Many workers were forced to leave their posts in Spain and Portugal on Monday after a major power cut affected phone lines, internet access, card payments, and left citizens without light.
The Portuguese electricity operator REN said the outage was caused by a “rare atmospheric phenomenon” related to extreme temperature changes in Spain.
The President of the EU council António Costa ruled out a cyber-attack as the cause of the outage, dispelling rumours.
Spanish economy temporarily “shut down”
“Essentially, the Spanish economy is shut down for the day and that means that businesses will take a short-term hit, but ultimately the total disruption will probably be marginal provided that the power comes back relatively soon,” Kyle Chapman, FX markets analyst at Ballinger Group, told Euronews.
Operator REN said that, in a worst-case scenario, it could take up to a week for normal services to return.
Kyle Chapman added: “I suspect the bigger concern will be about the state of infrastructure and resilience and it might hurt GDP growth slightly at the monthly level. I think we’re probably seeing the fundamental issues in scaling up renewable power coming to the fore.”
Spain’s economy grew 3.2% in 2024, more than double the eurozone average of 0.9%. Domestic demand drove the expansion, while tourism also contributed to growth.
Growth in Portugal came to 1.9% in 2024, according to Statistics Portugal.
Lower production as workers sent home
Beatriz Barber, who is based in Madrid and works for a Spanish engineering company, told Euronews that she was sent home in the early afternoon as she was unable to continue with her work.
“I was working normally until 12.30pm. I had an online meeting from my office … and the colleague that was speaking at the meeting was disconnected suddenly because she was calling from her home. It’s likely she was connected to another internet operator that was already down. The other colleagues that were in the meeting stayed connected – as I was”.
After this, Beatriz said that her computer monitor screens went black and that she was “connected to the internet on my laptop but not on my phone for half an hour more or less”.
“After that time, I had no more internet on my laptop. It was a progressive collapse,” she explained.
“My boss told my team and I that we could go home after this as we wouldn’t be able to continue working and the recovery of the power grid was expected to take several hours”.
Sectors hit by the power cut
Whilst the economic impact is not going to be fully known until the dust settles, the travel sector will certainly have felt the pressure as the power cut halted trains and caused major disruption at airports.
Eduardo Prieto, head of operations at Red Eléctrica, told journalists it was unprecedented, calling the event “exceptional and extraordinary”.
Mirko Woitzik, head of risk intelligence at Everstream Analytics, also noted to Euronews how fuel supply is being disrupted, hindering trucking across the Iberian peninsula.
He said car and truck plants from Ford to Iveco that employ some 5,000 workers also came to a standstill.
Meanwhile, thousands of smaller suppliers without adequate back-up power supply are also likely to be affected as well.
He further noted that Spain’s major manufacturing industries and supply chains include motor vehicles, food production, as well as chemicals.
European market reaction to outage
As of 17:30pm CEST, European markets showed little impact with all main indices in positive territory. Spain’s IBEX 35, the main benchmark of the Spanish stock market, was up 0.75% at 13,456.10, while the EUROSTOXX 600, a broad measure of the European equity market, gained 0.53% to 523.19.
Meanwhile, in France, the CAC 40 was up 0.50% at 7,573.76 points, Germany’s Dax was also higher, up 0.13% at 22,271.67 points. Italy’s FTSE MIB was also trading in the green, rising 0.31% at market close.