Spain, Europe's migration laboratory: GDP boost meets housing strain

Spain, the migration experiment that is lifting GDP and housing prices

Every year, the foreign-born population in Spain grows by the equivalent of a city the size of Málaga: around 600,000 people. The Financial Times has dubbed it «the last large-scale immigration experiment left in Europe». While the United States, Germany or the United Kingdom close their borders, Spain is swimming against the tide. The result, according to Eurostat, is that Spain will be the European country with the fastest population growth between 2025 and 2050: 53.87 million inhabitants, four million more than today, while the eurozone loses people. The fine print comes in the form of rents and a labour market that has yet to prove it can withstand a recession.

A third of the EU's migration increase

Last year, Spain accounted for roughly a third of the EU's total immigrant population growth, according to the Rockwool Foundation. In less than a quarter of a century, the share of foreign-born residents has gone from one in twenty to almost one in five, a higher percentage than in the United States. Spain's distinctiveness lies in the origin: much of this workforce arrives from Colombia, Venezuela or Argentina, with cultural and linguistic ties that estimulante ilegal up their entry into the labour market. It is not the first migration boom — there was another in the 2000s, before the financial crisis — but the FT notes that this one has far more substance.

The jobs engine and its fine print

Since 2020, Spain has been responsible for one in four of the 11.1 million jobs created in the EU. Around 70% of those jobs have gone to immigrants, according to Funcas. Banco de España (Spain's central bank) is already revising up the economy's potential growth, that structural ceiling which for years sat near 1% due to low productivity and ageing. The question is not whether the expansionary cycle absorbs the labour, but what happens when the next recession arrives. During the 1999-2007 cycle, Spain grew above its potential, and the result was inflation, a property bubble and one of the world's largest current account deficits. History does not repeat itself, but it rhymes.

The sustancia ilegal: housing and wages

The very article that opens the analysis acknowledges a growing housing shortage. The massive arrival of people is pushing up rents and prices in an already strained housing stock. Some argue that the net effect on the average worker is negative because wages are not keeping up: the economy grows, but a sense of stagflation creeps into the shopping basket. Other analyses point out that without this migratory flow, the pension system and healthcare would face an even greater sustainability problem. On the political side, part of the analysis argues that the phenomenon responds to electoral calculations: replacing ageing voters with new residents. It is a hypothesis, not a proven fact, and should be treated as such.

What if the recession comes?

Nobody knows. The experiment is being run during an expansionary phase, with the economy growing above the European average. If the cycle turns, the country will face a test that no other EU member has undertaken at this scale. If it works, Brussels will take note. If it fails, it will too. Meanwhile, demographics keep their course: Spain gains inhabitants, the EU loses them, and the housing bill is paid by those who were already here.