EU austerity: No quick fix for Spain

 

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It is the one set of figures that European officials fear: the quarterly statistics on unemployment.

For amidst all the sightings of green shoots, the lines of those without work serve as a reminder that the crisis in Europe is far from over.

In Spain, the general unemployment level has risen to 27.16%. It means there are six million without work.

The government in Madrid has tried to draw some comfort from the fact that the rate at which jobs are being shed is slower than in previous quarters. The Prime Minister, Mariano Rajoy, says: "Next year we will have growth and jobs will be created in our country."

It is, perhaps, the fate of leaders that they are destined to live in hope. So far, the government has misjudged the severity of the recession. The economy is expected to decline this year by 1.6%.

Spanish nightmare

In the southern Spanish city of Jerez, unemployment is close to 40%. It is not difficult to find couples like Lorenzo Barba and his wife Yolanda. He lost his job - driving trucks - two years ago. His wife was laid off from the hotel sector.

They are under threat of being evicted from their apartment. They scrape by. The fridge is almost empty. For five months, they have not been able to afford fish or meat for themselves in order to give their seven-year-old son a balanced diet.

"There is no future in Spain,' says Lorenzo Barba.

Lorenzo Barba with his wife and son at home in Jerez Lorenzo Barba and his family are going without food and could be evicted from their flat.

"Three generations are being destroyed - mine, my parents' generation because they are supporting us. And the worst part is what will happen to my son."

And herein lies the Spanish nightmare. For the country to see unemployment decline, it needs growth of more than 2%. No one is predicting that at the moment.

So as Daniel Fernandez Kranz, from the IE business school, points out, it is likely that unemployment will continue rising for three or four more years. That will test the resilience of Spanish democracy.

There is some good news from Spain. Its borrowing costs have fallen to levels not seen since 2010. The country is judged as less risky by investors. The current account is moving towards balance and exports are up.

Daniel Fernandez Kranz says it is a story of two economies. The large companies are benefitting from the lower wage costs but the smaller companies, which are the lifeblood of the economy, are still shedding staff.

And perhaps the most important fact to remember: economic activity is still declining. Tough times still lie ahead for Spain.

French slide?

France is waiting for its unemployment figures, which are also due. They, too, are expected to increase and that will be acutely embarrassing for President Francois Hollande who promised, during his election campaign, to bring unemployment down.

Although some steps have been taken to free up the labour market, it remains a daunting task to set up a new business in France and take on staff.

Start Quote

I call it balancing the budget. Everyone else... austerity”

End Quote Angela Merkel German Chancellor

The fear, in Europe, is that France is sliding into the camp of southern European countries, with little or no growth, rising unemployment and declining consumer and business confidence.

In terms of its influence, no one can remember when France counted for so little in Europe.

Today's figures will only reinforce what I wrote about earlier in the week - the retreat from austerity. Spain will miss the target for cutting its deficit but will discover that Brussels is more relaxed and, most likely, will give Madrid more time.

Growth has replaced reducing debt as the priority. You can sense Angela Merkel's unease about the resistance to austerity when she said: "I call it balancing the budget. Everyone else is using the term austerity. That makes it sound like something truly evil."

Today's figures may persuade the European Central Bank to cut its interest rate and the markets will cheer that.

But today also underlined what the President of the Bundesbank, Jens Weidmann, said this week - that it might take a decade to exit this crisis and that will test democracy, social cohesion and support for the European project.

Information published by the European Council on Foreign Relations found that 72% of people in Spain said they did not trust the EU.

 
Gavin Hewitt Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this
    +3

    Comment number 115.

    76.MH

    "No, the reason the southern countries want to stay in the EU and euro is that they remember what it was like before they joined"

    Given the amount of corruption on the continent and the fanaticism of "EU"-lovers, I think it is reasonable to guess that they might have joined the "EU" and stayed in because their politicians and journalists were bribed.

  • rate this
    +1

    Comment number 114.

    76 MH

    "No, the reason the southern countries want to stay in the EU and euro is that they remember what it was like before they joined.

    Spain and Greek villages were empty because their young had migrated to richer countries as waiters and road menders"

    I have seen your description of what East Anglia was like before we joined the Common Market - it was rubbish! I was there and remember

  • rate this
    +2

    Comment number 113.

    110"why does Greece have a bunch of German submarines now?"

    IMO it's likely the government's escape plan when the economy collapses completely and the Greek people are out for their blood. They can't count on their friends' luxury yachts, they might be somewhere else in the world at the time. If I were them that's where I'd be. :-)

  • rate this
    +1

    Comment number 112.

    101.margaret howard

    "In our referendum in 1975 the vote was 67% in favour out of a 67% turnout"

    I have read that the turnout was about 30%

    We were lied to by the integrationist camp including Heath

    The integrationist camp had much more money and the BBC

    UKIP!

    AfD!

  • rate this
    +2

    Comment number 111.

    96"Europe is alone so far making a huge effort to improve the lot of its people."

    From watching it I think they're doing the best that they can. The EU is IMO a uniquely and quintessentially European concept. The results are exactly as I expected. I just didn't think it would collapse so soon.

  • rate this
    +2

    Comment number 110.

    There's no quick fix for any country that uses the Euro - it's a crippling currency and the technocrats in Germany will never admit they made a huge mistake when they created it. At the same time Germany seems to be assett-stripping the smaller states (and coining-it-in by selling those same bankcrupts submarines - why does Greece have a bunch of German submarines now?)

  • rate this
    +3

    Comment number 109.

    #85quiteoaktree

    Yes there some benefits for a part of the population.
    There is not housing benefit here.
    National health service still free if you are spanish(loosing quality very fast)but if you are an unemployed immigrant or long time unemployed
    spanish you could have problems in many areas.
    My case, I was the owner and 1 of the 2 workers in an independent small business, I don't get a cent.

  • rate this
    +2

    Comment number 108.

    104.quietoaktree

    "UK leaving the EU--an international celebration --all the way to the Cayman Islands"

    I will be celebrating. I suggest "EU"-passport -burning parties at those places at which were invasion beacons for the Spanish Armada

    I presume Merkel will not be celebrating as we would no longer be being ripped off by being forced to pay for her rubbishy "EU"

    UKIP!

    AfD!

  • rate this
    +2

    Comment number 107.

    Burning building, no exits. Not only did Hague tell them that, so did many others. They still don't believe it. They still think they will survive it. All the kings horses and all of Germany's money can't keep the Euro alive indefinitely.

  • rate this
    -1

    Comment number 106.

    99, have you seen the footage of the Americans entering Paris after defeating the occupying forces. There were Europeans dancing in the streets that day.

  • rate this
    +5

    Comment number 105.

    101. margaret howard
    "It won't be much different today esp in Wales"

    Well,in my county of Pembrokshire,the damage done to our local fishing fleets of Milford Haven,by letting Spanish & French hoover up stocks,the EU is not totally loved.One can not predict out come of new referendum.The benefits of EU is increasingly seen in a negative light.

  • rate this
    -1

    Comment number 104.

    #102 kane

    --UK leaving the EU--an international celebration --all the way to the Cayman Islands.

  • rate this
    +1

    Comment number 103.

    Unemployment up in Spain & up in France. Europe only attracts bad news. No celebrations on the streets but the people have organised there own protests in Madrid.
    Growth in the UK though, so it's not all bad. The message to young Spaniards and French is "make your way to the UK" soon we'll be booming. Yee Haw!

  • rate this
    0

    Comment number 102.

    99.quietoaktree
    "--Funny, I have never seen Europeans in such a celebration."
    Wait until Europeans have something to celebrate first I'd say.

  • rate this
    -1

    Comment number 101.

    91 Phfft

    "I don`t mean to be unkind,but any item showing the EU in its true light, would not be accepted by you"

    I think that applies to you when you write at *78:

    "That is why I will vote,at every given chance against it,& its does seem I am not the only one"

    In our referendum in 1975 the vote was 67% in favour out of a 67% turnout. It won't be much different today esp in Wales

  • rate this
    +3

    Comment number 100.

    I have a solution which will work. Remove politically correct taxation on energy which makes the EU uncompetitive compared to USA and most Asian countries where fuels costs are generally lower. Let us make it easier for people to work.

  • rate this
    0

    Comment number 99.

    #90 dmt

    "We are supreme. i.e., their are different classes of human beings in the natural order of things, and we are at the top, by divine grace"

    http://www.dailymail.co.uk/news/article-2311986/Boston-latest-news-Americans-streets-celebration-police-capture-Dzhokhar-Tsarnaev.html

    --Funny, I have never seen Europeans in such a celebration.

    --only some in Arab countries.

  • rate this
    0

    Comment number 98.

    #91 Phfttt

    "I don`t mean to be unkind,but any item showing the EU in its true light, would not be accepted by you."

    Have I not asked Fulano questions unrestricted by any false propaganda ?

    --sorry if factual knowledge is my aim -- I can lie to myself adequately -- with no assistance from others.

    Fulano --I must leave for a couple of hours --hope you will be there.

  • rate this
    +2

    Comment number 97.

    The European Council on Foreign Relations found that 72% of people in Spain said they did not trust the EU. They could make that 100% if the survey was done in my house.

  • rate this
    -3

    Comment number 96.

    90 demo

    "We Europeans alone" We are supreme"

    I didn't say that. What I did say was that I've not yet heard any Russians etc willing to face up to their crimes and look for a brighter way forward. Their citizens still live in misery

    Europe is alone so far making a huge effort to improve the lot of its people. America alas has chosen the way of the dollar (even when owned by the Chinese)

 

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