Staff from the European Commission, in liaison with staff from the European Central Bank, carried out the eighth post-programme surveillance visit to Spain on 16-18 October 2017. Amid continued strong economic growth, well above the euro area average, banks have further adjusted their business models and cost structures, in turn supporting growth by providing new loans to the economy. On aggregate, they comfortably meet the regulatory capital requirements and the quality of banking sector assets has further strengthened, as the level and ratio of non-performing loans continues to drop. Challenges remain, however. The government deficit is still high, and government debt is only slowly declining and remains at just below 100% of GDP. Moreover, even though a sizeable reduction in private debt has been achieved, some sectors remain overleveraged. Similarly, unemployment has been declining at a fast pace, but remains very high especially among young and low-skilled workers. Finally, structural weaknesses hinder higher productivity growth.