By Recently important newspapers such as The Economist and other media have said that the Spanish economy is doing very well. Is this true?
No. The Spanish economy is far from being at its best. In fact, all major organizations and think tanks are warning of a sharp slowdown in 2025 and 2026. The PMI index (Purchasing Manager Index) already shows how industry is in a process of contraction, something that will be aggravated by the closure of nuclear power plants from 2027 that the Government is imposing.
It is true that Spain has stood out globally for high GDP growth. However, if you have constant debt records, NextGeneration European funds that inflate your economy, skyrocketing immigration and high levels of inflation, GDP increases, but it is not healthy growth. It’s as if the economy is artificially doped through government spending.
Productivity levels have been stagnant for over a decade, so there is no organic growth.
What are the worst indicators of the Spanish economy?
Spain has a record unemployment rate and youth unemployment rate in the OECD. Inflation is above the Eurozone and has not stopped growing for almost half a year, while in other countries it is easing.
Public debt is increasing and is at record levels every month. The budget deficit is around 3 percent, and both the European Union and Sánchez’s government have to play statistical tricks to keep it from increasing. For example, the costs of repairing the damage caused by the natural catastrophe in Valencia are not included in the Spanish deficit.
Housing prices are rising at 10 percent per year, making it impossible for young people to start a family.
You mentioned the issue of unemployment. Why has Spain had double digit unemployment figures for decades?
There are several reasons for this. One of them is that the education system is not adapted to the labor market.
In Spain there is the paradox that companies cannot find workers for the jobs they offer and, at the same time, there is a skyrocketing unemployment rate.
In 2024, companies left 150,000 jobs unfilled. They simply could not find qualified people to fill them.
On the other hand, there is the rigidity of the labor market. There is a minimum wage that keeps going up, so many companies don’t have the money to hire for low-skilled positions. In addition, there are many difficulties when it comes to dismissal, with high severance payments, i.e., hiring becomes a risk.
Nevertheless, there is the high level of taxes. To pay an employee 1,500 euros net, the company must pay the State more than 500 euros for multiple taxes. For small companies, this is unsustainable.
Parties of the opposition (PP and Vox) have said that the unemployment statistics are not real, why do they say that?
The Spanish Government, especially the part closest to the radical left, has decided to reduce unemployment with statistical tricks.
What they have done is to create the figure of “fijos-discontinuos” (intermittent permanent contract). This type of contract is based on hiring someone for a limited period of time, for example, a couple of months, and firing him with the promise that he will be hired again in a certain period of time.
During the months in which the person is not working, he/she does not count in the unemployment statistics. There are many Spaniards in this situation, but we do not know how many because the Ministry of Labor does not provide the data.
Moreover, in recent years, the sector where employment has grown the most is the public sector. Therefore, the State itself creates jobs to disguise the statistics.
What should the government do to turn back unemployment in Spain?
First, eliminate the rigidity of labor law. It is necessary to make it easy to hire and fire, so that there is movement in the market.
Second, lower taxes. It cannot be that in a labor relationship the State earns so much money that the company cannot hire.
Third, facilitate investment and entrepreneurship. In Spain it is very difficult to create a company, even if you have money. We are seeing the case of Altri in Galicia, a factory that is going to create 3,700 jobs and generate 9 billion euros to Spain’s GDP in 20 years. The extreme left is holding demonstrations to prevent its opening because they say it pollutes.
Finally, what are the most necessary measures that the Spanish economy needs?
It is very difficult to fix Spain, because the whole State has got into a loop of spending and debt.
The State must stop getting into debt and seek a fiscal surplus. To do this, it is necessary to cut back and produce more. This can only be achieved with strong companies, with investment and entrepreneurship. To achieve this, we need to deregulate, promote a culture of entrepreneurship, attract investment and stop spending on ideological policies. The problem is that there are many people living well with this system.
