Spain and Portugal show uneven economic integration

A joint report by the Bank of Spain and the Bank of Portugal reveals that economic integration between Spain and Portugal is substantial but highly unequal across different sectors.

According to the document ‘Perspectives on the Iberian Economic Integration’, the two nations have achieved deep integration in the trade of goods and production networks since joining the European Union. The wholesale electricity markets also show exceptional integration, driven by the complementarity between Spanish solar power generation and Portuguese hydroelectricity.

However, the central banks warned that other areas remain underdeveloped. Specifically, the trade of services, labor mobility, and non-banking financial investment show significantly lower levels of integration. The findings suggest that while the European Single Market has effectively reduced certain economic distances, it has been less successful at eliminating structural factors that influence cross-border economic decisions.