Spain’s Economy Grows Rapidly, But Citizens Struggle Amid Wage Stagnation and Housing Crisis
Spain’s strong GDP growth contrasts with wage stagnation and soaring housing costs, fueling citizen dissatisfaction amid rising living expenses.
- • Spain's GDP grows rapidly but GDP per capita lags due to population growth from immigration.
- • Salaries have risen 20.4% since 2019 but still lag 25% behind European averages.
- • Inflation and rising housing costs, particularly an 87.8% increase in new home prices, squeeze consumers.
- • The tax burden on families has increased, and young people face severe housing affordability challenges.
Key details
Despite Spain's impressive economic growth, reaching around 3% annually and standing as the Eurozone’s fastest-growing economy since 2023, many Spaniards do not feel the benefits in their daily lives. This paradox arises because while total GDP is rising, GDP per capita grows at only half that rate due to population increases driven by immigration, diluting wealth gains across more people. Salaries have increased about 20.4% since 2019 but remain approximately 25% below the European average, with the typical monthly salary at €1,660. Meanwhile, inflation has surged 22.1% over the same period, eroding purchasing power by about 1.7% overall and pushing up essential living costs dramatically—food prices alone have risen nearly 39%, and housing costs are particularly acute, with new homes increasing 87.8% in price.
Housing affordability remains a critical concern, especially for young Spaniards who often face situations where housing costs can exceed their entire income. The influx of over two million immigrants since 2019 has intensified demand, further inflating prices. Additionally, the family tax burden has risen, now consuming 12.6% of income, up from 10.8% pre-pandemic, resulting in €35 billion more in taxes taken from households.
Economist Ignacio de la Torre highlights that the growth is driven more by quantity—largely due to immigration raising consumption—than by increases in average family income. He emphasizes the urgent need to expand housing supply to relieve market pressures. Nobel laureate Daron Acemoglu adds that Spain still faces challenges in productivity growth and affordable housing access, especially for youth. He points to broader risks in the global economic environment but sees potential in Spain expanding its non-tourism export sectors.
In sum, while Spain’s headline economic numbers show vigorous expansion, a mix of inflation, wage stagnation, housing shortages, increased taxation, and demographic pressures contribute to widespread public sentiment that the economy has worsened since before the pandemic. Experts agree that policy focus on raising wages, expanding affordable housing, and boosting productivity is crucial for sustainable improvements in living standards moving forward.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.