The Institute of Employment Sciences and Labor Relations (ICER), an international scientific and technical entity, whose purpose is the analysis and research of the labor market, warns in its report ‘Europe: Forecasts before a conflict scenario’ about a potential slowdown in growth and its impact on employment in the face of a prolonged conflict in Europe.
In the report ‘Europe: Forecasts before a conflict scenario examines the consequences of a possible prolonged conflict in Europe, with special attention to the situation in Ukraine, aggravated by the crisis in the Middle East. The analysis, carried out in collaboration with Ceprede, Nebrija University and TBS Education Barcelona, highlights that the global political panorama, marked by the conflict in Ukraine and the Middle East, has placed geostrategy at the center of the possibilities of development and growth, by seriously affect trade exchanges, industrial production, strategic supplies and, especially, energy policy.
This study, which analyzes the impact on the Spanish economy in the face of a potential generalization of the war in Ukraine, points out the forecasts for the period 2024-2026 as worrying, both for macroeconomic stability and for the evolution of employment in Spain and other European countries. .
“The generalization of the conflict could have several significant effects on the Spanish economy, including an increase in energy prices, especially if Russia decides to further reduce its natural gas supplies to Europe, as well as an impact on tourism if a Potential escalation in Ukraine is perceived as an increase in security risk in Europe,” says Alejandro Costanzo, secretary general of ICER. “Spain could also be forced to increase its defense spendingwhich could have implications for other areas of public spending, such as the green agenda, with the exception of the development of alternative energies to fossil fuels,” he adds.
The report presents three macro scenarios for 2025 and 2026 in Spain, one of them facing a possible generalization of the Ukrainian conflict in 2025. In this conflict scenario, GDP growth could be reduced by almost one and a half points (-1.3 pp) at the end of 2025investment by almost two points, private consumption by almost one point and exports of goods and services by more than two percentage points, which would mean a reduction in the pace of job creation by more than 298,700 jobs and the consequent increase of one point (+1 pp) of the unemployment rate.
The report presents three macro scenarios for 2025 and 2026 in Spain, one of them facing a possible generalization of the Ukrainian conflict in 2025. In this conflict scenario, GDP growth could be reduced by almost one and a half points (-1.3 pp) at the end of 2025
A decline that would especially affect sectors such as construction and automotive, which depend on strong capital flows for their expansion and modernization. In this context, ICER warns of the need for fiscal incentives and structural reforms to stimulate investment and recovery in these key sectors.
Labor market
The labor market will also suffer the consequences of geopolitical uncertainty. ICER predicts that the unemployment rate in Spain could reach 13% in 2026 if the conflict continues, affecting above all the sectors most dependent on investment and consumption.
The effects on each sector will depend on the duration of the conflict, the political measures adopted and the adaptive capacity of each sector. ICER highlights that, while more traditional sectors such as construction, automotive and tourism are at risk, there are emerging areas that could see growth in job demand. Renewable energy, cybersecurity and digital technology are emerging as key sectors where job opportunities will grow as Europe moves towards sustainability and digital transformation.
ICER predicts that the unemployment rate in Spain could reach 13% in 2026 if the conflict continues, affecting above all the sectors most dependent on investment and consumption
ICER emphasizes that economic recovery will depend, to a large extent, on the ability of governments and companies to promote active employment and economic stimulus policies.especially those that facilitate labor mobility between declining sectors and those with growth potential. In this sense, ICER recommends close collaboration between the public and private sectors to ensure an orderly transition of employment.
ICER also highlights that, although certain traditional sectors will see a decrease in employment, professional retraining will be essential to maintain the dynamism of the labor market and professional employment services companies could play a relevant role. Investment in continuous training and professional retraining will be essential so that workers can transition to emerging sectors, where employment opportunities will be more resilient.
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