Innovative property investments
Investment property in Spain
Buying Guide
Economic Overview
Post-Franco recovery
Since Franco's death, Spain has had to work hard to recover.
It has had some phoenix-like moments, but like the rest of Europe, it has suffered some severe recessions as well.
However, Spain must be congratulated as it has achieved much in the short time since its release from Franco's grip.
It has travelled the path from dictatorship and isolation to a successful democracy in 30 years and, on the whole, it has kept on growing.
The result is that the average Spaniard is now 75% richer than he was 30 years ago and per capita income stands at around 80% of the EU average.
1975: initiating the turn-around
From 1975 the first major problem encountered by the economy was that its internal structure had not been revised in 30 years.
In the struggle to cope, wages had increased, unemployment was rife and as such social security costs were overwhelming and public sector industries were uncompetitive. Inflation stood around 16%.
The socialist government of Felipe González strove to turn Spain around.
The fact that they had a complete majority in parliament meant that there was no opposition to the severe policies that they were to put into practice over the next 14 years.
The government advocated policies such as the privatisation of the aforementioned state owned industries including electricity (Endesa), communications (Telefónica) and energy (Repsol), reined in social security costs, improved flexibility in the labour market and incentivised private capital investment.
The results were clear. By 1985 inflation was down to 4.5%, there was a budget deficit of 5% of GNP and wage increases were kept under the rate of inflation.
1986: joining the EU
In 1986 Spain joined the European Union and was therefore exposed to the harsh realities of European competition. Several outside factors made the transition to modern economy easier though.
A fall in oil prices, a tourism boom, depreciation of the US dollar and a further increase in foreign investment all helped to stabilise the economy enough to survive its new European status and growth levels from 1986 to 1990 averaged out at 5% per annum.
1990s: further liberalisation, privatisation and deregulation
The early 1990s brought a Europe-wide recession that hit Spain just as hard as everywhere else and recovery did not start until around 1994.
In 1992 Spain elected a conservative government and Jose Maria Aznar of the Partido Popular (PP) implemented policies that advocated liberalization, further privatisation and deregulation of the market.
In 1999 Spain became one of the first countries to implement the euro to replace the old peseta and managed to comply with all the requirements for entry.
Key facts
- Post-Franco, and in just 30 years, the average Spaniard is 75% richer and per capita income stands at around 80% of the EU average and growth continues
- In 10 years, a strict policy of privatisation and social security cuts alongside policies to improve labour market flexibility and incentivise private investment brought inflation down from 16% to 4.5%, the budget deficit to 5% of GNP and wage increases under the rate of inflation
- Joining the European Union in 1986 opened Spain up to fierce competition
- Spain maintained an average growth of 5% between 1986 and 1990 and recovered from the Europe-wide recession of the early 1990s by pursuing further liberalization, privatisation and deregulation of the market
- In 1999 Spain was one of the first to implement the euro and comply with requirements for entry
Downloadable Reports and Documents
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