Is Spain making a terrible mistake?

Added: 2026-05-30

[00:00:00]So this is quite remarkable.

[00:00:02]Over the last years, Spain has transformed.

[00:00:05]Their economy grew faster than almost any developed country in the world, faster than the US, and twice as fast as the EU average.

[00:00:12]But not just that.

[00:00:14]Out of the roughly 800,000 new jobs the EU created last year, two out of every five were in Spain.

[00:00:20]But here's the catch.

[00:00:22]These are not six figure jobs.

[00:00:24]Spain is not growing because of tech or finance.

[00:00:27]They primarily created these jobs in hotels, bars and restaurants.

[00:00:31]And since 2022, 70% of all new jobs they created were filled by immigrants.

[00:00:45]Spain is changing.

[00:00:46]Over the last years, their are foreign born population increased on average by well over 600,000 people per year.

[00:00:53]That's the equivalent of adding a city the size of Malaga each year.

[00:00:57]Is Spain making a terrible mistake?

[00:00:59]This is the Spanish economy with... Hindsight.

[00:01:04]If you've been following my channel for a while, you probably know that I'm an immigrant from the Netherlands.

[00:01:08]I live in Barcelona with my wife, who is from Mexico, and our two kids, of which the youngest was born over here in the city.

[00:01:15]And that makes me part of the problem, but it also gives me some first hand experience.

[00:01:20]Spain has some of the lowest fertility rates in the developed world, only behind Korea and Poland.

[00:01:25]Their population is getting older and many businesses struggle finding workers.

[00:01:30]Spain is increasingly seeing immigration as something that is necessary to sustain economic growth and to offset some of these demographic challenges, but I think you will be surprised at how far they're willing to go.

[00:01:44]Spain in the late 1950s was poor and isolated.

[00:01:48]Much of the population lived with the memory of civil war and decades of economic stagnation.

[00:01:54]Their productivity lagged far behind much of Western Europe, and Italy's productivity was about 40% higher than Spain's.

[00:02:02]Under Franco's dictatorship, Spain was cut off from the rest of Europe until he changed course In 1959, he pushed through far reaching reforms that promoted the country as a destination for travel and investment, and the timing couldn't have been better.

[00:02:17]Across northern Europe, incomes were rising sharply.

[00:02:21]Millions of families were now taking their first holidays abroad, and Spain had something that many of these countries didn’t have; thousands of kilometers of Mediterranean coastline, warm weather, and prices that felt unbelievably cheap.

[00:02:35]These reforms kickstarted the first period of intense tourism growth, with nearly 32 million arrivals in 1973.

[00:02:43]This, for many Spaniards, was part of something much bigger.

[00:02:46]They felt that Spain was finally catching up with the rest of Europe.

[00:02:50]Their economy grew on average with 5.5% per year.

[00:02:54]That was amongst the highest in Europe at that time.

[00:02:57]And that's when Franco passed away.

[00:03:03]His death sent shockwaves through the country.

[00:03:05]Spain was a dictatorship.

[00:03:07]Its government owned many of the factories, shipyards and large companies, employing millions of people.

[00:03:14]Their economic model was designed to provide stability and to create employment.

[00:03:19]During the Franco years, unemployment was incredibly rare.

[00:03:22]But when he passed, the resulting democratic reforms led to millions of people now being unemployed.

[00:03:29]The transition to democracy was painful.

[00:03:32]Spain opened itself to Europe, but this meant that their companies suddenly had to compete with far more productive European economies.

[00:03:40]They needed another driver of employment and economic growth, and they needed it fast.

[00:03:46]In 1992, Barcelona hosted the Olympic Games, and to facilitate the event, millions were invested in infrastructure and marketing.

[00:03:55]But the joy of the event was underscored by deep economic troubles.

[00:04:00]The Spanish currency had earlier lost two thirds of its value in just five years, but this had a flip side.

[00:04:07]A weaker currency meant that prices in Spain for foreigners were suddenly much cheaper.

[00:04:13]The Olympic Games and a weak currency together helped kickstart a second period of intense growth for Spain's tourism sector.

[00:04:21]Spain found its new economic model.

[00:04:23]This time it was built around demand from foreign countries.

[00:04:26]Tourism, real estate, services... The Spanish economy is still heavily tied to these sectors, but today there are no longer driving growth.

[00:04:36]They created a problem that the government is now trying to solve through immigration.

[00:04:41]So, this is the part where I usually have a short sponsored segment, but I couldn't find the sponsor in time, which unfortunately means that to break even with all that I'm investing into researching and editing these videos, I need to get about 700,000 views, which most likely means that I will lose money and that is okay.

[00:04:58]But if you're looking for a way to support my work, I do provide an option to join as a channel member.

[00:05:04]Just scroll down.

[00:05:05]There's a button over there that says join, and if you click on that, you see a couple of options for how you can support me in my work to continue making these videos.

[00:05:13]Either way, no pressure, and I really appreciate that you're here.

[00:05:15]And let's now go back to the video Today, much of the Spanish economy depends on tourism, real estate and foreign demand.

[00:05:25]Millions of jobs are tied to these sectors, and a key driver of economic policy has been to create employment.

[00:05:32]Unemployment dropped from a historic 26% of the working age population in 2013 to about 11% last year.

[00:05:41]That's a tremendous development, but it is still the highest unemployment rate of any developed country in the world, with a population that is aging and a generous welfare state.

[00:05:51]Spain must have a labor force that is capable of funding this all.

[00:05:55]But the entire point of economic policy is not that you grow.

[00:05:59]The point is that you improve lives.

[00:06:00]And that is something where Spain has been falling short By the early 2000, the main driver for growth was construction.

[00:06:09]This employed millions of people.

[00:06:10]But when the financial crisis hit, the housing market collapsed and construction projects stopped.

[00:06:17]The shock spread rapidly through the country.

[00:06:30]A quarter of the workforce was now unemployed as the construction sector slowed down.

[00:06:36]In its peak year, they built well over half a million new homes, which is more than Germany, France and the UK combined.

[00:06:42]But after the crash, they stopped building almost entirely.

[00:06:46]And that created a new problem they now built amongst a few storms in the entire developed world, which would make sense if you don't have an urgent housing crisis and demand for homes isn't that high.

[00:06:58]But if you're also pushing policies that add extra demand for homes like immigration, that could add immense pressure, and we’ll get to that.

[00:07:06]But in the 2010s, the priority was to prevent an all out social collapse and to restart economic growth as quickly as possible.

[00:07:15]So they turn to tourism, hospitality and services.

[00:07:19]They knew that these sectors could generate new jobs fast.

[00:07:23]The Spanish economy ultimately recovered and unemployment fell.

[00:07:27]By the mid 2010s, they were growing again when in parts of North Africa, following the Arab Spring, political instability and unrest meant that fewer European tourists chose to travel here.

[00:07:40]And that was great news for Spain.

[00:07:42]The Arab Spring started another wave of growth for Spain's tourism sector.

[00:07:47]At the time that Airbnb became more widely used.

[00:07:50]The sunny beaches of the Costa Brava, the Mediterranean islands and the architectural masterpieces in cities like Sevilla and Madrid helped Spain become one of the top global tourist destinations, and they attracted remote workers, retirees and other types of immigrants.

[00:08:07]But as time passed, the Spanish population was becoming older.

[00:08:11]Today, about 20% of the population is over the age of 65, which is high and slightly above average for Europe, but this is particularly troublesome if it is paired with low birth rates.

[00:08:23]That is where Spain truly stands out.

[00:08:26]Over the past two decades, Spanish women are having fewer and fewer kids.

[00:08:31]The number of babies that were born to Spanish mothers have almost halved since 2009, and this could become deeply problematic.

[00:08:39]So having kids in Spain is very difficult.

[00:08:41]And my wife and I, we have two kids, but we'd love to have a third one.

[00:08:45]But the problem is that it doesn't fit here in our house, so we would have to move somewhere else.

[00:08:49]But we are currently paying about €20 per square meter, which means that if we move to a bigger place, we have an extra bedroom that will cost us about €500 extra per month.

[00:08:59]And then on top of that, the kid will have to go to school, which is another €600 per month.

[00:09:04]And there are some tax benefits for people with bigger families.

[00:09:08]But all in all, conservatively we will be paying between €1000-1500 extra per month.

[00:09:14]If we decide to have another kid.

[00:09:16]That is our math and it can be done a lot cheaper.

[00:09:19]But it's true for almost everybody that having kids costs a lot of money, and particularly because of housing.

[00:09:34]Nationwide, the cost of rent has nearly doubled over the past ten years.

[00:09:38]In some cities, it is even worse.

[00:09:41]If you now want to buy an apartment in a city where I live, in Barcelona, a 120 square meter flat will set you back over €600,000.

[00:09:50]To afford this, you must pay taxes, a down payment and have sufficient leftover, which comes down to you having to save about a quarter of a million euros in a city where many people are spending half their income on rent.

[00:10:03]So fixing low birth rates probably would start by making life a little bit more affordable, or by providing more jobs inside the country where the wages are high and on paper.

[00:10:14]Spain has been doing quite well.

[00:10:16]Over the past 5 to 6 years, their economy was on fire.

[00:10:20]Spain became one of the fastest growing economies in Europe, and by extend the world.

[00:10:26]They created millions of new jobs.

[00:10:28]Tourism broke record after record, and the Spanish government adopted one of Europe's most open approaches toward immigration.

[00:10:53]They argued the country needed workers, taxpayers, and population growth to sustain the economy.

[00:11:12]This had already been set in motion in the early 2000s, and since then, Spain's population growth has been entirely driven by immigration and their foreign born population grew fivefold.

[00:11:24]But this wasn't paired with a plan to massively increase housing supply, to raise productivity or create enough high paying industries to absorb that growth sustainably.

[00:11:34]So Spain ended up in a very strange situation.

[00:11:38]The country was growing rapidly on paper, but many Spaniards increasingly felt locked out of the prosperity that that growth was supposed to create.

[00:11:47]They saw the economy growing around them and not for them.

[00:11:52]So the problem right now is that immigration is increasingly being used as a tool for economic growth, to pay for Spain's generous welfare state, and to drive growth in sectors that do not provide a lot of high paying jobs like tourism or hospitality.

[00:12:06]But there does exist in other way.

[00:12:09]Barcelona has shown this.

[00:12:12]In 1992, they hosted the Olympic Games.

[00:12:16]They reinvented themselves as a global tourism hub and with tremendous results.

[00:12:21]The city has now become a global icon and that was by design.

[00:12:26]But now, once more, they are reinventing themselves.

[00:12:29]So the reason why I move here to Barcelona is because the city is arguably one of the best places in the world to live.

[00:12:36]It's not just what the city has to offer, beaches, tourism and restaurants.

[00:12:40]We are just one hour away from the Costa Brava, where you'll find one of the most scenic beaches in the world.

[00:12:47]If you drive two hours land inwards, you're in a ski resort and drive a little further and you're in the Pyrenees, Andorra and southern France.

[00:12:55]And that presents a huge opportunity.

[00:12:57]So Barcelona had the insight that they can leverage the attractiveness of its city for productivity.

[00:13:03]And that's very different from in the past.

[00:13:05]So in the past, Barcelona, as well as other parts of Spain, were mostly going for volume.

[00:13:10]They wanted to attract the most tourists or the most investors from abroad that were interested in buying property in Spain, but they can use that same leverage to attract the best companies and to attract the best talent.

[00:13:23]Startups, technology companies and research centers.

[00:13:26]such industries generate much more value than a souvenir shop, and best of all, they provide high paying jobs.

[00:13:33]That is a huge opportunity and Spain has already proven that they can do it.

[00:13:38]In the 1960s, they leveraged their good weather and their beaches.

[00:13:42]In the 1990s, they leveraged their cheapness, and now they could leverage its livability to attract the best business.

[00:13:51]So I sincerely hope that you enjoyed the video, and I appreciate that you stuck around all the way towards the end.

[00:13:56]And if you're looking for ways to support me in my work, you can scroll down and there's a button there that says join, and you see a couple of options to join as a channel member if you're interested in doing so.

[00:14:06]Thanks again.

[00:14:07]And next week we're going to be here with another video.

[00:14:08]But if you already want to see something right now, here are two more videos you can consider for your next watch.