For decades, Europe’s urban economy has been dominated by the cities that make up what is known as the Blue Banana. a ‘region’ that in geographical terms consists of a megalopolis stretching from Manchester to Milan.
This region or belt includes cities such as London, Brussels, Amsterdam, Cologne, Frankfurt, and Paris. The region completely dominates in the economic field. In recent years, however, a ‘rebel’ has emerged. Madrid and its conurbations have undergone a more thanremarkable development . Little by little, it is beginning to measure itself against some of the cities that are part of this megalopolis.
Madrid challenges London and Paris
The Spanish capital is attracting more and more investment, tourism and wealth. In fact, in a recent report, economists at Oxford Economics claim that “Madrid is the only European city that is beginning to rival London and Paris in terms of GDP”.
The Economist also published an article about the economic boom in the capital. The growth in Madrid is driven by the good dynamism of the entire region, which, according to official data, will record more than 7 million inhabitants in 2023.
Analysts at Oxford Economics are optimistic about the growth of European cities in general, but especially in the north. “We are less optimistic about most southern European cities. They have underperformed in the past and we suspect they will do the same in the future.’ The ‘exception of Madrid’ confirms that there are competing cities in southern Europe with enough potential to generate wealth beyond the big ‘Blue Banana’.
Economic size and employment
In terms of economic size, Madrid is by far the most important city in Southern Europe. In fact, it is the only European city that is beginning to rival London and Paris in terms of GDP level. The city is home to a number of large multinationals, including, for example, large European banks. Thus, GDP per capita in Madrid is 17% higher than the EU27 average of €35,400.
If you compare Madrid with the rest of Europe, the result is striking: only eight EU27 countries have a higher GDP per capita than Madrid: Luxembourg, Ireland, Denmark, the Netherlands, Austria, Sweden, Germany and Belgium. In addition, Madrid had a good year in terms of economic growth in 2023, with a GDP increase of 2.8%.
In Madrid, employment increased by 18.3%, placing Madrid at the highest level of the autonomous communities in 2022.
Good performance in the Spanish capital
The experts who prepared this report explain that Madrid’s good performance is largely due to higher productivity growth than in the rest of Spain. Apart from productivity, Madrid’s weight as an economy has also increased. It attracts human capital. As a result, total real GDP (the total annual output of the region) increased by 50.9%. Partly because of the improvement in productivity, but also because Madrid is one of the regions with the highest population growth.
What is Madrid still inferior to London or Paris?
Oxford analysts admit that Madrid rivals, but is not yet up to, the leading cities in terms of technology and wealth and job creation. “Madrid lacks the ability to attract companies and workers in those leading sectors where Paris or London, or even rivals like Amsterdam and Berlin, dominate. As a business centre, Madrid is almost in the same circle as those cities, but it is not quite there yet. It’s a step below it,” says Oxford Economics. Madrid, like Spain in general, continues to struggle with high unemployment and years of talent emigration.
However, more and more qualified workers from the European Union and other countries are opting for a job in Madrid. They do so not because of salaries or other labour benefits, but because of the climate, leisure, gastronomy and other intangible factors that give Madrid certain advantages over other European cities.
Also read: Growth of Spanish tourism in 2024 will be greatest in Madrid and Malaga
Political landscape in Spain
There is also some concern about Spain’s political landscape. Mainly due to the entry of extreme parties of both left and right into national coalition governments. This has made it more difficult to reach a consensus on comprehensive economic and social reforms.
The future of the economy in the Spanish capital
Economists from the British analysis house emphasise that the Chamartín train station is the heart of the site. And, that the intention is to improve the connections with northern Spain and southern France. For example, with Lyon, which recently became a direct destination for high-speed trains.
