Spain has become an economic leader by using Ottawa’s toolkit the right way

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Canada’s federal cabinet ought to hold a fact-finding retreat in Madrid.

I doubt they’d complain about a few days in Spain’s sunny capital. And there are a number of urgent reasons why Ottawa should take notes from our Iberian friends.

Spain, with a population and economy of roughly comparable size to Canada’s, was identified by the International Monetary Fund as “the world’s fastest growing advanced economy,” with 2024 and 2025 economic-growth numbers (of 3.5 and a projected 2.9 per cent) exceeding those of the United States or Western Europe. It is also the major European economy with the smallest deficit, and its lowest unemployment rates since 2007.

Spain got here from a starting point, only a few years ago, resembling Canada’s current position – that is, stuck in the growth and productivity doldrums. Pedro Sánchez, the economist who serves as Spain’s centre-left Prime Minister, managed this bleeding-to-leading transition using a toolkit strikingly similar to the one Prime Minister Mark Carney currently has before him.

Analysts agree that smart policy is at the centre of Spain’s transformation. Specifically: Big, bold public investments in infrastructure, export growth and green-energy transition, and substantial use of immigration to drive growth and consumption and to staff those projects.

Those, you may notice, are cards that Canada has played, but without the golden results. The difference is the way Spain deploys public investment and immigration in timing and scale. Madrid takes a front-loaded approach to both physical and human capital: it goes big, and goes early. In comparison, Canada tends to wait for crises and then tries to play catch-up.

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Spain is famous for building public projects, including high-speed rail lines, subways, airports and highways, at a much lower cost than other Western countries. High-speed rail projects in Spain typically cost around $28-million a kilometre, compared with $73-million for other European and North American countries. Its subway lines have cost an average of around $200-million a mile, whereas Canada’s have averaged $1.3-billion a mile. And they generally come in on budget and on schedule.

The same goes for Spain’s green-energy transition. Its investment in battery and clean-energy industries was early and substantial, and unlike Canada’s, they were not written off after initial failures. Spain now has Europe’s leading clean-energy export industry.

The Spanish approach to capital projects works so well, experts say, because it is front-loaded: they cost less precisely because they are done fast. The expensive, difficult stuff is done early, rather than trying to economize on each step, and top designers and engineers are permanently staffed in government departments handling multiple big projects, with the power to quickly clear regulatory hurdles for private contractors.

Crucially, Spain has managed to have the skilled and unskilled labour already in place when it is needed. Coming out of the pandemic in 2022, Madrid recognized that huge labour shortages and a shrinking, aging work force were choking its ambitions. By increasing net immigration – 750,000 in 2022, with similar numbers the next two years – the government prevented labour from being an obstacle to growth. Of the 468,000 new Spanish jobs in 2024, about 409,000 were filled – or, often, created – by newcomers. This year, Spain passed a law to gradually grant citizenship to a million undocumented migrant residents, to make them part of the tax and pension systems. Canada is only beginning to do this.

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The Bank of Spain found that elevated immigration accounted for about half of Spain’s stellar economic growth rate (of 3.2 per cent) in 2023, and that the big influx “has helped boost productivity and raise potential output” by removing labour-market bottlenecks.

Canada’s own postlockdown immigration boom did propel economic growth, and was found to have prevented a recession. But because Canada’s main permanent immigration system is narrowly focused on highly educated people, and its big labour needs were in lower-skilled fields and trades, the mismatch resulted in an over-reliance on temporary workers by some provinces and a backlash driven by a perception that immigrants had driven up housing prices.

Spain has also experienced a housing-cost crisis tied to population growth. But its national and provincial programs dedicated to solving that crisis are more likely to succeed sooner, because it has not paused its immigration intake.

Here, the Conference Board of Canada reports that the severe shortage of skilled trades and labourers is already holding back our ability to build housing and pushing up its cost, even before Mr. Carney’s home-building initiative gets under way – and 700,000 tradespeople are set to retire by 2028. His other “nation-building” projects face similar human-capital shortfalls, on top of worries about our project-management competence.

That’s why Mr. Carney’s cabinet should visit Madrid’s Moncloa Palace, whose Prime Ministerial occupant might show them a better way.