Post_ 7 Spain

The explosion of worldwide economic crisis in 2008 has revealed a greater fragility of Spain compared to other countries. That's because Spain hasn’t created over the decades solid economic foundations of production, and because of the strong unbalance on the the tertiary sector (more than 60% of companies: tourism, transport, trade, telecommunications, financial and insurance services), which has suffered especially from the crisis. After 15 years, at the end of 2008,  GDP shrinks and in February 2009  Spain (as well as Greece, Irleand and Portugal) officially goes into recession. The building, which during the boom years had a major role in tow the spanish economy, during the crisis had a real paralysis. Prices for square meter collapsed and the sale of real estate became very difficult (almost half million of houses built have not been sold ). The crisis has also impacted on tourism, which however didn’t fall because of competitive prices compared to the European average. There is also an exponential growth of social spending.  Former Prime MInister Zapatero was alleged to have bet  too much on the construction industry trying to counter the crisis, financing many public works, not actually necessary (roads, parks, flowerbeds), which allowed the construction companies to go ahead, but without producing neither real wealth nor work for the future. In addition, the premier sought to deny until the last the severity of the economic situation, always speaking of a transitional slowdown. He was forced to resign six months before the end of his mandate because of the collapse of popular support with resulting unprecedented triumph of Partido Popular at early elections in November 2011. In the 2012 the financial crisis and the housing bubble put in serious trouble the economic situation. Banks and Government of Rajoy is forced to turn to EFSF (European Financial Stabilty Facility) to recapitalize Spanish banks. Unemployment raches stellar levels, around 25%, and youth unmployment (relating to young people under 25 years of age) exceeds 50% , these are signs o fan economy in recession as well as the flight of capital abroad and the steady increase in interest rates of government bonds up to 7% and then the spread increase over the German Bund.

The remedial measures taken to limit the damages: cuts and taxes

To combat this trend, in july 2012 the Government operates numerous and important cut: immediate suppression of thirteenth month's salary for state workers as well as reduction of holidays, cuts in unemployment benefits and pensions, increases of VAT from 18 to 21%. Popular protests against these measures are significant, because peoplerebel against the idea of having to pay to repair the crash of financial institutions generated by real estate companies.  The state does not have the means to remedy this deficit and thus tries to reduce costs and increase the tax burden on citizens. In the eyes of the world one of the most powerful images of Spanish crisis is the endless protest of miners in the region of Asturias, in the north of the country, who are asking the Minister Soria to respect the pact between the government and unions which provides aid throughout the 2012 for the mining sector, to achieve the progressive closure of mines not earlier than 2018. The cuts due to the crisis instead would lead to an immediate closing of structures, creating more unemployment in an area not among the richest in the 

peninsula.

Possible strenghts to be leveraged for shooting: exporting and innovation

In front of this almost catastrophic situation, there is anyway a downside positive the Iberian financial sector has proved relatively solid in the subprime crisis (which instead was catastrophic for the United States) and, in addition, many companies have been able to expand significantly in Latin America, China and India. In addition, innovation in several areas (renewable Energy, hi-tec, biotechnology, pharmaceuticals) has reached in Spain excellent levels of development and can be one of the key points for a re birth based on something more concrete than inflated construction investments that has played  a major role to push the country into recession.