Summary
General Franco died 50 years ago, but Francoism did not die with him. Spain, however, bore no resemblance to the country Franco took over after winning the 1936-39 Civil War. The economy in 1975 was developed, society was largely urbanised and a middle class had been created. But politically little had changed. The dictator left his regime and its institutions ‘tied up and well tied up’. King Juan Carlos, Franco’s successor as head of state, used the dictator’s immense powers to transition to democracy in a pact forged between the reformist right and the non-violent left. In 2025, the 1978 constitution overtook the 1876-1923 constitution as the oldest and most stable in Spanish history. Today Spain has a vibrant democracy, one of only 25 ‘full democracies’ in the ranking of 167 countries by the Economist Intelligence Unit (EIU), though its quality is perceived as declining and political corruption is a problem. A founding member of the eurozone,Spain is the world’s second most popular destination for international tourists, after France, and one of the world’s top 20 exporters of goods and of services. It also has a bevy of multinationals that barely existed in 1975. The stock of Spain’s direct investment abroad, almost non-existent 50 years ago, is much higher than Italy’s in absolute and relative terms. The unemployment rate (10.3%), however, has only been below 10% between 2005 and 2008. In education, more than half of 25-to-34 year-olds have tertiary education, above the OECD average. Women, who accounted for just under one-third of university enrolments in 1975, today account for close to two-thirds. Society has undergone profound changes, telescoped into a relatively short period. Average life expectancy (84 years) is one of the world’s highest; the population is rapidly ageing. In 1975, 27% of the population was under the age of 15 and 10% over 65. Today, 13% is under 15 and 21% over 65. As well as an ageing population, and the pressure this is exerting on the public pension and healthcare systems, the fertility rate has plummeted from 2.80 to 1.12, far short of the 2.10 at which existing population levels would be maintained. Deaths have substantially outnumbered births for the past 10 years. The ‘traditional’ nuclear family has changed significantly (the parents of more than half of new-borns today are not married), but the extended family is still the bedrock of society, much more than in northern Europe. Almost 20% of the population is foreign-born (0.4% in 1975). But for the influx of immigrants over the last 30 years, Spain’s population would have long ago almost ceased to have grown. Immigrants are also a significant driver of economic growth. Climate change is taking a heavy toll. In foreign policy, Spain, one of the most pro-EU countries, has taken a more forceful place on the world stage, while in defence it has promised to boost its very low spending.[1]
Conclusions
Spain is one of the political, economic and social success stories of the past 50 years (see Appendix a and b), but faces a host of challenges, some of them not new but becoming increasingly urgent. The economy is growing strongly (more than double the forecast EU average of 1.1%), fuelled, among other factors, by record international tourist arrivals, but the unemployment rate (10.3% around 11%) is close to double the EU average, productivity growth is sluggish, public debt is over 100% of GDP, one of the highest in the eurozone, and the sustainability of the relatively generous state pension system in a country with a fast-ageing population and one of the world’s highest average life expectancies is under pressure. Spain faces mounting fiscal pressures driven by the ageing trend.
In education, the early school-leaving rate (in 2024 13% of 16-24-year-olds had left school having completed, at most, compulsory secondary education) remains high, although far below the levels of 20 years ago.
In climate change, Spain is being hit hard, with abnormally sweltering temperatures even in the least expected months, dramatic bouts of drought and torrential rain.
The deep divide between the generally poor living standards of young adults and the relatively more comfortable life of the elderly is generating worrying intergenerational friction. The main factor is the inability of young adults to get on the property ladder at affordable prices. This is an EU-wide problem, but particularly acute in Spain. While the parents and grandparents of young adults have second and sometimes third homes (often a flat on the coast), the young usually are not able to leave the parental home until they are around 30, unless they have substantial financial help from the family.
Overtourism in Spain, which in 2025 is set to receive close to 100 million international tourists, more than double the country’s population, has led to landlords taking properties off the market in order to rent them exclusively to tourists and so earn much more with short lets than with long rentals. Even before the arrival of tourists in such large numbers, Spain had an acute housing shortage, added to which is the growth in the population (more than 8 million in the last 25 years), very largely due to immigration. The supply of housing has been behind demand for years.
The government is belatedly beginning to tackle this problem, promising to build more social rental housing (Spain’s stock is the lowest in the EU) and making it more difficult for property owners to rent only to tourists. The scale of the task is such that a Herculean effort will have to be made before any impact is felt. The lack of housing could put a brake on immigrant arrivals and impact the economy. The Bank of Spain warned that the mismatch between housing supply and demand ‘could become a clear supply-side bottleneck for the Spanish economy and a major social problem’.
Spain is not alone in its demographic changes, but they are more pronounced and have been telescoped into a relatively short period. But for immigration –one in five residents is foreign-born– Spain’s population would have virtually stopped growing some 20 years ago. Immigrants have also become a major driver of economic growth. The fertility rate (1.12) has been below the replacement rate (2.10) at which population levels would be maintained since the 1980s.
Immigrant assimilation has been largely successful. While Spain does not have ghettos like those in other countries, for example, France’s banlieues, it does, however, have areas with high concentrations of immigrants. Unlike France, Germany and the UK, all of which have been receiving international migrants for much longer, Spain has yet to incorporate more immigrants into political life. Only 1% of MPs between 1993 and 2023 were of foreign origin.
Spain has consolidated its democracy, with two mainstream parties, the Socialists and the PP, as well as Catalan, Basque and Galician parties, and others representing the extremes on the left and right. All of this makes Spain a difficult country to govern. Political life has become woefully polarised, making the consensus that would enable structural reforms to be approved for the benefit of the greater good impossible to achieve. The divide between left and right in the political class is deeper than in France, Germany and Italy. A German-style coalition government is, unfortunately, unthinkable.
Equally lamentable is systemic political corruption. Work on a national anti-corruption strategy, foreseen by law for September 2024, only started in July 2025 when the governing Socialist Party, engulfed in a series of scandals and facing the threat of being forced to call an early election, announced a battery of measures. For any measures to be credible and effective, the colonisation of state institutions by politicians and political influence in private companies needs to be ended.
Symptomatic of the declining quality of democracy is that the public administration is still needlessly opaque. Franco’s archaic Official Secrets Law of 1968, which allows classified information to be kept secret forever, remains inexplicably in force. The government unveiled a draft law in July 2025, which finally brings Spain into line with other democracies, and was pending parliamentary approval. In the 50th year of Franco’s death, it is about time.
[1] I would like to thank the following for helping with this report: Joaquin Almunia, Rafael Arenas García, Jesús Ceberio, Rafael Domenech, Enrique Fanjul, Andrew Gee, Emilio Lamo de Espinosa, Jim Lawley, Miles Lizak, Leandro Prados de la Escosura, Valeriano Muñoz, Pablo Zavala and my colleagues at the Elcano Royal Institute.
Image: The Royal Palace of Madrid (Spain) in the 1960s. Photo: foundin_a_attic (CC BY 2.0).
