Lorraine Williamson
Spain, long painted as the eurozone’s fragile member, is now being singled out by the Financial Times as one of Europe’s brightest performers. The British paper praises Spain as “a rare bright spot” on a continent otherwise struggling with sluggish growth.
While many EU countries wrestle with stagnation, Spain has been expanding at a pace that has surprised international observers and even its own institutions. The question now is whether this momentum can be sustained in the face of structural challenges.
Since the start of 2024, Spain’s economy has surged by around 3%. In stark contrast, the eurozone average barely reached 1%. The upward trajectory has encouraged Standard & Poor’s to raise Spain’s credit rating, citing resilience and investor confidence.
The Banco de España forecasts 2.6% growth in 2025, placing Spain well ahead of France, Germany, and Italy. For the first time in years, Spain is being held up as the fastest-growing large economy in Europe.
Why Spain is pulling ahead
Several forces are driving this unexpected boom. Tourism remains a backbone of the economy, with record visitor numbers generating jobs and tax revenues. The country has also been a major beneficiary of the EU’s Next Generation funds, channelled into digitalisation, infrastructure, and green projects.
Energy has emerged as another trump card. Spain’s investment in solar and wind has delivered some of the cheapest renewable power in Europe, drawing foreign manufacturers and tech companies eager to cut costs.
Labour reforms introduced in 2021, which curbed precarious contracts, have helped stabilise employment. Coupled with a relatively open immigration policy, the result has been a larger workforce, stronger domestic consumption, and renewed confidence in Spain’s long-term potential.
A housing crisis in the making
Yet beneath the optimism lies a growing concern. Housing costs in major cities have soared, squeezing locals and heightening tensions in tourist hotspots. Rising rents risk eroding the very social fabric that underpins economic growth.
The Financial Times warns that unless Spain addresses its housing shortage and ensures access to affordable homes, the momentum could stall. The country’s ability to balance booming demand with sustainable living conditions will be crucial.
Could Spain set the tone for Europe?
Spain’s trajectory challenges the idea that Europe must settle for sluggish growth. By combining investment in renewable energy, labour market reforms, and a pragmatic approach to immigration, Spain has charted a different course.
Whether this can be a lasting model depends on how well the government tackles its housing bottlenecks and maintains social cohesion. For now, Spain stands out as Europe’s unexpected frontrunner—an economy rewriting the narrative of the eurozone.
Source: Huffington Post