Iberian services frictions dwarf manufacturing trade barriers
Services remain less integrated than goods and electricity between Spain and Portugal. Research by Bank of Spain and Bank of Portugal authors, published on October 22, 2026, estimates services trade frictions above 100 percent in tariff-equivalent terms.
Lower barriers favor Portugal
Estimated trade frictions equal roughly 20 percent in manufacturing and exceed 100 percent in services; these are tariff equivalents, not actual customs duties.
A multi-country general-equilibrium model simulates reductions of 25 and 50 percent in bilateral trade-cost wedges.
The smaller reduction raises bilateral trade by about 20 percent and GDP by 0.17 percent in Portugal and 0.06 percent in Spain.
Halving the wedges raises Portuguese exports to Spain by 51 percent and Spanish exports to Portugal by 44 percent, with GDP gains of 0.39 and 0.13 percent, respectively.
Wholesale electricity prices differ by no more than €1/MWh in 95 percent of hours over 2015–2025, supported by complementary Spanish solar generation and Portuguese hydropower.
Workers lag behind banking
Despite joint European membership since 1986, bilateral migration and student mobility remain modest against comparable European corridors.
Spanish wages in 2024 exceed Portuguese wages by 21 percent in transport and communication and 66 percent in industry.
Financial integration is strongest in banking and asymmetric: Spain represents 12.6 percent of Portuguese banks' foreign risk-weighted exposures, against Portugal's 3.8 percent share for Spanish banks, averaged over 2022–2025.
Services and non-bank investment remain less integrated.
Not every friction is removable
The authors distinguish integration gaps from removable policy barriers: preferences and proximity also constrain trade.
Their simulations are illustrative benchmarks, not forecasts of a reform package.
They identify regulatory cooperation, mutual recognition and interoperable administration as priorities.