Spain’s banking industry remains highly selective in funding corporations. The Spanish government made projections for conditions to improve in 2015 and 2016 as the contraction of credit has slowed while deleveraging continues as bank lending shrinks. Spain's economy entered a recession in 2011.

Aiding the exit from the recession are lower energy and oil prices. Low efficiency in public administration has negatively affected firms' productivity. The Spanish government predicts a 2016 growth rate of 3%, while the International Monetary Fund and European Commission predict a growth rate of 2.7%. Overall growth in Spain is estimated at 3.2% for 2016.

Low Consumer Consumption

Wage moderation has decreased competitiveness in product markets in conjunction with consumption growth, which is likely to fall in 2016 as 2015's tax cuts have ended. To support competitiveness in light of wage moderation, reforms have been made to support business growth. A decrease in business competitiveness is likely to have a negative impact on consumer consumption. Consumer confidence declined in third quarter 2015.

High Debt

The interest rate on 10-year bonds was 1.7% as of December 2016. In December 2015, the treasury reached its goal when it issued a total of 139 billion euros in treasury bills. Deleveraging pressures have supported public and private debt levels. High public and private debt in Spain has decreased growth potential. Following a decline in overall interest rates, Spain's government issued debt at negative rates on several occasions. In third quarter 2014, private debt was 182% of non-consolidated gross domestic product (GDP), and in second quarter 2010, private sector debt was 36.8% higher. In October 2015, debt was 98.8% of GDP in conjunction with budget cuts that served as Spain's most recent method of boosting the economy. Spain's debt was increased in part due to its high level of foreign energy imports.

Emigration

Poor employment rates have encouraged emigration out of Spain, and the high emigration numbers of 2015 reflect the attitude that the job market is not likely to improve in the near future. In the first six months of 2015, emigration hit a high of 50,844. More skilled workers are available than jobs, contributing to emigration.

Income Disparity

Some view Spain's efforts to boost its economy as having the effect of widening income gaps and promoting lower salaries. Income disparities are at risk of becoming structural in conjunction with disposable income, which is adjusting in line with a competitive economy. Tax reforms adopted by Spain discourage low-income second earners from working. Long-term unemployment has contributed to income disparities. Tax cuts in 2015 have benefited high earners. Middle-income earners experienced a temporary increase in tax rates in 2015 of 30% to 31%.

High Unemployment Rates

Wage moderation efforts increased employment by 2.5% in 2014, though the rate will remain high in 2016. In fourth quarter 2014, the unemployment rate for individuals age 15-24 was 51.8%. About 5 million are without a job in Spain. The high unemployment rate is associated with off-the-books jobs that do not tender taxes paid to the state.

The unemployment rate at the end of 2014 was 23.7%. In some cities, like Jerez de la Frontera, the unemployment rate reaches 40%. The number of workers with indefinite contracts has fallen while temporary contracts are on the rise. The few jobs that are available include temporary or part-time work. A receptive attitude toward public assistance may be encouraging joblessness in Spain, and some are calling the prolonged employment crisis in Spain symptomatic of producing a lost generation. High investment levels will be required to help Spain's job market, and Spain's high unemployment was at the forefront of its recent elections.