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.
“By our estimate, more than 30,000 business travellers visit Spain and Portugal on average every day. Looking at Navan business travel customers alone, thousands of travellers from more than 350 companies have been impacted by the travel disruption in Spain and Portugal following yesterday's power outage," said Michael Riegel, CEO EMEA of business travel and expense management company Navan.
He added: "Once the power went out, Lisbon Airport was closed entirely yesterday, with limited flights from the region's other airports, while trains and metros were stopped entirely nationwide. The scale of this travel disruption is unprecedented — impacting planes and trains — and it will take weeks for the travel sector to return to normal as it deals with the fallout.”
“The disruption has not only impacted travel providers operating in the region but also all the businesses travelling yesterday and this week. Thousands of business travellers using Navan were disrupted yesterday, from over 350 businesses. They worked at companies operating in various sectors, from tech to manufacturing to professional services.”
Employees from technology, information and internet companies made up 41.5% of Navan business traveller impacted by the outage, while 20.3% worked at manufacturing and industrial goods companies.
Professional services employees accounted for 13.5% of business travellers impacted, whereas 9.7% worked at financial services companies. Employees from media and entertainment, consumer goods and retail and healthcare and life sciences companies were also affected.
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 told Euronews that the outage was disrupting fuel supply, hindering trucking across the Iberian peninsula.
"This is too early to tell but the costs are likely to be in the tens of millions of euros," said Woitzik.
"Several car and truck makers including VW, Ford, Stellantis, Seat, and Iveco have shut down their plants. Typically in the automotive industry, a 1-hour downtime costs up to $2.3 million so the costs will be significant across all industries impacted which also include food making, chemicals, truck making and others."
He added: "It's mission-critical to have sufficient alternative power supply and mitigate single-source exposure of power supply that can cause outages like these since there is insufficient back-up that can quickly be tapped into."
Alpesh Patel, co-founder of Cartex, a next-generation financial marketplace, highlighted the significant impact this incident had on financial and payment systems, calling for more innovation and risk management strategies in this sector.
"With mobile payments now accounting for a significant share of transactions, the combination of power loss and internet disruption has created a domino effect: smartphones without power, terminals without network access, and businesses unable to complete sales," he said.
Offline ATMs meant that several people were not able to withdraw cash either, once online payments failed, with Patel pointing out that "our financial systems are only as resilient as the infrastructure that supports them."
He added: "We believe this is a wake-up call. Redundancy in connectivity, offline payment capabilities, and alternative transaction processing solutions are no longer optional — they are essential.
"Events like this blackout highlight the urgent need for the financial and telecom industries to collaborate to ensure that when the grid fails, commerce doesn't. Payment systems must evolve beyond innovation — they must be crisis-proof."
Similarly, this outage has highlighted the challenges faced by utility companies.
Tim Johnson, CEO and co-founder of utility software company Endevor, said: "Weather events, aging infrastructure, and budget challenges are all key issues for today's utilities companies around the world. The Spain/Portugal outage demonstrates the need for deeper insight and prioritisation into building the grid of the future.
He added: "There's a huge risk for large-scale power outages because of these issues, and governments and businesses can better protect themselves by using data to prioritize asset management activities."
This data can help build capital plans to identify areas of improvement for investments and prioritise preventive maintenance across infrastructure, among other things, according to Johnson.
This event has also given rise to concerns about protecting a resilient and open internet. Ryan Polk, director of internet policy at non-profit The Internet Society, pointed out that electricity is the ultimate limiting factor impacting internet resilience.
"If there is no electricity to power routers, switches, receivers, and data centers, then there is no Internet. These exceptional events bring to the fore the Internet’s interconnectivity and its various components’ resilience at a country and regional level. A resilient Internet connection maintains an acceptable level of service in the face of faults and challenges to normal operation," he said.
Amazon also confirmed to Euronews that the power outage impacted its logistics centres on Monday, but said it was working to resume its operations throughout the course of Tuesday afternoon.
European market reaction to outage
European markets showed little impact with all main indices in positive territory on Monday late afternoon and at market opening on Tuesday.
As of around 4:15pm CEST on Tuesday, Germany's DAX had risen 0.6%, with the EUROSTOXX 600, a broad measure of the European equity market, gaining 0.3%, at 524.85.The CAC 40 index had dropped 0.2%, whereas the FTSE 100 was up 0.5%.
Spain's IBEX 35, the main benchmark of the Spanish stock market, was down 0.7%, at 13,359.61.
