Spain’s economy growing three times faster than UK’s

Spain is booming, particularly in Madrid, Barcelona, and along its ever-popular Mediterranean coastline.

The New York Times calls it the “end of a nightmare”, while elsewhere in the international press the official economic data published by the Spanish government on Friday was reported a little more sedately: Spain’s economy is not only growing, but surging ahead of most of the rest of Europe…

It is now almost a decade – ten long years – since the worst economic crash since World War II befell Spain, causing millions to lose their jobs and thousands to up sticks and leave. Many believed that their displacement would be permanent, such was the financial abyss facing the nation during the disastrous years between 2008 and 2012.

But slow, steady and sometimes painful labour and economic reform has enabled Spain to claw its way out of the doldrums and, in the second quarter of this year, post economic growth of 0.9%.

Now, while that figure might seem low, it is actually an exceptional performance: not just in context, but in isolation. Growth of 0.9% is three times higher than in the UK, and almost twice that of France, which grew its economy by 0.5% over the same period.

In context, it is an even more impressive performance, given that Spain was one of just two European countries to suffer a double-dip recession during the credit crunch. This second quarter data also marks a continuation of growth that should see Spain’s economic growth surpass 3% for the second year running – making it Europe’s best-performing economy.

During the depths of the crisis, Spain’s unemployment rate reached 26%. Today, it is down to 17.2%, and falling. “We believe consumer spending growth appeared to regain some momentum in the second quarter, continuing to ride on the back of strong employment creation and a comfortable financial climate,” said IHS Markit economist Raj Badiani.

Indeed, Spain’s eye-catching performance is likely to prove a source of inspiration for France’s new President Emmanuel Macron, who is considering introducing similar labour market reforms to those employed by Spain since 2010 – namely a loosening of employment laws that has made it easier for companies to lay off workers. The effect of this has been a growing willingness among firms to hire new staff, safe in the knowledge that they would not necessarily be tied into long-term employment contracts.

This reform helped boost Spain’s manufacturing sector, which has driven the country’s export economy – exports now account for one-third of Spanish economic output, up from less than one-quarter a few years ago.

With exports booming, Spain’s local governments have also been able to increase their tax take, and this money has now trickled into the wider economy – as can be seen in the construction of a number of infrastructure projects nationwide.

Spain is back on its feet and looking steadier and more stable than ever.