The regulatory maze and its cost for the Spanish economy

In the Bank of Spain’s blog, Juan S. Mora-Sanguinetti analyzes the country’s regulatory complexity and its impact on the economy. He argues that the quality of the regulatory framework is a key driver of growth, yet Spain faces a structural challenge: today’s dense and fragmented rules add costs, increase administrative burdens, slow business dynamism, hinder territorial expansion, and complicate innovation—especially for SMEs. The solution, he notes, is not fewer regulations, but smarter ones: clearer, better coordinated, and supported by stronger impact assessments to avoid unnecessary duplication across levels of government.

Key takeaways

• Proliferation of rules: since 1979, more than 400,000 provisions have been approved in Spain. In 2022 alone, 11,775 new regulations were added—equivalent to 32 per day, or one every 45 minutes.
• Regulatory heterogeneity: differences across regions and sectors create significant dispersion, adding complexity and costs for companies operating in multiple areas and hindering their territorial expansion. In addition, there is a growing trend in regulatory activity, accompanied by an increase in cross-references between norms.
• Economic impact of the regulatory framework: a 10% increase in regulatory volume translates into a 0.5% drop in employment in companies with fewer than 10 workers. SMEs are the most affected, as they have less capacity to absorb compliance costs. A larger number of rules also reduces the entry of new firms and slows job creation. In some sectors, such as industry, there is a clear negative relationship between regulatory density and business dynamism.
• Risks for innovation: regulatory overabundance and lack of coordination can discourage investment and the adoption of new technologies.
• Need for simplification: Spain requires effective mechanisms for regulatory evaluation and coordination to reduce duplication and strengthen impact assessments. A clearer framework would support business creation, job growth and overall competitiveness.