Yes you can work anywhere in the EU with a British passport, usually just a matter of some paper work. There are loads and loads of websites dedicated to working living in Spain. A good start would be expatfocus and Britishexpats.
One point I should make about working in Spain, first off wages are very low and the cost of living is quite high, secondly if you don't speak the language than your work options are limited. Around Madrid usually that means bar staff or teaching English, neither of which pay enough to live off of.
If your looking to make the move to Europe than the best (but not always the easiest) option is to get a job with company that has overseas offices that's how we got over here.
Secondly I know that there is/are books dedicated to getting overseas jobs, unfortunately the name fails me, if I find it, I'll post.
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Be Canadian Eh, that's for all you American out there:)