2016 Index of Economic Freedom

Spain

overall score68.5
world rank43
Rule of Law

Property Rights70.0

Freedom From Corruption60.0

Limited Government

Government Spending41.1

Fiscal Freedom58.3

Regulatory Efficiency

Business Freedom76.0

Labor Freedom51.7

Monetary Freedom84.7

Open Markets

Trade Freedom88.0

Investment Freedom85.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 46.5 million
  • GDP (PPP):
    • $1.6 trillion
    • 1.4% growth
    • -0.5% 5-year compound annual growth
    • $33,711 per capita
  • Unemployment:
    • 24.7%
  • Inflation (CPI):
    • -0.2%
  • FDI Inflow:
    • $22.9 billion
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Fallout from the global financial and eurozone crises has hurt the Spanish economy, but a number of structural adjustments have enhanced prospects for recovery. Comprehensive reforms have been made in corporate taxation, reducing the top rate to 28 percent from 30 percent. The rate will be further reduced to 25 percent from January 2016. A new labor law intended to enhance flexibility in areas such as compensation and working hours has been implemented.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 68.5 (up 0.9 point)
  • Economic Freedom Status: Moderately Free
  • Global Ranking: 43rd
  • Regional Ranking: 20th in Europe
  • Notable Successes: Open Markets and Monetary Freedom
  • Concerns: Management of Public Finance and Labor Freedom
  • Overall Score Change Since 2012: –0.6

Despite some progress, large fiscal deficits and high levels of public debt necessitate a greater commitment to sound public financial management and a return to a sustainable level of government spending. Corruption continues to undercut respect for the rule of law.

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Background

Mariano Rajoy’s conservative Popular Party won the November 2011 election and introduced the largest budget deficit-reduction plan in Spain’s history along with crucial structural and labor reforms. In 2012, the European Union bailed out Spain’s banking sector with a €41 billion loan. However, Rajoy’s government has dismissed recent warnings that more government austerity measures are needed and has demurred at pension reform. The Spanish economy is growing at a steady rate. Spain’s very high unemployment rate has declined only slightly, and youth unemployment hovers at around 55 percent.

Rule of LawView Methodology

Property Rights 70.0 Create a Graph using this measurement

Freedom From Corruption 60.0 Create a Graph using this measurement

Political parties are popularly viewed as the institutions most affected by corruption in Spain, with campaign financing being a particular point of contention. Although the courts have a solid record of investigating and prosecuting corruption cases, the high workload means that they are often overburdened, and cases proceed very slowly. Spanish law protects property rights, but enforcement of contracts is slow.

Limited GovernmentView Methodology

The top individual income tax rate is 47 percent, and the top corporate tax rate is 28 percent. Other taxes include a value-added tax and a capital gains tax. The overall tax burden equals 32.6 percent of total domestic income. Government spending amounts to 44.3 percent of GDP. The budget deficit is over 5 percent of GDP, and public debt is at a level near 100 percent of GDP.

Regulatory EfficiencyView Methodology

Procedures for setting up a business have been streamlined, and licensing requirements have been reduced. Bankruptcy proceedings are fairly straightforward. Labor regulations remain inflexible. Although the government has rolled back renewable energy subsidies aggressively in recent years, it maintains the world’s most generous fuel subsidy program for high-seas fishing fleets.

Open MarketsView Methodology

EU members have a 1 percent average tariff rate. Trade agreements are currently being negotiated with countries that include the United States and Japan. Spain generally treats foreign and domestic investors equally under the law, and nearly all sectors are open to foreign investment. With the banking sector under continuing strain, the stability of the financial system remains fragile.

Country's Score Over Time

Bar Graph of Spain Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Spain to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Switzerland810.5
2Ireland77.30.7
3Estonia77.20.4
4United Kingdom76.40.6
5Denmark75.3-1.0
6Lithuania75.20.5
7The Netherlands74.60.9
8Germany74.40.6
9Luxembourg73.90.7
10Iceland73.31.3
11Czech Republic73.20.7
12Georgia72.6-0.4
13Finland72.6-0.8
14Sweden72-0.7
15Austria71.70.5
16Norway70.8-1.0
17Latvia70.40.7
18Poland69.30.7
19Cyprus68.70.8
20Spain68.50.9
21Belgium68.4-0.4
22Macedonia67.50.4
23Armenia67-0.1
24Malta66.70.2
25Slovakia66.6-0.6
26Hungary 66-0.8
27Albania65.90.2
28Bulgaria65.9-0.9
29Romania65.6-1.0
30Portugal65.1-0.2
31Montenegro64.90.2
32France62.3-0.2
33Serbia 62.12.1
34Turkey62.1-1.1
35Kosovo61.4N/A
36Italy61.2-0.5
37Slovenia60.60.3
38Croatia59.1-2.4
39Bosnia and Herzegovina58.6-0.4
40Moldova57.4-0.1
41Greece53.2-0.8
42Russia50.6-1.5
43Belarus48.8-1.0
44Ukraine46.8-0.1
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