Spain's economy is growing. Is that the whole story?

Spain's economy grew 2.8% last year, 3.2% the year before. Almost none of it came from people getting better at their jobs. Spain's growth is real but it's being driven by more people working, not by each person producing more. In fact, Spain's productivity per hour worked is still 7% below the EU average and is around 37 points below Germany's. So what's going on? As with all these things, it's complex, but in essence, 99% of Spain's firms are SMEs and our regulatory environment actively rewards them for staying small. Not on purpose, perhaps, but in Spain, growth depends on continued immigration inflows, demographic stability and the assumption that people can afford to live where the jobs are, which, in Madrid and Barcelona, is increasingly not the case. Spain's productivity problem and the demographic problem aren't two separate conversations. If you're making long-term capital or location decisions in Spain, you should be looking at both numbers, not just the headline economic growth figure.