![]() ![]() He blames the situation on high fiscal fraud and uneven tax contributions among Spaniards, and disputes the argument that Spain spends too much on public services. They defend measures such as curbing of public spending, privatising public companies, and labour reform (recently approved despite strong opposition from the unions) and changes to retirement system.īut economist Juan Francisco Martín Seco, also a columnist for Spain’s second-largest daily newspaper El Mundo, believes that the public deficit is caused much more by the fall in income than the increase in spending. Not all economists see the source of Spain’s pain in the housing bubble, with Neoliberal economists insisting the current economic problems were caused by uncontrolled expansion of public spending. The ratio of housing price to average salary in Spain became almost triple that of EU-15 countries. Most workers were immigrants or youth that opted for the quick money instead of furthering their education. The construction industry accounted for 12% of GDP, more than double than UK or France. In the 1990s and 2000s, banks invested strongly in the real estate sector. To answer this question we must look in more detail into the alleged Spanish economic miracle. Nowadays many ask why the Central Bank was so negligent. As Spanish banks’ risk profiles began rising, it seemed the Spanish Central Bank was asleep. The bubble kept growing.īut while house prices continued to increase, salaries did not. Corruption made millionaires out of politicians and developers. Local governments made millions by reclassifying land from rural to urban. Spain’s housing bubble began in 2005, with the media and economists urging Spaniards to buy property. This is the sorry end of Spain’s “economic miracle”, which led to an unsustainable housing bubble, a fundamental regulatory failure by Spain’s Central Bank and a humiliating 100 billion euro bank bailout in June.Įurope now waits to see whether Rajoy will accept a bailout from the European Central Bank to buy unlimited amounts of government debt in exchange for austerity and economic reforms - a bailout fiercely opposed by most Spaniards concerned that even more drastic reforms will affect retirement payments, so far untouched by Rajoy’s government. Spain’s government, led by Mariano Rajoy, has now been forced into action following a woman’s suicide that made international headlines, and has finally accepted opening a dialogue with the main opposition party PSOE to devise measures that will protect the most vulnerable households. ![]() ![]() “ houses without people, nor people without houses.”įor months the opposition and social movements called for a stop to evictions that have so far affected some 400,000 families. Many other parents were not so lucky, losing their own houses when their kids lost jobs and the banks moved onto the houses of the loan guarantors. “At least in our case our parents didn’t guarantee our loan,” says Sara. They live with their parents now, yet they still owe the bank 90,000 euros, as in Spain, unlike in many other countries, one is not free of mortgage repayments once the house was repossessed by the bank. Sara and Fernando, like many young Spaniards, lost their jobs and their house. (When in 2010 the demand for this kind of work declined, he was one of the first to go.) Despite their unstable financial situation, the bank gave them a mortgage, encouraging them to extend to cover the cost of furniture and a car. Although Fernando did well with the construction boom, his employer saved on social security contributions by hiring him always as a casual. With the help of their parents, the couple bought a house in the outer suburbs of Sevilla because they couldn’t afford one closer to the city.Īn art history graduate, Sara hasn’t held a job for longer than six months. Spaniards Fernando and Sara got married in 2007.
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