Spain is Europe's leading economy, according to the Financial Times.

Barcelona"Spain is an exceptional bright spot among European economies, which themselves have performed dismally. Since the beginning of 2024, the Spanish economy has grown at an average annual rate of 3%, compared to just over 1% for the eurozone as a whole. In recent weeks, S&P Global Ratings has upgraded its 2025 rating to 2.6%, underscoring the country's position as Europe's fastest-growing major economy and one of the strongest in the advanced world." This is how the Financial Times the current Spanish economy, in an article entitled "Spain has become the most outstanding economy in Europe", in which it breaks down the factors that have driven Spanish growth, although it also warns that it must combine it with productivity improvements.

According to the British newspaper, the factors that have driven this growth are, on the one hand, tourism, which has recovered from the pandemic, and it also highlights European aid. "The government has been spending subsidies from the EU's Next Generation funds on infrastructure improvements; Spain is the second beneficiary. Cheap renewable energy has also attracted foreign direct investment," it explains. On the other hand, however, the most important driver, it highlights the FT, has been immigration. "While other European nations have been willing to tighten their borders, Spain has taken a more liberal approach. Since 2022, it has had an average annual net inflow of about 600,000 immigrants, most of whom are of working age. An expanding labor force has driven employment to record highs and skilled employment to record highs that have affected its European counterparts. The population increase has also boosted consumer spending," the newspaper notes.

Immigration and Productivity

A significant portion of the newcomers come from Latin America, explains the Financial Times. In 2023, these new arrivals accounted for 70% of Spain's population growth, according to JP Morgan. Furthermore, the migration surge is expected to continue. In fact, "Spain has recently simplified legal immigration routes and plans to grant residence and work permits to more undocumented migrants," explains the report. FT, which warns that this boom Immigrant-led growth must be managed carefully.

First, although Spain's real GDP, in purchasing power parity, has increased by around 6.8% since 2019, in per capita terms it has only grown by 3.1%. "Migrants have mainly filled gaps in lower value-added sectors, such as hospitality and construction." Thus, FT points out one of the often-debated weaknesses in the Spanish and Catalan political and economic environment, and states that "to ensure that living standards grow, Spain's sluggish productivity growth must also improve," and points out that Spain's unemployment rate remains one of the highest in the EU.

It also believes that policymakers "should anticipate broader socio-economic issues that may hinder the sustainability of high migrant flows" and says that "the majority of Spaniards support immigration," but warns of problems with access to housing and unaffordable rents. "However, Spain's fragmented political environment will be a major obstacle to consolidating its economic progress. The minority government of Prime Minister Pedro Sánchez, affected by the scandal, has struggled to pass important laws. This is a shame. Spain has shown other advanced economies that immigration can be a significant source of income and important national and international income," warns the FT"To continue being an example, Spain must turn its demographic windfall into lasting prosperity," he concludes.