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It is a common misconception that the failure of the armada resulted in the decline of Spain.
After the failed invasion of England, Spain soon began to enter a period of decline. This occurred for a number of reasons. The Counter-Reformation had drained considerable Spanish resources. Moreover, many of the resources of the Spanish colonies had been exhausted. Additionally, only one-third of Spain's population actually worked - one-third of the population belonged to the clergy and another one-third belonged to lower nobility - and there was no middle class in Spain, and a small higher class. Finally, inbreeding caused inept leadership in the monarchy.
