Barcelona's Pompeu Fabra is the only Spanish institution to feature in the top 200 of the new THE ranking.
A further five Spanish universities featured in the top 400 worldwide, while three others dropped have out of the high profile list since 2013.
"In any nation where austerity’s hurt a bit harder, we’re starting to see some pressure," rankings editor Phil Baty said to The Local, speaking about the new results.
"Spain’s made some fairly significant moves. Pompeu Fabra University’s stood firm at 165th. It’s not all doom and gloom but they (Spanish universities) are certainly behind," said Baty.
"That's especially true when (Spain is) compared to South Korea, China, Singapore, where there’s been government-backed investment," he added.
"There seem to be an issue around the Mediterranean universities not doing so well, whereas the Nordic countries and Germany seem to be doing well," Baty explained, speaking more generally about the rankings.
He said successful universities were "more willing to use English", and highlighted Germany's focus on international collaborations."
"There is an issue that the majority of leading journals tend to be in English," he said, as the rankings use citations from 13,000 journals charted by Thomson Reuters.
"There is a challenge for European universities that English has become the lingua franca of research," Baty said.
In order to improve their international reputation, universities must also look at their ties to power.
"Are they at arms’ length from government?" Baty asks. "US and UK universities have a large amount of autonomy from the state. They have state funding but they are independent institutions."
It is no coincidence that such universities are the best in the world, the rankings editor said: "This leads to a healthy culture of free inquiry on campus. It also allows them to be entrepreneurial; to behave a bit more like businesses and be dynamic."
In Spain, apart from Pompeu Fabra, the five Spanish universities to make the top 400 were Barcelona University, the Autonomous University of Barcelona, the Autonomous University of Madrid, the University of Barcelona and the University of Navarre.
Dropping out of the list were Catalonia's Rovira i Virgili University, Valencia Polytechnic University and Vigo Univeristy.
The California Institute of Technology held on to the world number one spot for the fourth consecutive year, ahead of Harvard University in second and the University of Oxford in third.
Rounding out the top five were Stanford University in the US and the UK's Cambridge University.