How to Remove Remaining Barriers to Economic Freedom in Spain
After two decades of robust growth, the 2008 financial crisis hit Spain hard. It exposed systemic institutional weaknesses and structural distortions in the economy that had not been addressed during the process of Spain’s incorporation into the European Union (EU). As in the United States and other countries, a credit boom in the early 2000s fuelled a real estate bubble that boosted demand, employment, and public revenues. Once the Great Recession began, the entire scheme came crashing down like the proverbial house of cards.
In order to achieve sustainable economic growth, Spain needs to limit government spending further at all levels, reform and lighten regulatory oversight, and reduce taxes. Also, more steps should be taken to tackle corruption and promote a much greater degree of labor flexibility. Continuing the difficult but necessary market-oriented reforms begun decades ago will bring more economic freedom to Spain.