Does Spain have what it takes to become the next Germany?

Is Spain on course to be the next Germany of the eurozone?

From serving sun loungers to snaffling them early in the morning. From flip flops to socks ‘n’ sandals. And from paella to bratwurst – is Spain really ready to become the euro area’s next Germany?

I only ask because analysts at global finance giant Morgan Stanley seem to think so. Fortunately, they weren’t talking about culture and customs, but the economy. Even so, it seems a strange comparison to make. Germany, as we all know, is the current strongman of Europe, with low unemployment, solid job stability and an export-led economy that has benefited greatly from global confidence in the good German name and the weakened euro.

So how might Spain be able to follow suit? “Spain, where unit labour costs are falling due to recession and reforms, and where export performance is strong, is on its way to becoming the euro area’s next Germany,” said Morgan Stanley analysts Joachim Fels and Sung Woen Kang.

Fels believes that Spain will rival Germany’s export-led economy in three-to-five years, predicting that although unemployment will remain high during that time, the erosion of labour costs will make Spain an ultra-competitive player on the European stage.

So would this be a good thing, or a depressing return to the old days when Spanish labour was seen as cheap, cheerful and largely unskilled? Experts are divided. Some argue that Spain’s economy lacks the inherent strength and diversity needed to see it rise to the top of Europe’s economic tree, while others are quietly confident.

Moorad Choudhry, a professor at Brunel University, told CNBC that Spain has ‘eight or nine’ major weaknesses in its economy, which “suffers from bottlenecks on the supply side, labour market rigidity, stifling bureaucracy, real estate loan losses that still need to be recognised on bank balance sheets, and an excessive social welfare bill.”

Yet despite Spain’s GDP falling by 1.8 per cent in the final quarter of 2012, there are signs that the country’s economy is beginning to emerge from the gloom. Some of the world’s largest car manufacturers, such as Renault and Ford, have begun to move production to Spain to take advantage of the solid infrastructure, sophisticated technologies and low labour costs.

And although the corruption cloud hanging over Spain Prime Minister Mariano Rajoy refuses to budge, fellow European politicians have praised the government’s handling of the crisis.

So while the biting austerity and soaring unemployment might be at complete odds to Germany’s lavish social benefits and robust job figures, Spain might well be on the self-same fast track to economic success as its Teutonic northern neighbour.

We can but wait to find out. And keep an eagle eye on those sun loungers…