The Spanish economy’s growth accelerated at the end of last year on the back of increased consumer demand, lending credence to the government’s claim that the country has put a half-decade slump behind it.

In the fourth quarter of 2014, Spain’s GDP grew 0.7 per cent, the biggest quarterly increase since 2008, according to data released by the National Statistics Institute (INE). The economy grew by an average of 1.4 per cent throughout the year, a figure that outstripped most forecasts.

Household spending has driven recent growth, with an increase of 0.9 per cent in the fourth quarter.

The secretary of state for the economy, Íñigo Fernández de Mesa, said the figures reflected "a 180-degree turnaround" for the Spanish economy and the most dramatic recovery for two decades, given that GDP shrank 1.2 per cent in 2013.

In his state of the nation address to Congress on Tuesday, prime minister Mariano Rajoy said Spain "has emerged from the nightmare".

He also said his government would create 500,000 jobs this year and offered a new, more optimistic growth forecast for 2015 of 2.4 per cent, which would put Spain among Europe’s fastest growing economies.

“The speed of our recovery can only be compared to the speed with which we fell into the slump,” he said.

“Spain has gone from the verge of bankruptcy to becoming an example of economic recovery which right now other EU countries are looking to.”

However, opposition parties have decried what they say is government triumphalism, saying that ordinary Spaniards are still not benefitting from the macroeconomic upturn. While the jobless rate, at 24 per cent, is dropping, critics say new jobs being created are mostly poor quality or temporary.

The state of the economy will come under increasing scrutiny this year, with several elections scheduled which are likely to redraw the political map. Regional and municipal elections will be held across most of Spain in May and a general election is expected by the end of 2015. The governing Popular Party (PP) and opposition Socialists are both struggling in polls, with the new, anti-austerity party Podemos leading voter intention, according to several recent studies.