Shorouk Express
“Spain shows Europe how to keep up with America’s economy” – such a declaration might startle readers who vividly remember the recent economic and debt crisis, when Spanish default seemed a real possibility. Yet these are the words chosen by the liberal weekly The Economist, which observes that Spain is outpacing the US in both economic growth and job creation, with its GDP growth of 3% almost four times higher than the eurozone average of 0.8%. This Spanish success story stands in sharp contrast to Europe’s persistent growth lag behind America – a gap so significant that, as we noted in our December 2023 press review, by 2035 the prosperity difference between the average European and American is projected to match today’s divide between Europeans and Indians.
Spain’s success, the weekly explains, rests on the financial system and labour market reforms implemented by previous governments during the recession, which, combined with EU funds, strong immigration, renewed tourism and rising services exports, are now bearing fruit.
Perhaps even more striking is that it is not only Spain performing well, but also all other southern European countries. These nations, once the hardest hit by the financial and economic crisis of 2009-2014 that threatened the stability of the eurozone, earned the unflattering label “PIGS,” an acronym for Portugal, Italy, Greece, and Spain. At the time, some even entertained theories attributing their weaker economic performance to the region’s warm climate and abundant sunshine, thought to encourage idleness.
Such theories can be dismissed as deterministic or outright racist, of course, but above all they have not aged well, because, as Ignacio Fariza writes in his article “Revenge of the PIGS” on El País, these nations’ climatic conditions now power their renewable energy advantage. According to Fariza, their lower dependence on Russian energy sources, together with a higher share of the service sector, has proved a significant edge over northern Europe after the Russian invasion of Ukraine. Spain, he argues, long the laggard of industrial revolutions, now finds itself with a “golden opportunity” – industrial electricity costs 40% below EU averages – offering a chance not merely to halt deindustrialisation but to attract fresh industrial investment. The journalist points to Amazon’s €16 billion data centre investment in Aragon, leveraging cheap renewable energy, available land and skilled labour, as potentially just the beginning, with more energy-intensive industries likely to follow.
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The enthusiasm for the coming prosperity and bright tomorrows is tempered by Juan Ramón Rallo’s analysis in El Confidencial, where he claims to spot a stark disconnect between Spain’s crown as the OECD’s most successful economy and how Spaniards themselves perceive it. While headline figures show robust growth, Rallo argues that ordinary Spanish households’ experience tells a different story. The paradox’s root lies, according to his analysis, in immigration: of the 1.74m jobs created since 2019, foreign workers claimed 1.35m. Thus, he contends, Spain’s expansion stems primarily from imported labour rather than productivity gains or rising living standards among existing residents, explaining why many Spaniards feel excluded from the stellar growth celebrated by Prime Minister Pedro Sánchez’s Socialist government.
In a similar vein, Gloria Mena of La Sexta, a news outlet, observes that Spaniards’ purses remain stubbornly thin despite the macroeconomic feast. While headline figures sparkle, wealth concentration tells a grimmer tale: a tenth of the population commands more than half the nation’s riches. The modal salary – a mere €14,586 – speaks volumes about the average Spaniard’s lot.
Living standards and immigration are prominent themes also in neighbouring Portugal. The western neighbour’s economic growth seems to have translated more effectively into rising living standards for its residents. Paulo Lopes points out in The Portugal News that the OECD ranks Portugal among its top five members for household disposable income growth since pre-pandemic levels. Strong wage increases and robust domestic consumption have driven this success, with the economy set to grow by 2% in 2025 – markedly above eurozone forecasts.
Writing for Renascença, André Rodrigues reports that Portugal needs between 50,000 and 100,000 immigrants yearly to maintain growth. A University of Porto study suggests an even higher figure of 138,000 newcomers annually would be needed to reach the EU’s wealthiest ranks by 2033. The economic case is clear: immigrants contributed over €2 billion to social security in the first eight months of this year, while drawing only €380m in benefits.
In Italy, there is palpable relief at no longer being Europe’s economic problem child. As Gianluca Zapponini writes in Formiche with undisguised satisfaction, Europe’s fiscal disciplinarians find themselves in an awkward position. In the latest European Semester review – the annual assessment of EU members’ budgets – Brussels has praised Italy, Greece, and France for their 2024 fiscal plans while criticizing the traditionally frugal northern states. Germany, Finland, and the Netherlands, long the champions of strict spending limits and low deficits, have been labeled “not fully compliant” with the Stability and Growth Pact, he points out. The assessment by Economics Commissioner Paolo Gentiloni reveals what Zapponini sees as a stark reversal: the former enforcers of fiscal orthodoxy are now struggling to meet their own standards.
Czech Republic: Eight years to match German wages?
“I need eight years and we’ll have German-level wages.” This declaration by Czech Prime Minister Petr Fiala, a conservative academic turned politician, triggered endless mockery. While southern European economies are thriving, the Czech Republic under his coalition, which took power in 2021 after defeating populist billionaire Andrej Babiš, has not only failed to narrow the gap with Germany – it has been overtaken by Poland.
As Jan Moláček observes in Deník N, Poland faced identical challenges: a war next door, Ukrainian refugees, and soaring energy costs – the very factors Mr Fiala cites to explain his government’s economic failures. Poland even manages to spend 4% of GDP on defense, twice the Czech level. The irony, Moláček concludes, is that Fiala’s “brave positive vision” bears an uncomfortable resemblance to the very populism he once denounced.
