During the 1990s, Spain’s economy stabilized, unemployment declined (largely because of the rapid expansion of the services sector), and inflation eased. This economic recovery resulted partly from continuing integration into the single European market and from the government’s stability plan, which reduced budget deficits and inflation and stabilized the currency. The government pursued this policy of economic stabilization to enable Spain to qualify for the European economic and monetary union outlined in the 1991 Maastricht Treaty (formally the Treaty on European Union). The government also began privatizing state-owned enterprises. Moreover, Spain succeeded in qualifying for the euro, the EU’s common currency; in 1999 the euro was introduced as a unit of exchange, although the Spanish peseta (the value of which was locked to that of the euro) remained in circulation until 2002. In the early 21st century, Spain had one of the strongest economies in the EU. Foreign direct investment in the country tripled from 1990 to 2000. Moreover, since 2000, a large number of South Americans, eastern Europeans, and North Africans have immigrated to Spain to work in the construction industry, which contributes about one-tenth of the gross domestic product (GDP).
The global financial downturn that began in 2008–09 took root in the euro zone and Spain was one of the countries hardest hit. Spanish banks, undercapitalized and suffering the effects of a burst housing bubble, dragged down an already ailing economy. The government’s initial attempts to stimulate the economy proved insufficient, and Spanish bond yields—the benchmark of the country’s ability to borrow—rose to dangerous levels. Unemployment skyrocketed as a succession of governments introduced austerity measures in an effort to restore confidence in the Spanish economy. In 2012 Spain accepted a €100 billion (about $125 billion) bailout package from the EU, the European Central Bank, and the International Monetary Fund to recapitalize its banks.