European Commission Report on Portugal 2025

This report identifies the main areas of action to strengthen Portugal’s competitiveness and resilience. The economy is stable and recovering well, supported by domestic consumption, tourism, and the implementation of the Recovery and Resilience Plan (RRP). However, structural reforms are needed to ensure sustainable and inclusive growth. The focus is on three central dimensions: modernizing the economic fabric, an efficient energy transition, and responding to an aging population. Portugal faces challenges that limit its ability to innovate, grow, and compete. The business sector, dominated by small and medium-sized enterprises (SMEs), struggles to scale and invest in technology. Obstacles persist in accessing financing, industrial licensing, and coordination between authorities. The climate transition requires accelerating the transition from fossil fuels, strengthening the electricity grid, and investing in storage solutions. On the other hand, demographic aging puts pressure on the pension system and healthcare, requiring long-term measures. Upskilling the population, integrating young people into the labor market, and combating energy poverty are also priorities to ensure more balanced and fair growth. Portugal faces challenges that limit its capacity to innovate, grow and compete. The business fabric, dominated by small and medium-sized enterprises (SMEs), struggles to scale up and invest in technology. Obstacles persist in access to finance, industrial licensing and coordination between authorities. The climate transition requires accelerating the phase-out of fossil fuels, strengthening the electricity grid and investing in storage solutions. At the same time, population ageing is putting pressure on the pension system and healthcare, calling for long-term measures. Upskilling the population, integrating young people into the labor market and tackling energy poverty are also priorities to ensure more balanced and fair growth.