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Barcelona and Madrid 7 day trip in August. Will the cities be a ghost town?

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Hi,

I'm planning a quick small trip to Europe for me and 3 of my friends for August 8-16. It will be the first time that any of us have traveled to Europe. We are trying to choose between staying in Barcelona the entire trip and just taking a train and bus tours while there to different spots or staying in Madrid. I've heard from others that in the past, Spain and other European countries vacation during the month of August and close up shops. Is this still true? We are between the ages of 25-30 so we would be interested in the nightlife. My main concern is if most of the restaurants and shops will remain open during these travel dates. If anyone has any insight as to how the city will be during this time and the places we should visit and see please please share.

Thank you in advance for taking the time to respond. It is greatly appreciated.
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