Figuring it out

The statistics are in and, on the face of it, 2018 was a good year for Spain: the country's economy expanded at a rate of 2.5%, slower than the 3% posted over the last three years but still ahead of the eurozone average. It's a figure that leads us to a couple of revealing conclusions.

Over the last few years, Spain's macroeconomic performance has showed indifference to the country's chaotic politics - and 2018 was no exception. After ousting Mariano Rajoy as prime minister with a no-confidence vote in June, Socialist leader Pedro Sánchez took the helm of a minority government that has since been paralysed by its weak grip on power (it holds just 84 seats in the 350-seat congress).

All the proof one needs of this is found in the farce surrounding 2019's budget. The spending plan remains a draft document on Sánchez's desk, requiring the (unlikely) approval of a hostile congress later this month. Yet the government's inability to actively manage Spain's economy hasn't impacted on macroeconomic reality: in the last quarter of 2018, the country's GDP expanded at 0.7%, up from 0.6% in the second and third quarters. The eurozone average in the final three months of last year, by stark contrast, was just 0.2%.

The prospect of Brexit, on the other hand, did have an effect on Spain's economy throughout 2018. A report published this Thursday by the Bank of Spain shows that expansion during Q4 last year was partly driven by an increase in exports - but not exports to the UK. Overall throughout 2018, Spanish exports to EU countries rose by 8%; but during the same period, sales of Spanish goods to Britain fell by 6%.

Another statistic also tells us that Spain's export market is increasingly wary of Brexit. Between 2012 and 2017, the number of Spanish companies exporting goods to the UK rose steadily, yet in 2017, the year after the Brexit referendum, there was a 0.8% decrease in such businesses. The Bank of Spain notes that the "elevated uncertainty" now surrounding Britain's withdrawal from the EU makes it difficult to predict how Spanish exports to the UK will perform in the medium-term future. No "you-know-what", Sherlock.

Despite a dip in Spanish exports to the UK, though, the relationship between Madrid and London is as robust as ever (leaving the perennially sensitive issue of Gibraltar aside). The two governments' recent agreement, which secures the voting rights of Britons in Spain and Spaniards in the UK in case of a no-deal Brexit, is eloquent proof of this. Indeed, both these groups of expatriates have good reason to believe that the coming months will not be as chaotic as the scaremongers - with their terrifying and largely ungrounded predictions - like to make out.