More than 220,000 workers who live outside of Madrid explain why it economically surpasses Catalonia

BarcelonaThe distancing of the economies of Catalonia and the autonomous community of Madrid has been a subject of debate over the last decade, both among economists and in the political sphere, as Catalonia has lost weight in comparison to the Spanish capital in terms of gross domestic product (GDP) per inhabitant. According to a study by the Barcelona Chamber of Commerce, a significant part of this growing differential between the two territories is due to the existence of 221,000 people who, despite working in Madrid and, therefore, counting their professional activity within this autonomous community, reside in other provinces.

GDP per inhabitant is an economic indicator that allows for the comparison of the economies of different territories, as it divides the economic activity of a specific location (its GDP) by the number of people who live there. In this sense, Madrid had always had a higher GDP per capita than the Catalan one for various reasons, such as the difference in economic models (Madrid has many financial services, while Catalonia is more industrial), the type of territory (Catalonia is larger and less densely populated), and the capital city effect (the fact of being the state capital attracts more multinationals, concentrates public investment, and provides jobs to thousands of civil servants who receive salaries paid by citizens from across the State).

However, throughout the current century, the difference had been widening: if in 2000 the GDP per inhabitant of Catalonia represented 94% of Madrid's, last year it was 83%, a loss of eleven points, according to the Chamber's calculations. Throughout the last few years, experts and politicians have attributed this lag of Catalonia with respect to the Community of Madrid to all sorts of reasons, from the overweighting of tourism in the Catalan productive fabric to the greater impact that the 2008 crisis had on Catalonia due to its higher export capacity, as well as a flight of companies due to the 'Procés'.

According to the Chamber, however, it is mainly due to the demographic composition of Madrid, since the productivity between the two territories remains without major variations: "The productivity differential [between Catalonia and Madrid] has been stationary for a quarter of a century," asserts Joan Ramon Rovira, director of the Chamber's studies cabinet. "A productivity problem is not the case," he adds regarding Catalonia's relative loss of economic weight.

Thus, according to the chamber of commerce's calculations, the difference is explained by the fact that in Madrid there are more than 348,000 people who live in other autonomous communities but work in Madrid, while only about 127,000 take the opposite path, that is, they live in Madrid but work outside. This leaves a differential of more than 221,000 workers, residing mainly in the two Castiles, whose work is indeed counted in the Madrid GDP. In the Catalan case, this differential is only 42,000 workers: about 104,000 live outside Catalonia and work there, and about 62,000 vice versa.

Put another way, in net terms Madrid has 221,000 people who contribute to increasing its GDP but who are not taken into account when dividing the GDP per inhabitant, since they are registered in other autonomous regions.

This differential, moreover, has skyrocketed with the pandemic, according to the Chamber's estimates. Between 2021 and 2023, the last year with census data, Madrid has gained almost 43,000 more workers who do not reside in its territory, while in Catalonia the increase has only been 9,600.

However, the president of the Chamber, Josep Santacreu, points out that even though the differences between the Catalan and Madrid economies can be explained, the main challenge is to narrow the gaps in GDP per capita and productivity with the main European economies. "Together, Catalonia, Madrid, and all of Spain have pending challenges regarding productivity" with respect to the rest of Western Europe.

Upward revision of forecasts

Aside from the comparative study between Madrid and Catalonia, the Chamber has also revised its economic forecasts upwards. Thus, the body expects the Catalan economy to grow by 2.8% in 2026, three tenths of a percentage point more than its latest forecasts from July, and 2% in 2027, two tenths more. Rovira highlights the "resilience of the Catalan economy," which maintains significant growth levels in both household consumption and investment.

The negative point, however, is the upward revision of inflation as well. The Chamber has increased the forecast for the rise in the cost of living in Catalonia this year from 3.3% to 3.7%, and for 2027 it has increased it from 2.6% to 3.4%. Despite this, it emphasizes that good employment levels and the fact that gross wages have grown more than inflation over the last two years will allow maintaining certain levels of robustness despite the "slowdown" in economic activity caused by the rising cost of energy and international trade and geopolitical tensions.