Castilla y León economy grows 2.9% amid new tax reduction plans

The economy of Castilla y León grew by 2.9% in the second quarter of 2026, a rate that triples the growth of the eurozone and exceeds the Spanish national average. This expansion was driven by a 4.4% increase in the services sector, a 4% rise in manufacturing, and strong internal demand, including an 11.6% increase in capital investment. However, the primary sector faced a significant contraction of 8.2% due to low harvests and inflation impacts.

In response to the regional economic climate, the Junta de Castilla y León has announced a major fiscal reform package. The plan includes 36 new tax reductions aimed at providing an estimated 920 million euros in savings by 2027. Key measures include lowering the regional personal income tax (IRPF) minimum rate from 9% to 8.75% by 2027, expanding inheritance tax benefits, and introducing new deductions for youth housing savings and sports activities.

Simultaneously, BBVA reported a 3.3% increase in new financing for companies, SMEs, and the self-employed across Spain during the first half of 2026. Specifically in Castilla y León, the bank saw a 4.8% increase in financing, supporting diverse local business models despite varying regional economic pressures.