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I recently got into Europa Universalis IV. Things are going well for my first game. I started as Castile and diplomatically formed Spain. I am the world leader in colonization in the New World. France stands at my back, and Portugal is slowing being dissolved into Spain.

However, the Protestant reformation has started, and, well, it is hurting me some. We Spanish pride ourselves on your Catholic faith (we are even the Defender of the Faith), but it hurts our relations ship with many other nations and our research (or was it idea group?) speed. What benefits do the Spanish people gain by remaining Catholic? It isn't papal influence since the Pope isn't as powerful as he was before the Reformation. The only major reason I can see at the moment is that it would hurt our relationship with France if we became Protestants.

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First off, the malus to tech cost is likely caused by being the Defender of Faith as it gives +5% Technology cost. You can hover over the cost in the technology menu to see what impacts it.

As you're the New World leader, you also possess an advantage by staying Catholic with the Treaty of Tordesillas. If you stay friends with the Pope, you'll get a settler bonus in every colonial region where you were the first to establish a colonial nation, and every other Catholic will be penalized for colonising there.

I wouldn't actually dismiss the Pope at all. Even while the Papal States themselves aren't too powerful, controlling the Curia has a ton of bonuses:

  • +1 Diplomats
  • +1 Yearly prestige
  • −10% Stability cost modifier
  • +2 Possible advisors
  • −20% Advisor cost
  • +1 Leader without upkeep
  • −20% Aggressive expansion impact
  • −5% Technology cost

You can also get nice things from the Pope by spending Papal Influence independently of his power. Seriously, a powerful Papal States could prove a worthy ally for you as Spain if you don't have plans to expand further than you probably did by inheriting Naples.

Also, if you have the third Religious idea, you can declare holy wars on your heretic & heathen neighbours (regardless if you stay or flip), so keep that in mind for opportunities to strike.

Overall, I'd never flip early, if at all, as Spain, but rather see how the Reformation spreads out.

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