearney and presented on Wednesday in Madrid in collaboration with the Institute of Economic Studies (IEE). Spain has dropped to 11th place in the global ranking, suffering a 13% decline in the confidence indicator, a two-place drop compared to the previous year.
Why Spain is Less Attractive to Investors
During the report’s presentation, held at the IEE’s headquarters with the participation of its president, Íñigo Fernández de Mesa, and its general director, Gregorio Izquierdo, the factors explaining Spain’s loss of appeal as an investment destination were analyzed. In a global context marked by geopolitical tensions, economic uncertainty, and structural changes, key issues include legal uncertainty, excessive bureaucracy, and high tax pressure.
While investors positively assess aspects such as technological innovation (29%) and the quality of infrastructure (26%), concerns outweigh these positives. The main obstacles to FDI are the complexity of regulation, the lack of effectiveness of existing legislation, mediocre protection of property rights, and the absence of competitive tax incentives. Gregorio Izquierdo warned during the study’s presentation: “The country needs structural reforms to improve its competitiveness and gain ground against economies like Italy, which has overtaken Spain in this indicator in 2025.”
Global Competitors and Spain’s Position
The United States ranks first, followed by Canada, the United Kingdom, and Japan. Germany and China hold the fifth and sixth positions, while France, Italy, the United Arab Emirates, and Australia complete the top ten. Spain’s drop from 9th to 11th place signifies a two-point decrease between Kearney’s 2024 and 2025 editions of the index.
Madrid as an Investment Magnet within Spain
Despite the national decline, a regional breakdown shows a different picture: the Community of Madrid concentrates over 64% of the received FDI, solidifying its position as an epicenter for businesses and investments in Spain. Catalonia follows, albeit with decreasing participation. Communities such as the Basque Country and the Valencian Community are gaining weight, reflecting an increasing territorial diversification of investments. The most attractive sectors include manufacturing, information and communication technologies, finance, and scientific and technical services. The United States remains the primary source of investment flows, with over 6.6 billion euros annually, followed by the United Kingdom, France, and Germany.
Recommendations for Boosting Investment Confidence in Spain
The report offers a series of recommendations to strengthen Spain’s attractiveness: greater legal certainty, simplification of legislation, legal stability in strategic sectors, reduction of the tax burden, and promotion of R&D&I. It also aims to modernize foreign investment legislation and avoid interventionist measures that create uncertainty, such as those applied in the real estate sector. “Spain cannot afford policies that deter investment. We must commit to a predictable, competitive environment that is conducive to business growth. The opportunities are there, but it takes courage to implement the reforms,” concluded Íñigo Fernández de Mesa.
