Ready to discover how Spain became an economic powerhouse—and why it's still struggling to keep up with its neighbors? Dive into our fun deep-dive on Spain's journey from isolation to EU star, social spending, real estate bubbles, and pension woes! Don't miss the spicy takes and wild stats! Subscribe for more global stories, and drop a comment on what surprised you most! #Spain #Economy #EU #Politics #History
👉 This channel was created in collaboration with https://www.youtube.com/@costua
0:00 - Spain’s Economic Overview and Social Challenges
1:23 - Spain’s Path to European Union Membership
6:20 - The European Market’s Impact on Spain
6:24 - Economic Transformation and Sectoral Growth
13:55 - Spain’s Growth, Challenges, and Divergence
18:09 - The Construction Bubble and Economic Crisis
26:41 - Social Policies, Regulation, and Investment Obstacles
36:24 - The Pension Trap and Spain’s Fiscal Future
We're now available on Spotify! Listen now https://open.spotify.com/show/033ygZMll1PIfydayeyRct
👉 This channel was created in collaboration with https://www.youtube.com/@costua
0:00 - Spain’s Economic Overview and Social Challenges
1:23 - Spain’s Path to European Union Membership
6:20 - The European Market’s Impact on Spain
6:24 - Economic Transformation and Sectoral Growth
13:55 - Spain’s Growth, Challenges, and Divergence
18:09 - The Construction Bubble and Economic Crisis
26:41 - Social Policies, Regulation, and Investment Obstacles
36:24 - The Pension Trap and Spain’s Fiscal Future
We're now available on Spotify! Listen now https://open.spotify.com/show/033ygZMll1PIfydayeyRct
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NewsTranscript
00:00Spain has an economy of almost two trillion dollars and is among the four largest economies
00:05of the European Union and the 12th largest in the world. But there is a problem. In terms of
00:12income per capita, it lags far behind Germany, France, and other leaders of Western Europe.
00:17And the reason is not only that Spain earns less, the country has also taken on huge social
00:24obligations at the same time. In 2025, 13.7% of GDP was spent on pension payments and the pension
00:33fund itself ended the year with a deficit of 7.4 billion euros. And that's just one part of the
00:40problem. High social spending is combined with strict regulation of the labor market and business,
00:45which is why Spanish companies often prefer not to grow large so as not to take on new costs and
00:52restrictions as they grow. Spain is often called the most socialist country in Europe. What is it?
00:58A successful social model or an economy that is gradually starting to live beyond its means?
01:04In this video, we'll look at how Spain went from economic isolation to becoming one of the world's
01:10largest economies. What did the European Union give it? And how it is losing opportunities for
01:16development due to social populism, relying solely on its pleasant climate and favorable
01:21geography. The road to the European Union. Spain joined the European economic community,
01:29the predecessor of the European Union, on January 1st, 1986, after long and difficult negotiations.
01:36The accession process began in 1977, when the first democratic elections were held in the
01:42country after the death of dictator Francisco Franco. The new government immediately applied for
01:48membership. At the same time as Spain, Portugal and Greece also applied for EU membership, both of
01:55which had overthrown their own dictatorial regimes in 1974. And the prospect of these countries joining
02:02caused a mixed reaction in Brussels. On the one hand, EU members recognized that the inclusion of new
02:08countries in the common market would benefit everyone. On the other hand, there were concerns about
02:12whether countries with extensive experience of dictatorships would be able to adhere to the principles of
02:18democracy and human rights. That is why, before starting substantive negotiations, EU members set conditions for the
02:25candidates regarding the reform of their political systems. To prove its compliance with European standards,
02:31Spain carried out extensive legislative work over two years. A new constitution was adopted. The European Convention on Human Rights,
02:40the European Social Charter, the UN International Covenant on Civil and Political Rights,
02:45and the International Covenant on Economic, Social and Cultural Rights were ratified.
02:49And only after that, in 1979, did the accession negotiations began. Neighboring France was concerned about competition from Spanish farmers,
03:00the largest fishing fleet in Europe, and the possible influx of Spanish migrant workers.
03:06They insisted on a transitional period for Spanish agricultural products lasting from 7 to 10 years, and Spanish fishermen were
03:13to be granted equal access to the waters of other community members after 15 years.
03:19Restrictions on the movement of workers were also provided. Spain, accordingly, was dissatisfied with the discriminatory conditions imposed by its
03:27future partners.
03:28However, Prime Minister Felipe González agreed to them, following the advice of Margaret Thatcher, who in 1983 stated that it
03:36would be wiser not to irritate the member states by insisting on a perfect agreement,
03:41and first join the club, and then fight for a review of the entry terms from the inside.
03:46History proved that you're right. After joining the EU in 1986, and gaining the benefits associated with membership, Spain was
03:55later able to achieve a reduction in the transitional period for fishing,
03:59early abolition of quotas and tariffs on agricultural trade, and free movement of labor.
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06:20How did the European market restructure the Spanish economy?
06:24Joining the European economic community in 1986 was not just a political return to Europe for Spain, but the beginning
06:32of a deep economic restructuring.
06:35The country emerged from decades of economic isolation shaped by the autarkic policies of the Franco regime when foreign trade
06:41remained restricted.
06:42In 1985, exports and imports together accounted for only 35.4% of GDP.
06:51Today, Spain's foreign trade turnover reaches about 72% of GDP.
06:56In four decades, the country's economy has effectively become one of the most integrated into the European market.
07:03The most important change was access to the European market.
07:07With the removal of trade barriers, Spanish companies gained the opportunity to sell their products within a single economic area
07:13that covers approximately 450 million consumers.
07:17Accordingly, the geography of trade itself also changed.
07:21In 1985, European countries accounted for 53% of Spanish exports.
07:28Today, this share is already about 72%.
07:32The share of European countries in Spain's imports also increased during this time from 36% to 67%.
07:40But the main result of integration is not only the increase in trade volumes.
07:45Spain began to restructure its own economy to meet the needs of the large European market.
07:50That is why today the country is simultaneously a major industrial producer, an agricultural exporter, and one of the world's
07:57main tourist centers.
07:58A striking example of this transformation is the automotive industry.
08:02Spain has become one of the main manufacturing hubs of the European automotive industry.
08:07Today, the automotive sector accounts for about 10% of the country's GDP and provides about 9% of jobs.
08:16Its model is based on integration into European production chains.
08:2089% of cars produced in Spain are exported to Europe, as well as over 60% of manufactured automotive
08:26components.
08:28As a result, cars and components have become the largest category of Spanish exports.
08:33According to the Observatory of Economic Complexity, in 2024, this sector accounts for about one-sixth of the country's goods
08:42exports.
08:42And Spain's share in the global export of automotive products amounted to 4.38%,
08:50which secured at the seventh place among the largest exporters of automotive products in the world.
08:56Along with the growth of manufacturing, Spain increased the production of products with higher added value.
09:01The chemical and pharmaceutical industries, the production of medicines, cosmetics, perfumes, paints, and fertilizers make up more than 14%
09:09of the country's goods exports.
09:12And about 13% more comes from mechanical and electrical equipment, electronics, and components.
09:18That is, European integration gave Spain the opportunity to develop not just one narrow export sector,
09:25but an entire production system integrated into pan-European supply chains.
09:30At the same time, the country managed to maintain the competitive advantages of those sectors that have historically been linked
09:36to its climate and geography,
09:37particularly in agriculture.
09:39Today, agricultural products account for about 13% of Spain's merchandise exports.
09:46Spain has effectively turned its natural environment into an export advantage,
09:49supplying the European market with fruits, vegetables, and other agricultural products.
09:54Every year, the country exports over 7 million tons of fruit.
09:58Spain is especially strong in citrus fruits,
10:01with more than 3 million tons of oranges and about 2 million tons of mandarins.
10:08The country is also a world leader in the export of nectarines, peaches, and plums,
10:13and ranks second in the export of melons and lemons.
10:16And here's another example, olive oil.
10:20Spain produces about 40% of the world's olive oil,
10:24remaining the undisputed leader in the global market.
10:26Spain is also among the world leaders in winemaking.
10:29Every year, it exports over 2 billion liters of wine,
10:34second only to Italy in volume.
10:36At the same time, Spanish wine mainly competes in the lower price segment.
10:41France, for example, exports about a third less wine,
10:44but earns three times more foreign currency revenue from it.
10:47Overall, the European market became more than just a sales destination for Spain.
10:51It allowed the country to scale up what it already knew how to produce.
10:55And at the same time,
10:57it created incentives for the development of new manufacturing capabilities.
11:00In addition, there is another sector where Spain managed to turn its natural advantages
11:05into a huge economic resource, tourism.
11:09Today, Spain is second in the world in terms of the number of international tourists.
11:13In 2025, about 97 million visitors came to the country,
11:19making Spain second only to France, which welcomed about 107 million tourists.
11:24At the same time, in terms of economic impact, tourism in Spain surpasses that of France.
11:29In 2025, foreign tourists spent over 115 billion euros in the country,
11:36which is the highest figure in Europe and the third highest in the world after the USA and China.
11:42On average, one tourist spent about 1,144 euros in Spain,
11:47while the global average is 909 euros.
11:50Tourism and related industries make up about 15.5% of Spain's GDP.
11:56According to forecasts, their share could increase to over 16.5% by 2036.
12:03Integration with Europe gave Spain not only the opportunity to sell more,
12:07it also brought large-scale injections of funding into the country's economy.
12:11From 1986 to 2024, Spain received a net total of 268 billion euros from the EU budget.
12:21A significant portion of these funds was directed towards modernizing infrastructure.
12:25With the support of European funding, Spain developed an extensive network of high-speed railways and highways.
12:32It modernized energy networks, and about 7 million households gained access to high-speed internet.
12:39European support also extended directly to producers.
12:42More than half a million Spanish farmers regularly receive funding under the EU's Common Agricultural Policy.
12:49Spanish scientists have attracted about 17 billion euros in grant funding under the Horizon Europe program.
12:57That is, European funds did not work in isolation from the economy,
13:01but created an infrastructural and financial foundation for it.
13:05Roads and railways made it easier to move goods.
13:08The single market expanded potential demand.
13:11Agricultural subsidies supported producers.
13:13And science funding stimulated the development of new technologies.
13:17As the Spanish economy grew, the country's role within the EU also changed.
13:23Spain gradually went from being one of the main recipients of European aid
13:28to a country that makes a significant contribution to the Common Budget.
13:32Today, its annual contributions to the EU budget exceed the funds received from Brussels by more than 1 billion euros.
13:39The EU membership has become an economic multiplier for Spain, opening up a huge market and accelerating the modernization of
13:47infrastructure,
13:48provided access to capital, and allowed Spanish businesses to scale up their competitive advantages.
13:54Between the West and the East, European integration gave Spain a powerful boost.
14:00Today, Spain is the 12th largest economy in the world and the 4th in the European Union.
14:08Since joining the EU, its nominal GDP has increased more than tenfold,
14:12from $181 billion in 1985 to $1.91 trillion in 2025.
14:24But a high GDP does not necessarily mean a high standard of living.
14:28The Spanish economy serves a population of over 49 million people,
14:32which has been growing rapidly in recent years, largely due to migration.
14:37So, if we move from the overall scale to per capita indicators,
14:41the picture becomes much less impressive.
14:44In terms of GDP per capita, Spain occupies an intermediate position between the richest economies of Western Europe
14:51and the countries of Central and Eastern Europe.
14:53In 2025, this figure was about $38,600.
15:00This is less than in Germany, France, and Italy.
15:03At the same time, Spain is ahead of Czechia, Poland, and Bulgaria.
15:07Interestingly, this middle position also holds when it comes to growth rates.
15:11Today, Spain is developing faster than most of the major economies of Western Europe.
15:16In 2025, its GDP grew by 2.8%, while the French economy increased by only 0.8%,
15:26Italy by 0.5%, and Germany by 0.2%.
15:32However, the countries of Central and Eastern Europe, which started from a lower economic base,
15:37continue to catch up with the West even faster.
15:39In 2025, Poland grew by 3.1%,
15:44Bulgaria by 3.1%,
15:48and the Czech Republic by 2.6%,
15:51almost catching up with Spain.
15:54That is, Spain itself is also growing,
15:56but its advantage over the new EU members is gradually decreasing.
16:01The reason for this situation largely lies in productivity.
16:05Spain has managed to create a large and diversified economy.
16:09However, labor efficiency remains far from the level of Europe's leaders.
16:14According to the Organization for Economic Cooperation and Development,
16:18one hour of work by the average Spanish worker generates about $68.8 of GDP.
16:25This is only slightly above the average for the Organization for Economic Cooperation and Development,
16:30which is $67.5.
16:33In this regard, Spain lags significantly behind the leading economies of Europe,
16:38the United States, and Australia.
16:39At the same time, it is ahead of most Eastern European countries,
16:43Turkey, Israel, and Japan.
16:45The same can be seen in the actual consumption figures of the population.
16:49Individual consumption in Spain is about 92% of the EU average.
16:55This is the highest figure among the countries of the former Soviet bloc in Southern Europe,
17:00but it remains lower than in most Western and Northern European countries,
17:04except for Portugal.
17:07The situation with people's incomes doesn't look so optimistic either.
17:11The average annual earnings in Spain are about 32,678 euros.
17:17This is less than half of German salaries,
17:2041% less than French,
17:23and 12% less than Italian.
17:26However, economic well-being is not limited to salaries alone.
17:30According to the UN Human Development Index,
17:32which takes into account not only income,
17:34but also life expectancy, education,
17:37and other aspects of human well-being,
17:39Spain ranks 28th in the world.
17:42It lags behind Germany, the Netherlands, France, and the United Kingdom.
17:45And it is ahead of Italy and all the countries of Central and Eastern Europe.
17:50European integration definitely reshaped Spain's development,
17:53but the next stage of development turned out to be more difficult.
17:56Spain has already learned to produce and sell more,
18:00but it has not yet learned to produce as productively
18:02as the richest countries in Europe.
18:04That is why today it remains an economy between the West and the East.
18:10Developed enough to be one of the centers of the EU,
18:13but still not productive enough to join its club of the richest countries.
18:17The Construction Bubble
18:21Despite the fact that joining the European Union
18:24brought significant advantages to Spain,
18:26and stimulated economic development,
18:28it also had its negative consequences.
18:31In particular, Spain's accession to the Eurozone in 1999
18:35became the trigger for the biggest crisis
18:38in the country's post-war history.
18:41Thanks to the free movement of capital,
18:44market conditions in Spain came into line
18:46with those in the most developed European countries.
18:49In just one year, the average long-term loan rate dropped more than five-fold,
18:54from 11.7% to 2.2% per annum.
19:00This convinced many Spaniards that the time had finally come
19:04to fulfill their dream of buying their own home.
19:06The government, seeing an opportunity to solve the housing problem
19:10and attract citizens' funds to invest in the economy,
19:13actively promoted the spread of mortgage lending
19:16and the development of the construction sector.
19:19Borrowers received significant tax benefits.
19:22The money used to pay off the mortgage was exempt from income tax.
19:26Amendments to land legislation were adopted,
19:29which greatly simplified the allocation of land for construction
19:32and the rezoning of agricultural land.
19:34Thanks to these changes, between 1986 and 2006,
19:39the area of construction sites increased by an average of 44 hectares per day.
19:45All this stimulated a construction boom in the country.
19:48Between 2001 and 2007,
19:51the total amount of mortgage loans increased by 250%
19:55and lending to construction companies and realtors by 513%.
20:00During this period, about 600,000 new homes were built in Spain every year,
20:07more than in Germany, France, Italy, and the United Kingdom combined.
20:12Construction became the leading sector of the economy.
20:14It provided jobs for 2.9 million people,
20:18which made up 14% of the entire workforce in the country.
20:23The sector accounted for 12% of the country's GDP,
20:28more than double the equivalent figures in France and the United Kingdom.
20:32At the center of the mortgage boom were Cajas, the savings banks.
20:36These are regional financial institutions
20:38closely connected with local oligarchs and officials.
20:42They provided the same services as banks,
20:45but were not subject to the close supervision of the Central Bank of Spain.
20:49Due to the lack of oversight and systemic corruption,
20:52it was possible to get a Cajas loan without checking creditworthiness or credit history.
20:58Essentially, this was the Spanish version of what in America became known as subprime lending.
21:05Loans were given to people whose ability to pay back the money was questionable from the very beginning.
21:12According to the regulations of the Bank of Spain,
21:14a mortgage loan cannot be granted for more than 80% of the property's value.
21:18Then the Cajas gladly gave loans for
21:22100 or even
21:24110% of the property's value
21:26so that the family could buy furniture after moving into their new home.
21:30At the same time,
21:31the loan repayment period was very long,
21:33up to 40 years.
21:35People were in a hurry to take out housing loans
21:37because property prices were constantly rising by 10-15% per year
21:43from 1997 to 2007.
21:47The price per square meter of housing almost tripled from 1,000 to 2,900 euros.
21:54At the same time,
21:55the interest rates on loans were only 2-3% per year.
21:59Thanks to this,
22:00mortgages were considered very profitable,
22:02an investment without any risk.
22:05Even if at some point people lost the ability to pay their loan installments,
22:09they could sell the apartment,
22:11pay off the debt,
22:12and still have a profit left.
22:15This is how a classic speculative bubble was formed,
22:18which inflated itself.
22:21People took out loans because they believed that prices would keep rising.
22:25They created increased demand for real estate,
22:27which caused prices to rise even more.
22:30And this encouraged even more people to take out loans.
22:33Meanwhile,
22:34while housing prices and the size of mortgage loans were rising rapidly,
22:38the average salary in Spain remained stable.
22:41Labor productivity also remained unchanged.
22:44During the real estate boom,
22:46it grew by only 0.3% per year,
22:49which was the lowest rate in the EU.
22:53This was a warning sign indicating that people's ability
22:57to service their growing debt burden was decreasing.
23:00However,
23:01the government and the Bank of Spain were not concerned about this.
23:04The economy was thriving.
23:06From 1999 to 2003,
23:10GDP grew by an average of 3.8% per year,
23:14and from 2004 to 2008,
23:17by 3.1%.
23:19While in the European Union as a whole,
23:22the average growth was 2%.
23:24This created the appearance of incredible success for Spain,
23:29until the moment when the real estate bubble burst.
23:32This was triggered by the financial crisis of 2008,
23:36which began in the United States.
23:38The supply of assets on the international market sharply decreased.
23:42It became difficult for the Spanish Cajas to attract money.
23:46They started lending less,
23:47which resulted in a decrease in demand in the real estate market.
23:50This forced companies to stop construction.
23:53The number of completed projects dropped to less than 100,000 per year.
23:58Unemployment surged.
24:003.7 million people lost their jobs,
24:04including 1.7 million construction workers,
24:07which is 59% of everyone employed in the industry.
24:12By 2014,
24:13the unemployment rate exceeded 26%,
24:16and among young people under 25,
24:19unemployment reached 56%.
24:22Most of the unemployed could no longer service their loans,
24:25so banks began repossessing property from insolvent debtors.
24:28By 2012-2015,
24:31about 400,000 families were evicted from their homes.
24:36However,
24:37their hardships did not end there.
24:39According to Spanish law,
24:40a loan is not considered repaid after the collateral is ceased,
24:44but only when the bank has received the full amount of the loan.
24:47And since property values dropped by 37% after the crisis began,
24:51the value of the collateral was lower than the amount of the debt.
24:55So,
24:55after losing their homes,
24:57people often still owed the bank tens of thousands of euros.
25:00To save the country's economy from total collapse,
25:03the government turned to external assistance.
25:05European Union partners agreed to provide 100 billion euros,
25:09but only on the condition that the government significantly reduces its own spending
25:14and increases its revenues.
25:16Spain had to cut the salaries of
25:172.8 million civil servants
25:20and stop indexing pensions for
25:229 million pensioners,
25:24cut a number of investment projects,
25:26as well as raise the VAT rate from 16% to 18%.
25:32To stabilize the banking system,
25:34they created the so-called Bad Bank Cereb,
25:37a special institution where banks transferred all their non-performing assets,
25:42bad loans,
25:42and abandoned construction projects left unfinished due to the crisis.
25:46In total,
25:47Cereb received almost 200,000 assets
25:49with a combined value of over 50 billion euros.
25:53100 billion euros received from European Union partners
25:57were used for bank recapitalization,
26:00which allowed them to maintain their solvency.
26:02Instead, the Cajas, which were the main culprits of the crisis,
26:05were not rescued.
26:07Out of the 45 savings banks that operated in Spain before the mortgage crisis,
26:12only two small regional institutions remain today.
26:16Getting out of the crisis was difficult.
26:18Between 2008 and 2015,
26:22Spain's GDP fell by 26%,
26:25from 1.64 to 1.21 trillion.
26:30Economic growth resumed only in 2016.
26:34But even after that,
26:35Spain needed another seven years
26:37to return to its pre-crisis GDP level.
26:42How do you destroy the rental market?
26:46Dictator Francisco Franco,
26:48who was in power from 1939
26:50until his death in 1975,
26:54set himself the goal of eradicating
26:56left-wing political ideas in Spain forever.
26:58However, as history has shown,
27:02he did not succeed.
27:03Of the 50 years that have passed
27:06since the first democratic elections
27:07after the fall of the dictatorship,
27:09governments were in power for almost 30 years,
27:13formed by the Spanish Socialist Workers' Party.
27:16All of them traditionally pursue active social policies,
27:19trying to protect vulnerable groups of the population
27:22and introduce standards of equality.
27:24However, the enthusiasm for socialist practices
27:27often leads these governments
27:29to make misguided decisions,
27:30which result in problems for the country
27:32and slow down economic development.
27:34An example of such a decision
27:36is the current government's attempt,
27:38led by Pedro Sanchez,
27:39to regulate the housing rental market.
27:41After the crisis from 2008 to 2015,
27:44the construction of new housing in Spain
27:47slowed down significantly.
27:48So many Spanish families,
27:50as well as migrants,
27:51the country receives about 500,000 a year,
27:54are forced to rent housing.
27:56High demand has caused prices to rise,
27:59leading to dissatisfaction among renters.
28:01In 2019, the government of Pedro Sanchez
28:05passed a new housing law through parliament,
28:07which introduced a number of provisions
28:09aimed at protecting renters
28:11from price increases and sudden evictions.
28:14Landlords were required to sign contracts
28:16for at least five years,
28:17and if the landlord is a legal entity,
28:20for seven years.
28:22At the same time,
28:24during the term of the contract,
28:25rent increases were only allowed
28:27up to the Consumer Price Index.
28:29In effect, this means freezing the real price.
28:33Realizing that they were losing their income
28:35due to price restrictions,
28:37many homeowners simply refused
28:38to rent their properties
28:39to permanent residents.
28:42Many of them switched
28:43to much more profitable short-term rentals
28:45for tourists.
28:46The number of rental housing offers
28:48decreased by a third,
28:49and even more in large cities.
28:51In Madrid now,
28:52it seems there are half as many apartments
28:54as there were before the law was introduced,
28:56and in Barcelona,
28:58a quarter as many.
28:59Five years ago,
29:00nine families competed
29:01for each available apartment in Barcelona.
29:04Now, it's 54.
29:07The reduction in supply
29:08has led to higher prices.
29:10Having lost the ability
29:11to adjust housing prices quickly,
29:14owners started factoring in future increases
29:16right when signing contracts.
29:18As a result,
29:19the average rent has increased by 28%.
29:22According to market laws,
29:25increased demand should have led
29:26to a rise in investment
29:27in housing construction.
29:28However, this did not happen.
29:30Government intervention
29:32in price formation
29:33has made the real estate business unpredictable.
29:35So investment in housing construction
29:37in Spain remains at the 2019 level,
29:40while on average across the EU,
29:42they have increased by 10% during this time.
29:46And in regions where local authorities
29:47pursue overly active social policies,
29:50this leads to an investment collapse.
29:53For example,
29:54after Barcelona decided to allocate
29:5630% of the area
29:58in every new building for social housing,
30:01the number of construction applications
30:03dropped fivefold.
30:04So instead of solving the problem,
30:07the government only made it worse,
30:09provoking a new housing crisis.
30:11The contrast with Argentina is telling.
30:14During the pandemic,
30:15they introduced even stricter
30:17rent regulations there.
30:18Minimum three-year contracts,
30:20payments only in pesos,
30:22and limits on annual price increases.
30:24The result was similar.
30:26Owners started withdrawing housing
30:27from the market en masse,
30:29and the supply dropped sharply.
30:30In 2023,
30:32the government of Javier Millet
30:34completely abolished these restrictions.
30:36By 2025,
30:38the supply of rental housing
30:40had almost tripled,
30:41and the cost of rent
30:42had decreased by about 30%.
30:44Two governments faced the same problem,
30:47but chose opposite solutions.
30:49Spain tightened regulations,
30:51while Argentina abolished them.
30:53And the results turned out
30:55to be just as different.
30:57The curse of the 50th employee.
31:01Excessive regulation also holds back
31:03the development of Spanish business,
31:05especially where the economy needs rapid growth
31:08and a willingness to take risks.
31:10This is clearly seen
31:12in the high-tech startup market.
31:14The venture model works on the principle
31:16of many failures
31:17for the sake of one big success.
31:20Most funded companies do not survive,
31:22but one truly successful company
31:24can make up for the losses of all the others.
31:26Such companies are called gazelles,
31:29startups,
31:30capable of increasing production
31:32by more than 20% per year
31:34for at least three consecutive years
31:36and quickly scaling
31:38from a staff of a few
31:39to 100 employees.
31:41The problem with Spain
31:42is that there are extremely few
31:44such companies here.
31:45If on average across Europe,
31:47about half a percent of startups
31:49grow into the gazelle category,
31:50in Spain,
31:52it's only 0.1%.
31:54Which is five times less.
31:56As a result,
31:57it's harder for an investor
31:58to find the one
31:59that achieves great success,
32:00which compensates
32:01for dozens of failed bets.
32:03And therefore,
32:04the incentive to invest
32:05venture capital
32:06becomes weaker.
32:07The main reason
32:08for the lack of gazelles,
32:10according to investors,
32:11is that Spanish businesses
32:13themselves
32:13do not want to grow,
32:15since the government
32:16actively hinders this.
32:18And it's not about tax pressure.
32:20Taxes in Spain
32:21are about the same level
32:22as in most European countries.
32:24But the problem lies
32:25in administrative barriers.
32:27Labor legislation in Spain
32:29contains a large number
32:30of provisions
32:31for the protection
32:32of workers' rights.
32:33Most of them apply
32:34to large and medium-sized companies
32:36with 50 or more employees,
32:39which is why these provisions
32:40are called
32:41the curse of the 50th employee.
32:43From the moment
32:44the staff reaches 50 people,
32:47the company is required
32:48to comply with a quota
32:50for hiring people
32:51with disabilities,
32:522% of the total staff.
32:55Under the supervision
32:56of the Local Labor Protection Authority,
32:58a workers' committee
32:59must be established
33:00and the administration
33:01is required to coordinate
33:03any decisions with it
33:04that concern employees,
33:06dismissals,
33:07transfers between departments,
33:09changes in work schedules,
33:10and pay.
33:11An equality plan
33:12is mandatory,
33:13which must ensure
33:14equal opportunities
33:15for men and women
33:16and prevent sexual harassment.
33:18The fine for violating
33:19the equality plan
33:20can reach up to
33:21225,000 euros.
33:24VAT reporting
33:25Small businesses
33:27submit it quarterly,
33:28while medium-sized businesses
33:30do it monthly.
33:31The company also loses
33:32the ability to submit reports
33:34in a simplified format.
33:35That's why many businesses
33:36in Spain,
33:37even if they have
33:38the opportunity to expand,
33:40avoid doing so
33:41in order not to fall victim
33:42to the curse
33:43of the 50th employee.
33:44There are very few
33:46companies in the country
33:47that are able to grow
33:48to a medium or large scale.
33:50And it is precisely
33:51these kinds of businesses
33:52that usually have
33:54higher labor productivity,
33:55invest more,
33:56and create greater added value.
33:58Medium and large companies
33:59make up only 0.8%
34:01of all businesses in Spain.
34:03For comparison,
34:04in Germany,
34:05their share reaches 2.5%,
34:07which is more than
34:08three times higher.
34:10In 2019,
34:12shortly after the socialist government
34:14of Pedro Sánchez came to power,
34:16the Ministry of Economy
34:17conducted an audit
34:18of the legislation
34:19regulating business.
34:21It turned out
34:21that there are
34:22130 regulations
34:24that hinder
34:25the operation of businesses.
34:27However,
34:27instead of making it
34:28easier to do business,
34:30the government chose
34:31to introduce
34:31new regulations.
34:33For example,
34:34previously,
34:34equality plans
34:35were only mandatory
34:36for companies
34:37with more than
34:37150 employees.
34:39In 2021,
34:41this requirement
34:42was extended
34:43to companies
34:43with at least
34:4450 employees.
34:46At first glance,
34:47the Spanish economy
34:48seems attractive
34:49for foreign investment.
34:51In 2024,
34:53Spain ranked third
34:54after Luxembourg
34:56and France
34:56in terms of
34:57total foreign direct
34:58investment in Europe.
35:01The end of 2024,
35:05the total amount
35:06of accumulated
35:07foreign direct investment
35:08was 916.7 billion euros,
35:12of which
35:13almost
35:14221 billion euros,
35:16or more than
35:1724%
35:18of the investments
35:19were directly
35:20in real estate.
35:22Thanks to its
35:23pleasant climate,
35:24beautiful nature,
35:25sea,
35:26and ocean,
35:27Spain attracts
35:27foreigners
35:28from wealthy countries,
35:30especially those
35:31of retirement age.
35:32English people,
35:33Germans,
35:34and people
35:34from northern European
35:35countries
35:36who moved to the country
35:37to enjoy a pleasant
35:38old age.
35:39According to the
35:40annual population census
35:41of the National Institute
35:42of Statistics of Spain,
35:44as of January 1st,
35:452025,
35:46there were
35:47548,000 foreigners
35:50aged 65 and over
35:51living in the country,
35:53compared to
35:54426,000 in 2020.
35:56Yes,
35:57in
35:582024,
36:0027.2%
36:01of all home purchases
36:03in the Canary Islands
36:04were made by foreigners.
36:06In the province
36:07of Santa Cruz
36:08de Tenerife,
36:09their share reached
36:10over 33%.
36:14Spain sells its climate
36:16and lifestyle,
36:17just like other countries
36:18sell cars or oil.
36:21The Pension Trap
36:24Spain is taking on
36:26more and more
36:26social obligations.
36:28The biggest of these
36:29is the pension system,
36:30whose costs are rising
36:31as the population ages.
36:33According to estimates
36:35by the Organization for
36:36Economic Cooperation
36:37and Development,
36:38pension expenditures
36:39will be one of the
36:40main sources of
36:41fiscal pressure on
36:42Spain in the coming
36:43decades.
36:43In 2025,
36:46Spain spent
36:4613.7%
36:48of its GDP
36:49on pensions.
36:50According to the
36:51forecast,
36:52by 2050,
36:53this share will
36:54increase to
36:5517.3%,
36:57and this will be
36:58the highest rate
36:59in the world.
36:59The Spanish pension
37:01system operates
37:02on a solidarity
37:03principle.
37:04Pensions for current
37:05retirees are funded
37:06by contributions
37:07from current workers.
37:09The amount of the
37:10payment depends
37:11on the contribution
37:12history and earnings
37:13throughout the working
37:14career.
37:14The cost of such a
37:16system for workers
37:17is high.
37:18The total pension
37:19contribution is
37:2028.3% of salary,
37:2423.6% is paid
37:26by the employer,
37:27and another,
37:294.7%,
37:30is withheld
37:31from the employee's
37:32salary.
37:33In return,
37:34the guarantees
37:34for pensioners
37:35are among the most
37:36generous in the world.
37:38In 2026,
37:40the minimum age
37:41pension will be
37:42888.7 euros
37:45per month,
37:45and the maximum
37:473,359.6 euros.
37:51According to the
37:52Organization for Economic
37:54Cooperation and Development,
37:55the average pension
37:56in Spain provides
37:57about 87%
37:58of the previous salary.
38:00For comparison,
38:01in France,
38:02this figure is
38:0272%.
38:04In Germany,
38:0555%.
38:06In Poland,
38:0837%.
38:09And the average
38:10across the Organization
38:11for Economic
38:12Cooperation and Development
38:13is about
38:1461%.
38:15And this difference
38:16has only increased
38:17over time.
38:18From 2000
38:20to 2022,
38:21the average
38:22old age pension
38:22in Spain
38:23grew by
38:2444.5%,
38:26while the average
38:28salary increased
38:28by only
38:2919.7%.
38:30That is,
38:32pension incomes
38:33grew more than
38:33twice as fast
38:34as the earnings
38:35of working people.
38:37The higher
38:38the pension guarantees,
38:40the greater
38:40the burden
38:41on those
38:41who are financing
38:42them today.
38:43And for Spain,
38:44this is especially
38:45critical,
38:46since the number
38:47of pensioners
38:47is increasing,
38:48while the ratio
38:49between workers
38:50and pension recipients
38:51is getting worse.
38:52We've already
38:52discussed this.
38:53Why does such
38:54a demographic trend
38:55become a problem
38:56for the economy?
38:56In our video
38:57on the Tzina Der Javi channel,
38:59in 50 years,
39:00there will be
39:01no Ukrainians.
39:02What should be done
39:03about demographics?
39:04In 2010,
39:05the balance
39:06of Spain's
39:07pension system
39:07was in deficit
39:08for the first time.
39:09And since then,
39:10the government
39:11has lacked enough money
39:12every year
39:13to cover all
39:13the designated payments.
39:15To find funds
39:15to cover this deficit,
39:17it was necessary
39:17to increase
39:18the financial pressure
39:19on workers
39:19and businesses.
39:20Since 2023,
39:22an additional
39:22intergenerational
39:23solidarity contribution
39:24has been introduced,
39:25which is gradually increasing.
39:27Initially,
39:28it was 0.6%
39:29of the salary.
39:30In 2026,
39:32it amounts to
39:330.9%,
39:35of which 0.75%
39:37is paid by the employer
39:39and 0.15%
39:41by the employee.
39:43And by 2029,
39:45the contribution
39:45will reach
39:461.2%
39:47of the salary.
39:49Although the levy
39:50helps to alleviate
39:50the problem,
39:51it does not
39:52completely solve it.
39:53In the 2025
39:54financial year,
39:55the National Institute
39:56of Social Security,
39:57the Spanish pension fund,
39:59ended with a deficit
40:00of 7.4 billion euros.
40:03It has to be covered
40:04with funds
40:04from the state budget.
40:06At the same time,
40:07the government
40:07is taking measures
40:08that cause outrage
40:09not only in Spain itself,
40:11but also
40:11in other EU countries.
40:14This is about
40:14the misuse
40:15of European aid funds.
40:17In 2020,
40:19European countries
40:20jointly tried to mitigate
40:21the consequences
40:22of the COVID pandemic.
40:25To stimulate
40:25economic recovery,
40:27the leaders
40:27of European countries
40:28agreed to issue
40:29joint bonds
40:30totaling
40:31577 billion euros.
40:34These funds
40:35were used
40:36to launch
40:36the Next Generation
40:37EU program,
40:39which included
40:39projects within
40:40the framework
40:41of the green transition,
40:42digitalization,
40:43infrastructure development,
40:44and economic reforms.
40:46Spain was among
40:47the largest recipients
40:48of aid.
40:49It was allocated
40:5080 billion euros
40:52in non-repayable grants
40:54and 83 billion
40:56in concessional loans.
40:58According to the conditions,
41:00the money had to be used
41:01for specific projects
41:03and could not be used
41:04for current spending.
41:06According to the report
41:08of the Spanish
41:08Court of Auditors,
41:09published in 2024,
41:11the government redirected
41:13part of the European funds
41:14to cover the pension
41:15system deficit.
41:17At that time,
41:18it involved the misuse
41:19of 2.4 billion euros.
41:22The first scandal
41:23of the Pedro Sánchez government
41:25was hushed up.
41:26However,
41:26the investigation
41:27into the abuses
41:28did not stop in 2025.
41:30The Spanish newspaper
41:32El Mundo
41:33published information
41:34that the government
41:35transferred
41:363 billion euros
41:37from energy development
41:39projects
41:39to pay pensions
41:40and another
41:422.2 billion euros
41:44from industrial
41:45transformation funds
41:46to other types
41:47of social assistance.
41:49In total,
41:49according to El Mundo,
41:51the government redirected
41:52more than 10 billion euros
41:53of European aid
41:55to the social sector.
41:56Budget problems
41:57created additional room
41:58for maneuver
41:59for the government.
42:00Due to the lack
42:01of a stable majority
42:02in parliament,
42:03Spain has not been able
42:04to adopt a new state budget
42:06since 2023.
42:07Therefore,
42:08the country has been living
42:09under a rolled-over budget
42:10from the previous year
42:12for the third year,
42:13and the government
42:13is forced to manually
42:15redistribute state funds
42:16among different sectors.
42:17In such conditions,
42:19it is much easier
42:19to change the allocation
42:20of expenditures.
42:21For example,
42:23in 2025,
42:25the government deemed
42:26projects for building
42:26charging stations
42:27for electric vehicles
42:28and solar power plants
42:30as not a priority
42:31and transferred
42:321.3 billion euros,
42:35which were allocated
42:36for these projects
42:37by the EU,
42:38to the pension fund
42:39to ensure the timely payment
42:40of pensions.
42:41Such actions by Spain
42:42sparked criticism
42:43among the public
42:44and other EU countries,
42:45especially in Germany
42:46and the Netherlands.
42:47We demand,
42:49first of all,
42:49that any violations
42:50are prosecuted
42:51wherever appropriate,
42:52and secondly,
42:53that there be full transparency
42:55at all times.
42:57And thirdly,
42:58any funds that were not used
42:59for their intended purpose
43:00must be returned,
43:02stated the president
43:03of the European Taxpayers Association,
43:05Michael Eager.
43:07The Spanish government
43:08is trying to quell
43:09the scandal
43:10by convincing
43:11the European Commission
43:12that these transfers
43:13were just a regular
43:14financial maneuver
43:15and that the funds
43:16will eventually return
43:17to the projects
43:18for which they were intended.
43:19However,
43:20since the state budget deficit
43:22has not gone away,
43:23there is no answer
43:24to the question
43:24of where the government
43:25will get the necessary money
43:27for this.
43:29They ran out
43:30of other people's money.
43:32Margaret Thatcher
43:33once used this phrase
43:34to describe the policies
43:35of our predecessors,
43:36the British Labour Party.
43:38Socialist governments
43:39traditionally create
43:40financial chaos.
43:41They always run out
43:42of other people's money.
43:44These words
43:45can be fully applied
43:46to the record
43:46of Spain's current government,
43:48which consistently
43:49expands social guarantees,
43:50but does so
43:52in an economy
43:53where productivity
43:54and income per worker
43:56remain lower
43:57than in the leading countries
43:58of Western Europe.
43:59As a result,
44:01social obligations
44:02are growing faster
44:03than the economy's
44:04ability to finance them,
44:05and the budget deficit
44:06is becoming chronic.
44:08When its own resources
44:09are insufficient,
44:10the government
44:11is forced to look
44:12for additional sources
44:13of funding,
44:13increase the tax burden,
44:15and use unconventional
44:17budget solutions.
44:18At the same time,
44:19excessive regulation
44:20complicates business scaling
44:22and prevents the economy
44:24from fully realizing
44:25its potential.
44:27The main problem
44:28in Spain
44:28is that the state
44:29is taking on
44:30more and more obligations
44:31while the economy itself
44:33is not becoming
44:34productive enough
44:35to support them
44:36without strain.
44:38And if this imbalance
44:39persists,
44:40the current model
44:41of the welfare state
44:42will increasingly serve
44:43not to build prosperity,
44:45but for consuming resources
44:47that the economy
44:48has not yet managed
44:49to create.
44:51Spain became wealthy
44:53thanks to an open economy
44:54and the European Union,
44:56but does it now risk
44:57losing this advantage
44:58because of the
44:59excessive role
45:00of the state?
45:01What do you think?
45:03Write in the comments.
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