OECD Economic Surveys: Spain 2023
Spain implemented sizable measures to cushion the impact of the pandemic and of the inflationary shock after Russia’s war of aggression against Ukraine. The economy has held up well, but public debt, which was already high, has increased because of the pandemic, making it urgent to step up the pace of fiscal consolidation. Public policy should continue to address Spain’s structural weaknesses. Growth potential is low and will remain so with the rapid ageing of the population. Fulfilling the country’s objectives to fight climate change will require a strong and broad commitment in favour of a cleaner energy mix and a more environment-friendly tax regime. Unemployment remains the highest in the OECD and the integration of young people into the job market remains challenging, although recent reforms have reduced the high share of temporary contracts. Improving educational and labour market outcomes among the young should entail strengthening the connection between the educational system and the labour market, supporting students at risk of falling behind, improving career counselling, and providing a more efficient public employment service. Boosting the low level of entrepreneurship among young people requires additional financial and educational support. More social rental housing in stressed areas would facilitate access to housing for young people.
SPECIAL FEATURE: INCREASING OPPORTUNITIES FOR THE YOUNG IN SPAIN
Also available in: French
Key Policy Insights
Following the outbreak of Russia’s war of aggression against Ukraine, sizeable measures were implemented by the government to cushion the inflationary shock and to support the economy, and economic growth held up remarkably well in the second half of 2022 and the first one of 2023. Going forward, public policy should continue to address Spain’s structural weaknesses. First, although the 2021 labour market reform has made it possible to reduce the high share of temporary contracts, unemployment remains the highest in the OECD and the integration of young people into the job market remains challenging. Second, income inequalities and poverty remain significant and poverty especially among young people. Third, Spain’s growth potential is low and is expected to remain so, notably given the rapid ageing of the population. Stepping up the pace of fiscal consolidation should be a priority, given the demographic outlook and high public debt. Fulfilling Spain’s ambitious objectives to fight climate change will require a strong commitment of all economic agents and a more environment-friendly tax regime.
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