But that\u2019s not what the most commonly used economic measure says. In fact, the scores of articles hailing Spain\u2019s \u201cmiracle<\/a>\u201d economy are overwhelmingly based on the fact that the country\u2019s GDP \u2013 the total value of its produced goods and services \u2013 is rapidly increasing.<\/p>\n Compared to other EU countries, it is true that Spain\u2019s GDP growth has been extraordinario in recent years. CaixaBank<\/a>, the country\u2019s largest domestic lender, reported earlier this week that Spain\u2019s output has risen 10% since 2019, well above the eurozone average of 6.4% and a whopping one hundred times more than Germany\u2019s<\/a> anaemic 0.1% expansion.<\/p>\n The swift growth also shows little sign of subsiding. Earlier this month, the European Commission<\/a> and the Bank of Spain<\/a> both hiked their Spanish growth forecasts for this year to 2.9% \u2013 more than double the EU\u2019s 1.4% average projected expansion.\u00a0\u201cReal GDP growth is expected to remain strong in 2025,\u201d the Commission noted, adding that \u201ceconomic activity\u201d is also expected to \u201cremain robust\u201d until 2027.<\/p>\n But as Jos\u00e9 Bosc\u00e1, an economist at the FEDEA think tank in Madrid, points out, Spain\u2019s GDP data \u201cis not so promising\u201d when adjusted for its population growth, which has also swelled in recent years. \u201cIf we only assess economic growth based on GDP data, there are factors that we are not taking into consideration,\u201d Bosc\u00e1 said.<\/p>\n Indeed, Spain\u2019s GDP growth is largely a direct consequence of its growing population. Soaring immigration \u2013 especially from Latin America \u2013 has caused Spain\u2019s overall population to surge in recent years, and, predictably, has also caused its total output and consumption to rise.<\/p>\n According to the Elcano Royal Institute<\/a>, the country\u2019s immigrant population has risen by roughly 600,000 people per year since the end of the pandemic, pushing its population to a record high of just under 50 million. Roughly one in five people now living in Spain were born abroad.<\/p>\n In addition to boosting net output, the influx of workers has boosted government revenue and, by tempering wage rises, has helped keep inflation barely a fraction above the European Central Bank\u2019s 2% target rate.<\/p>\n But it has also exacerbated Spain\u2019s chronic shortage of affordable housing and compounded the country\u2019s cost-of-living crisis \u2013 especially for young people, the vast majority of whom still live with their parents and a quarter of whom are currently unemployed. According to the latest available<\/a> data from Eurostat, the average Spaniard only leaves home at the age of 30: well above the bloc\u2019s average of 26.<\/p>\n The wave of immigration has also made it increasingly difficult for Spain to reduce its overall rate of joblessness, which at 10.45%<\/a> remains the highest in the EU. Nine in ten jobs created between January 2024 and March 2025 were filled by foreign workers, the Elcano Institute notes. Many Spaniards who are employed have seen tepid real wage growth for decades, constricting their buying power \u2013 and in many cases their motivation.\u00a0<\/p>\n Such factors explain why Spain\u2019s economic \u201cmiracle\u201d is overwhelmingly not being felt by its citizens. A recent poll by the Funcas research centre revealed<\/a> that 55% of Spaniards think that the economic situation is worse than before the pandemic, while 90% believe they have lost purchasing power.<\/p>\n Luz at the end of the tunnel?<\/p>\n Immigration is not the sole reason for Spain\u2019s rapid growth rate. A surge in post-pandemic tourism is also a major factor, as is the country\u2019s broader shift<\/a> toward high-value-added service sectors, including real estate, finance, and IT.<\/p>\n \u201cIt\u2019s not just tourism, it\u2019s also non-tourism services,\u201d Finance Minister Carlos Cuerpo told CNBC<\/a> earlier this year. The fact that Spain\u2019s \u20ac100 billion in annual non-tourism export services now exceeds its \u20ac95 billion in tourism exports also underscores the \u201cmodernisation of the Spanish economy,\u201d he said.<\/p>\n Foreign investors, including Chinese battery manufacturer CATL<\/a> and auto giant Stellantis, have been drawn by Spain\u2019s relatively cheap energy, with the country\u2019s bountiful sunlight increasingly being harnessed by manufacturers through investments in solar power.<\/p>\n Payouts from the EU\u2019s pandemic recovery fund have also contributed. Madrid is on course<\/a> to receive a total of \u20ac163 billion in grants and loans from Brussels by the end of next year: the second-highest amount in the bloc, after Italy.<\/p>\n But profound structural obstacles remain. These include high government debt-to-GDP levels inherited from the eurozone crisis and pandemic; widespread unemployment; and political instability partly engendered by Prime Minister Pedro S\u00e1nchez\u2019s minority government, which has been mired in corruption scandals<\/a> involving his inner circle. Due to the political dysfunction, Spain hasn\u2019t managed to pass a new budget since 2022, forcing the government to rollover the 2023 budget, even as its booming population and robust tax revenues have created a new reality in the country.\u00a0<\/p>\n That said, not even a new budget would address Spain\u2019s biggest problem: low productivity. Bosc\u00e1 noted that this is largely a result of the composition of Spain\u2019s industrial sector, where 99.8% of firms are small and medium-sized enterprises consisting<\/a> of fewer than 10 employees.\u00a0This industrial landscape inevitably curtails productivity growth and domestic investment.<\/p>\n \u201cSpain is relying entirely on economic cycles,\u201d said Judith Arnal, senior researcher at Elcano and an independent adviser to the Bank of Spain. \u201cAnd reforms need to be urgently implemented whilst the economy is doing well.\u201d<\/p>\n Moreover, as the Commission\u2019s report this earlier this month noted, Spain\u2019s economy \u2013 although less exposed than other EU countries are to trade disruptions from the US and China \u2013 is still heavily dependent on tourism from other exporting nations, such as Germany, which are vulnerable.<\/p>\n Furthermore, Brussels warned, \u201ca more-pronounced-than-anticipated slowdown of migration flows could reduce the dynamism of the labour market, resulting in a less favourable outlook for private consumption and investment.\u201d<\/p>\n Spain, in short, is growing \u2013 just not in the way many headlines suggest. Strip out the population surge and the picture looks far less miraculous. And unless productivity finally stirs, the boom will remain more statistical than real. For a country long burdened by clich\u00e9s, it may turn out that the greatest misconception of all wasn\u2019t about siestas or sangria, but about the strength of its comeback.<\/p>\n Economy News Roundup<\/p>\n EU plunges ahead with Ukraine loan as Belgium \u2018pleads\u2019 for alternatives. The European Commission vowed to continue trying to harness Russian assets to fund a \u201creparations loan\u201d to Ukraine on Friday, despite Belgium\u2019s exhortations that the EU seek alternatives to the \u20ac185 billion cash scheme. Read more.<\/a><\/p>\n EU economy chief urges G7 to speed up $50 billion Ukraine loan. In an exclusive interview with Euractiv, Economy Commissioner Valdis Dombrovskis said Western partners should frontload disbursements from the loan,\u00a0agreed<\/a>\u00a0in June last year, to plug the war-torn country\u2019s looming financial black hole early next year. Read more.<\/a><\/p>\n EXCLUSIVE: EU economy chief urges G7 to speed up $50 billion Ukraine loan<\/p>\n \n\t\t\t\t\tThe European Commission is calling on Western allies to accelerate payments from a $50 billion\u2026\t\t\t\t<\/p>\n \n\t\t\t\t\t4 minutes\t\t\t\t<\/p>\n \t\t\t\t\t Belgium slams EU plan to fund Ukraine with Russian assets. In a four-page letter to European Commission President Ursula von der Leyen on Thursday, seen by Euractiv, Belgian Prime Minister Bart De Wever said the reparations loan could prompt investors to sell EU debt or pull funds out of Euroclear and other European institutions, \u201camplifying systemic risks\u201d and potentially destabilising the euro. Read more.<\/a><\/p>\n EU \u2018ready\u2019 to propose Russian assets loan despite Belgian doubts. Ursula von der Leyen suggested on Wednesday that the European Commission is poised to table a legal proposal for the so-called \u201creparations loan\u201d. \u201cThe next step is that the Commission is ready to present the legal text,\u201d the Commission president said in a speech at the European Parliament in Strasbourg. Read more.<\/a><\/p>\n Brussels rebukes Finland for breaching EU budget rules. The European Commission formally reprimanded Helsinki for contravening the EU\u2019s 3% fiscal limit on Tuesday, as weak consumption and geopolitical uncertainty stoked by Russia\u2019s war in Ukraine compound the Nordic country\u2019s gloomy economic outlook. The move came just a week after Brussels\u00a0predicted<\/a> Finland\u2019s deficit would surge to 4.5% of annual GDP this year \u2013 well above the 3.7% shortfall projected<\/a>\u00a0in May. Read more.<\/a><\/p>\n Brussels rebukes Finland for breaching EU budget rules<\/p>\n \n\t\t\t\t\tThe European Commission formally reprimanded Finland for contravening the EU\u2019s fiscal rules on Tuesday, as\u2026\t\t\t\t<\/p>\n \n\t\t\t\t\t3 minutes\t\t\t\t<\/p>\n \t\t\t\t\t Europe must \u2018step up its game\u2019 on China, says EU industry chief. In an address to the European Parliament on Tuesday, St\u00e9phane S\u00e9journ\u00e9 said Beijing\u2019s export controls on rare earths have \u201cdirectly targeted\u201d Europe, and stressed that the bloc must \u201credouble [its] efforts\u201d to break its strategic dependence on the world\u2019s second-largest economy. Read more.<\/a><\/p>\n EU urges Belgium to relent on using Russian assets amid peace \u2018momentum\u2019. The publication of a 28-point Russian-American\u00a0peace proposal<\/a> last week has made the EU\u2019s plan to fashion the reparation loan \u201ceven more urgent\u201d, European Commission chief spokesperson Paula Pinho said on Monday. Read more.<\/a><\/p>\n Washington says EU must slash levies on US exports before getting tariff relief. Speaking after meeting his European counterparts in Brussels on Monday, US trade chief Jamieson Greer said Washington wouldn\u2019t exempt EU goods from a blanket 15% US tariff until Brussels implemented its part of the joint EU-US statement agreed this summer. \u201cIt\u2019s really hard to move on to other things or to a broader cross section of the economy before we fully implement the first part of the agreement,\u201d Greer said. Read more.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Today\u2019s edition is powered by European\u00a0DIGITAL\u00a0SME\u00a0Alliance \u00a0Shape Europe\u2019s tech sovereignty at the\u00a0DIGITAL\u00a0SME\u00a0summit Join the conversation with policymakers and…\n","protected":false},"author":2,"featured_media":290584,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":{"0":"post-290583","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom","12":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/290583","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=290583"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/290583\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/290584"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=290583"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=290583"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=290583"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"EXCLUSIVE:](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2025\/11\/GettyImages-1238121821-1-800x534.jpg\")
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