They are two of the main European nations that overlook the “Mare Nostrum” and embody what is defined as Mediterranean Europe. Yet Spain and Italy have been growing at different rates for years and are going through very different phases in their economic history. It would be easy to trace these differences back to the current political conflicts: on the one hand the sovereignist right of Giorgia Meloni, on the other the socialist leadership of Pedro Sánchez. In reality, the gap between the Iberian country and ours has its roots in long-term trends that often ignore the orientations of the governments in office, albeit with some exceptions.
The Italian and Spanish GDP compared
Let’s start with the gross domestic product: Spanish GDP growth has for years been higher than that of Italy (and, in various phases, also that of other large European countries such as France and Germany).
But be careful: we are talking about percentage changes. In absolute terms, the Italian GDP is still higher than the Spanish one. However, it is the dynamics that make the difference: the Iberian economy is growing at a faster pace, while the Italian one is proceeding more slowly.
A dynamic that has become even more evident after the pandemic. From the fourth quarter of 2019 (the last before Covid) to the third quarter of 2025, Spanish GDP grew cumulatively by 9.8 percent, compared to 6.5 percent in Italy. The real divergence, however, is recorded above all in the period following the post-pandemic rebound: from 2022 onwards the growth rates of the Iberian economy have progressively distanced themselves from those of the country.
Thus the labor reform favored consumption and wages
A dynamic that is also reflected in employment. If the Italian government claims the results obtained in the creation of new jobs, the numbers still show a gap: in the last six years the number of employed people in Italy has grown by 5.9 percent, while in Spain the increase has been 10.1 percent.
Not only that. Female employment in the Iberian country is approximately ten percentage points higher than in Italy.
But when we talk about work, we cannot fail to mention the reform that the Spanish socialist government launched in 2021. The intervention strengthened collective bargaining and significantly limited the use of fixed-term contracts, encouraging permanent ones. It has also introduced new forms of stable but flexible relationships, such as the “fijo discontinuous”, designed especially for seasonal workers. In this case the contract is not interrupted, but is suspended between one season and the next. During periods of inactivity the worker does not receive a salary, can access unemployment benefits and maintains seniority and accrued rights, with recall priority when activity resumes.
In 2024, the Spanish average annual salary of full-time and permanent employees exceeded that of Italy. If we then consider purchasing power, therefore the relationship between wages and cost of living, the Iberian overtaking has emerged as early as 2009, according to OECD data. The dynamics, therefore, starts from afar.
What the Spanish labor reform seems to have strengthened, however, is the stability of domestic consumption: in 2025 family spending grew by 3.4 percent, compared to the 0.4 percent recorded in Italy. Spanish growth, therefore, unlike Italian growth, appears to be supported to a greater extent by domestic demand.
Why foreigners are the key to the “Spanish boom”
The premise is one: the fertility rate of Spanish women is not very different from the Italian one, in fact it is slightly lower. In 2024 in Italy it stood at 1.18 children per woman, compared to 1.12 in Spain. Yet the Spanish population has grown much more than that of other large European countries, as shown in the graph below.
From 2000 to today, the Spanish population has grown by over 20 percent, one of the highest figures in Europe. A dynamic largely due to the significant influx of foreign citizens, today a structural component of the Iberian economy. It is no coincidence that Pedro Sánchez’s government announced at the end of January, in contrast to the global climate of “zero tolerance”, a regularization measure aimed at around half a million migrants who entered the country irregularly, an initiative which however aroused criticism at European level.
Today, there are approximately 9 million foreign-born residents in Spain, one of the highest shares on the continent in relation to the overall population.
As can be understood from the graph above, it is above all this component that is slowing down the demographic winter and supporting the economy and employment.
If it is true that immigration in Spain has different characteristics than in Italy – also due to the strong presence of citizens from Latin America, facilitated by the language and historical ties – it should be remembered that the first foreign community in the country is the Moroccan one. The presence of Italian citizens is also significant, today around 325 thousand and constantly increasing, who often hold qualified positions.
Over time, the Iberian country has also managed to attract some of the so-called “brain drain”, combining this with integration policies that have contributed to rejuvenating an otherwise increasingly older workforce.
Low energy prices: the real lever of Spanish success
One of the keys to the Spanish success was the choice to reduce the link between the price of gas and the cost of electricity. Through strong investments in renewables, particularly photovoltaic and wind, Spain has progressively decreased its dependence on gas, which in other large European countries, and in particular in Italy, continues to significantly impact electricity prices.
Between 2020 and 2025, Madrid added over 40 gigawatts of new wind and solar capacity, effectively doubling its installed power.
In 2024, 57 percent of the electricity produced in Spain came from renewable sources. In Italy, still strongly linked to thermoelectric production, the share stopped at 41 percent.
Since 2022, with the drastic reduction of Russian gas supplies to Western Europe, the gap has also widened on the price front. In 2024 the average price of electricity was around 108 euros per megawatt hour in Italy, compared to 63 euros recorded in Spain. In some months of 2025 the Iberian price fell to a third of the Italian one, with significant effects on the production costs of families and businesses.
Pnrr and foreign investments: the differences between Rome and Madrid
The other major factor of divergence is the Pnrr. Italy, with a plan worth around 191.5 billion euros in grants and loans, has distributed resources across a wide range of interventions – from the green and digital transition to infrastructure and healthcare – but continues to deal with slow and complex implementation. As of November 2025, just over half of the planned resources had been spent, with delays on several strategic works.
The Spanish approach is different, although not without its critical issues. Madrid is the second beneficiary of the Next Generation EU after Rome, with around 163 billion in subsidies and loans. However, it chose to use only a part of the available loans, also thanks to the improvement in the debt/GDP ratio favored by economic growth.
Spain has concentrated a significant share of resources on digital transition, energy efficiency, sustainable mobility and employment. In summary, a strategy more aimed at strengthening the sectors considered strategic for industrial competitiveness, which so far seems to have produced results.
The difference also emerges in the ability to attract capital: in recent years Spain has recorded around 60 percent more foreign investments than Italy. A gap that also depends on structural factors, such as faster justice times and more streamlined administrative procedures, issues that have weighed on our country for decades.
Fewer hours worked, more results: the crux of productivity
One of the most profound differences between Rome and Madrid is the issue of productivity. Labor productivity measures the average value of goods and services produced by each employee in a given period of time. For a company it means greater margins and competitiveness; for a country it directly affects GDP growth.
It is also an advantage for workers: greater productivity is often associated with higher wages, better professional opportunities and, sometimes, fewer hours worked for the same pay.
The problem is that in Italy labor productivity has been stagnant for years and, in the last five, it has recorded a weaker dynamic than in the main European countries.
In the years following the pandemic, Italian employment grew especially in sectors with low average productivity, such as construction, catering, assistance and some personal services. These are highly labour-intensive sectors, in which the increase in employment does not automatically translate into a strong increase in added value per employee. At the same time, Italy continues to lag behind the European average in intangible investments, such as software, research and development, organizational capital, which are among the main drivers of long-term productivity growth.
And productivity is one of the keys to Spain’s recent dynamism. If we look at labor productivity per hour worked, since 2019 Spain has recorded cumulative growth higher than that of Italy (according to Cnel data, approximately +0.6 percent, half a point more than Italy). Not a huge gap, but significant in a European context of weak growth.
At the base there are more substantial investments in digitalisation and renewable energy, but also greater integration in international supply chains and in some sectors with higher added value. Spain, like Italy, remains characterized by a strong presence of small and medium-sized enterprises; the difference is not so much in the formal structure, but in the ability to concentrate resources and innovation in the leading sectors. A challenge on which the real game of the coming years will be played.