Over the past few years, the Spanish economy has become a bit of a happy outlier in Europe. It has clocked in GDP growth of almost 3 percent even as its neighbors in the European Union grapple with stagnation. Its employment figures are up while the IBEX, the Spanish stock exchange, is at record levels.

And the good news may not be fleeting. According to most forecasters, the economic outlook remains solidly positive, even factoring in the volatility introduced by U.S. tariffs and the uncertainty created Vladimir Putin’s territorial ambitions.

Under Prime Minister Pedro Sánchez of the Socialist Workers Party (PSOE) — read social democrat — Spain has also remained steadfastly on the political left, resisting the strong right-wing currents that have swept over much of Europe. Accordingly, Sánchez has backed policies that stand in marked contrast to many of its neighbors and the U.S.

For one thing, Spain has opened its doors to immigrants, particularly those from its ex-colonies in Latin America who share a common language and religion. For another, Spain was one of the first EU countries this year to recognize a Palestinian state.

Sánchez has also gone his own way on defense policy. Spain was the only NATO country to publicly oppose Trump’s demand to commit 5 percent of GDP for defense spending. He eventually signed a communique aligning it with the rest of NATO members, but with a loophole that allowed Spain to simply meet the previous target of 2 percent (It had been spending 1.3 percent, the lowest in NATO). Recently, Sánchez cancelled an order for American-made F-35 fifth-generation fighter planes in favor of buying a European alternative. The prime minister has plainly seen the polls that show most Spaniards prioritize spending on social programs over defense.

Sánchez himself has managed to remain in office despite facing a long list of challenges including natural disasters, Covid-19, the weakening of his allies on the left and numerous accusations of corruption that might have sunk a less dexterous politician. Master politician or cunning prestidigitator, whatever one thinks of Sánchez, there’s little argument that he’s managed to snatch victory from the jaws of defeat innumerable times since becoming PM in 2018.

Scandal Season

But the streak may be ending. In July, Santos Cerdán, a senior official in the PSOE, was sent to prison for running a scheme to award public works contracts in exchange for hundreds of thousands of euros in kickbacks. Also implicated: the minister of transportation, José Luis Ábalos, and Koldo García, who started off as Ábalos’s bodyguard and chauffeur, rose to become advisor, fixer and, it seems, master in the dark art of corruption.

Over the course of his tenure, Sánchez has personally faced numerous accusations of corruption, most of which were fishing expeditions instigated by his right-wing adversaries and presided over by similarly inclined judges. Even his wife was affected last year in a case that was brought by a far-right anti-corruption organization called Clean Hands whose targets are invariably on the left. This led Sánchez to take an unannounced “retreat” for a few days, ostensibly to weigh the option of resigning to protect his family. Unsurprisingly, at least to those who have followed his career, Sánchez decided to dig in and fight.

To secure a governing majority in 2023 when his party lost the popular vote, he forged a coalition not only with expected leftist allies, but also with nationalist parties from Catalonia and the Basque Country. The sign-off required significant concessions, including a controversial amnesty for Catalan separatist leaders jailed for organizing an illegal referendum in 2017. This broke an earlier promise Sánchez had made to oppose any amnesty, which he had dismissed as unconstitutional. But in 2023, political necessity trumped campaign rhetoric, and the move was widely perceived — even by some Socialist voters — as a Faustian bargain that has hounded him since. 

But back to the financial scandal. The “Koldo case,” as it’s come to be known, featuring audio recordings of members of his administration clearly talking about payoffs, looked to be the death knell for Sánchez and his governing coalition. Even some of his allies questioned his tenure at the helm.

Leaders of the Popular Party (PP), the moderate right opposition which is a bit like the pre-Trump, pre-Reagan, pre-Gingrich Republican party of yore, smelled blood and could hardly contain their glee at the prospect of taking down Sánchez. But their schadenfreude would be short-lived: a couple of scandals subsequently sullied their own nest.

One involved the revelation that a PP deputy had inflated her resume with false master’s degrees and fictitious university attendance. The other focused on Cristóbal Montoro, minister of finance under a previous PP administration, who was accused of creating an influence network to enrich himself and close associates. Miracle of miracles: with media attention diverted to corruption in the PP, Sánchez and his party were resurrected Lazarus-like … at least temporarily.

In addition to managing the damage from the ex-minister’s alleged malfeasance, Alberto Nuñez Feijoo, the professorial-looking leader of the PP, faces a problem that became evident at PP rally held recently in central Madrid where he was the featured speaker. Tens of thousands were in attendance, but pretty much everyone I sampled at the event said they were really there to hear Isabel Ayuso, the president of the regional government of Madrid and a media savvy politician cut from Trumpian cloth.

Ayuso flings insults with ease, uses social media to savvy advantage and takes positions that place her firmly at the populist right edge of the PP. In one incident that went viral, she called Sánchez a son of a bitch during a regional assembly, only to claim later that she had been misheard (wink, wink). And, like Trump, scandals seem to have no effect on her, whether it be accusations of mishandling retirement homes during Covid or her boyfriend’s admission that his business had defrauded the Spanish tax authorities to the tune of hundreds of thousands of euros. Ayuso, whose popularity now extends beyond Madrid, is seen by some in the PP as the only person who could win more votes than the more moderate-sounding Feijoo.

Anti-Immigration and the Right

Standing on the sidelines watching the two leading parties duke it out, Santiago Abascal, the leader of the far-right VOX party is the real winner in this scandal-ridden political season. His party is on a roll, with 20 percent of likely voters supporting it in the latest polls — a six-point increase in one month. The governing PSOE, by contrast, is on a downward spiral, dropping seven points during the same period to around 26 percent. That left the battered PP slightly ahead of the PSOE.

VOX won seats in the last regional and local elections and looks to be on course to win more, making itself indispensable if the conservative PP is to govern without a majority. VOX’s Abascal, like several other right-wing EU leaders, is a Trumpian creature through and through. He’s been photographed gladhanding with a host of populist nationalists including Steve Bannon, Tucker Carlson, JD Vance, Marine Le Pen of France and Hungarian Prime Minister Victor Orban. And his rhetoric has taken Spanish political discourse to new extremes, for example calling Sánchez a dictator, a mafia don, a communist — and even going as far as saying he should be hung by his feet, only to say later it was a “metaphor.”

Channeling MAGA across the Atlantic, VOX states it wants to “make Spain great again,” an ultra-nationalist trope nostalgic for the Spain of Franco, of the state closely aligned with the Catholic Church, of a time when the country had not been invaded by “foreigners.” Never mind that Spain has been settled over the centuries by Phoenicians, Jews, Carthaginians, Romans, Visigoths and Arabs. Forget that in the 20th century, poverty made it a country of emigrants to Latin America and the rest of Europe, many of whose descendants are now returning.

Nevertheless, Abascal’s anti-immigration drumbeat has proved to be quite effective. Although inflation, inequality and housing have been the top concerns for Spaniards in poll after poll, worry about immigration has grown by 16 percentage points in the last year and a half, with about 60 percent of Spaniards saying there are too many of them. Almost one-fifth of the population of 48 million is foreign-born, with the majority from Latin America. But Moroccans, numbering just over a million, are the largest single immigrant group by national origin. And it is Moroccans who are mostly the target for the right’s anti-immigrant campaign.

Again shamelessly borrowing from Trump’s playbook, whenever a crime involving immigrants take place, the right puffs it up into a massacre. In July, when a 68-year-old man was attacked by three Moroccan youths in the town of Torre-Pacheco in Murcia, one of the poorest provinces of Spain, members of VOX and the ultra-right took to social media calling for vengeance. Within days, dozens of masked ultras descended on the town, randomly attacking members of the Moroccan community and destroying property. 

A few weeks later, in the same region, the city council of Jumilla, which is controlled by the PP and VOX, voted to prohibit the annual Muslim celebration in the community’s athletic facility. The Sánchez government called the prohibition illegal, but Rocío de Meer, the VOX spokesperson, said the prohibition was simply to “protect our national identity.”

She then brought up the conspiracy theory of “the great replacement” — namely that progressive governments were allowing large numbers of immigrants to replace the “traditional” ethnic majority in order to guarantee votes in their favor, a trope central to both MAGA and the European right. According to VOX’s de Meer, by 2044 there will be "more people of foreign origin than Spanish," in Spain and proposed that those "have not adapted to our customs" be deported.

Ironically, immigration has been one of the primary engines of Spain’s growth. After the 2008 financial crisis, the country actively recruited Latin American workers to support tourism, agriculture and construction. And according to a recent study by the European Central Bank, 80 percent of GDP growth in Spain over the past five years has been driven directly or indirectly by workers from abroad.

The strength of Spain's economic growth can be attributed to various factors. Look first to frothy domestic consumption, which is linked to Sánchez’s success in raising the minimum wage by 50 percent since he took office. But growth wasn’t all about eating the seed corn. The economy has enjoyed a broad-based boom in construction, tourism and public investment supported by EU funds. This has translated to sustainable employment growth — more than 440,000 jobs in 2025.

It shouldn’t be forgotten, though, that Spain has a long way to go in its efforts to approach the prosperity of northern Europe. Unemployment Spain hovers at 11-12 percent, the highest in the EU, with youth unemployment double that figure. Salaries remain low compared to Spain’s EU partners and by no coincidence, workers are also less productive.

The largely welcome explosion in tourism — ground zero is Barcelona, which is bursting at the seams — has created housing shortages as landlords turns their rental properties into more profitable Airbnb’s. Immigrants’ competition for affordable housing has only exacerbated the problem. And while shortages of affordable housing are a familiar problem from London to Los Angeles to Singapore, it has hit the young particularly hard in Spain, where only 15 percent of those under 30 can afford to live alone.

• • •

The disconnect between the largely bright macroeconomic picture and the average Spaniard’s problems in envisioning a secure, prosperous future has been fundamental in pushing voters away from the center. Workers and farmers, once solidly in the social democratic PSOE camp, have shifted right, as have the unemployed in general and young males in particular. Part of the blame must fall on Sánchez, who has been unable to formulate an effective counternarrative to the right’s drumbeat of nativism, and part is just the consequence of the natural cycle of democracy: run things long enough and most of the country’s problems will be laid at your feet.

It seems inevitable at this point that the PSOE will have to hand the reins of power over to the PP. This, of course, means a shift to the right, but maybe without the radical populist changes in public policy we’re seeing in the U.S. That will depend in large part on whether the conventionally conservative PP can win enough votes to form a government on its own. If Abascal continues to grow VOX at the expense of the PP (as he has over the last few months), then the latter might well have to give more ground to the ultra-right, meaning a more profound anti-liberal change in direction for Spain.