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

    Comment number 175.

    172. quietoaktree
    I think still in our culture, it's there, is in people subconscious. But it's difficult for me to explain it in few words. Sorry I have to leave the chat now.
    Best for all.

  • rate this

    Comment number 174.

    QOT's 162 has this link:
    Readers can understand the badly spelt text because the context is clear. QOT's stuff lacks context and so loses its effect and meaning. He/she needs to learn to write so his points gain validity. Readers must be told the link is invalid as an argument.

  • rate this

    Comment number 173.

    Beeb boys, does QOT work for you? I can't see any reason to remove my posts, especially the ones that try to explain to readers how they should look at the link he/she put in answer to my comment on reading. Readers can't know why he/she put up the comment as they don't have access to what it is referring to. Please put it back. The stream has been broken. About 25% of monthly salary for 35yrs.

  • rate this

    Comment number 172.

    #168 Fulano

    -- Are you saying the lack of discussion on the CW is partly to blame--or not ?

    Sorry-wasn´t clear to me .

    #167 CL

    --is 6-8 kids still a normal sized family in Ireland.

    They went abroad before --whats new ?

  • rate this

    Comment number 171.

    167 Chris

    "You should not use wikipedia for data"

    Population, Ireland - 4,487,000 - 2011
    Source: World Bank

    Wikipedia is a wonderful tool.

    But rather than nitpicking, the point I was making was that for the first time in 200 years Irish population has grown again since the 1970' and despite this financial setback (caused by greedy banksters) many can stay rather than emigrate

  • rate this

    Comment number 170.

    "lessor" was the term used with regards to the failing Euro members. It was said that they were now a drain on the Union and their membership should be terminated. The likes of the so called PIIGS was mentioned along with other member states and even France was thrown in for good measure. The preferred Euro group was quite small and select.

  • Comment number 169.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 168.

    158. quietoaktree
    Judge Garzon is been condemned due to something that law says is up to an interpretation.He was in two complicated issues at that time,gurtel case that links corruption in some regions that are ruled by PP with some companies(conected with PP)that charged crazy quantities to those
    regions and the case of missing bodies from the civil war.The second case was more painful for part

  • rate this

    Comment number 167.

    155.margaret howard
    You should not use wikipedia for data as it is often out of date or just wrong as in this case. Ireland has seen mass migration over the last twelve to eighteen months with no sign of it easing. What we are seeing is a change in our demographics with an increasing ageing population along with an increasing percentage of less qualified - population is now at just over 4.5m TBC

  • rate this

    Comment number 166.

    151 QOT

    "If the Germans take to the streets - the party is over"
    Or the party will have just begun, depending on your viewpoint of course.

  • rate this

    Comment number 165.

    #160 QueerZ

    --In the 70´s Greeks could go on pension after 20 years working.

    "retired people in Greece get pensions because they pay huge contributions throughout their working life."

    --figures please with comparisons !


    #161 CL

    --what does ´lessor´ imply ?

    Kleiner --means smaller --please give example !

  • Comment number 164.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 163.

    151 QOT

    "If the Germans take to the streets - the party is over"

    I have a lot of friends in Germany and am full of admiration for their stoicism. But I agree with you that many feel being taken advantage of.

    There is no other country I know that works as hard or educates its children as thoroughly and I really think they should do a Switzerland in a Europe that doesn't deserve them.

  • rate this

    Comment number 162.

    #157 QueerrZ

    "Could someone tell QOT to learn how to write? What it writes makes no sense,"

  • rate this

    Comment number 161.

    While Germany is benefiting from the weak Euro and the kudos the politicans are getting from being "the main player" there is little chance of them throwing in the towel. However there is a growing undercurrent of anti-Euro feeling. I am just back from Stuttgart and there was a lot of talk about the harm that is being done to Germany by the "lessor" member states. Interesting!!

  • rate this

    Comment number 160.

    #154 Raising retirement age has certainly contributed to youth unemployment in Greece. It also wasted money there, too, as retired people in Greece get pensions because they pay huge contributions throughout their working life. Youth unemployed has to have some minimal handouts paid from the state. TROIKA mess yet again making the situation worse. Bail-outs are loans for DE to benefit.

  • rate this

    Comment number 159.

    3 Minutes ago
    "German retirement is 67 --some talk of 69"
    I believe Spanish retirement is set to rise to 69 very soon. It was 65 before Rajoy got in. That's a 4 year rise in under 2 years. That's painful.

  • rate this

    Comment number 158.

    #146 Fulano

    --I remember the ´shooting´in parliament --and the brave member who did not budge.

    -- Do you think that the forbidding of the Civil War discussion is partly to blame for the situation you describe ?

    --sorry for again giving Greece as example.

    --I am not aware of the same in Portugal --they only appeared to go on a ´spending spree´--after the revolution ?

  • Comment number 157.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 156.

    #150. Mr Naughty
    Careful when you compare societies, we could continue to talk about human rights.......then globalization.........then corporations........and then back to the customer, you.


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