Spain’s shadow economy is the largest in western Europe

LAST UPDATED: 31 Jan, 2014 @ 10:32
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Spain’s shadow economy is the largest in western Europe

SPAIN’S black economy has flourished as the country struggled through a brutal economic downturn.

A new study released by the Finance Ministry estimates off-the-books activity accounted for 24.6% of Spain’s economy at the end of 2012, up from 17.8% before the crisis began in 2008.

The shadow-economy problem is now one of the worst in western Europe. A report last year pegged Greece’s black economy at 24% percent of GDP, Italy’s at 21%, and Spain’s at 19$.

Another report from 2013 estimated that 1 million Spaniards work off-the-books.

Many officially unemployed people do “mini-jobs” in the black economy, while some who hold legal jobs supplement their income with underground work, he says.

The study says Spain’s government exacerbated the black-economy problem by raising taxes as it sought to reduce budget deficits—increasing the incentive for business to go underground—while failing to implement “efficient tax control.” Spain has only one tax inspector per 1,928 taxpayers, compared with 729 in Germany.

13 COMMENTS

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  1. Over here in Cadiz its the other way around – only 25% of money ‘is’ above board. Everybody knows this. everybody does it. businesses openly tell you 30% off for cash.

    And we’ve just lost our challenge to bogus fines from 3 years back – when we didn’t know better.

    This EU lark seriously needs to be stopped!

  2. Spot on SUE J, as all the system seems to do is punish small businesses and the more legal you are the more you get punished. The black economy where I am is huge with the main problem being people working without work contracts. It is just a way of living with people justify by saying it the fault of the “chinos” or saying politicians so it so why can’t i.

    In Fuengirola where I live there are maybe 30 chiringuitos on the sea front and if everyone was inspected at 3pm on Sunday afternoon they would catch 100’s of workers working cash in hand.

    Of course with the labour laws being so ridiculous and social security payments being so high many are forced to do this. One of the biggest problems in Spain is the labour laws, reform that properly making easier and cheaper to employ someone and you solve the unemployment. In UK you pay between 10/15% for a worker where as here it is closer to 40%

  3. You can change the labour laws all you like. The only time that corruption in Spain was held in check was shock/horror in Franco’s time.

    Why do you think that every country in central and south America is totally corrupt – this cancer was taken there by the conquistadores.

  4. Mark,
    your not Roger cacca ya ya under another name are you?

    Pure uniformed stupidity -more insults from an ignoramus – do you really enjoy playing the clown.

    The Inca and Aztec empires are something I have studied in depth. Both had superbly functioning organizations and in the case of the Inca empire it grew not by slaughter and destruction a la the Spanish/Portuegese/English empires but by guaranteeing food and protection.

    You need to get out more and try reading about the centuries old corruption in Argentina/Brazil/Mexico/Guatemala/Chile/Peru – it goes on and on – pure stupidity yes but not from me.

  5. @Stuart, you obviously have a few issues because all I was trying to say was you can’t tarnish the whole of South America with the same brush. You wouldn’t compare Greece with Sweden or Germany with Spain so do the same with South America?

    not only have I spent large periods of time in South America I have also been married to a South American for 12 years and also have many friends living all over that continent. In fact I sat up to the early hours of the morning on Sunday talking to an English friend of mine who is currently working in Argentina and talking about life in UK, Argentina and Spain. Of course, like all continents there is corruption there and in general more than Europe but there are also at least 2 countries with less than Spain and other countries addressing the problems as their economies grow.

    As for your Franco comment, there maybe need to bring more control/fear back into the country so those badly breaking law are 1. Are not Doing it almost risk free & 2. Think before breaking it as they are actually scared about being caught . But to think the country maybe better off under a Franco like time only means you may need down your books about history 500 years ago and pick up a book on recently Spanish history.

    No I am not Roger whatever his name is

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