Posts Tagged "Spain"

Debt and indebtedness: The Spanish Economy

While the new Lib Tory (others prefer to call it Con Dem) government settles in and blames the outgoing government with ambiguous comparisons to Greece, I think I should draw attention to Spain.

Over the last few months living in Madrid, I’ve been in the thick of Spanish economic news and though I’m not an economist, I think I’ve managed to pick up a few things from my ex-girlfriend, who was.

Starting with the differences between Greece and Spain, it’s important to note that Greece was forging its figures for years and years acting totally recklessly. Spain, to the contrary, has had a fiscally responsible government since 2004. Some would contest this with the power of hindsight, but for a long time Europe’s 4th economy (I was also shocked to learn that)  was doing very well. It had comparatively low debt and was even running budget surpluses a few years ago, as you can see here.

The banking sector survived unscathed, in contrast to Britain’s bail-out, but problem in Spain has essentially been an over-reliance on the housing bubble, which burst violently, combined with spiralling unemployment reaching nearly 20%.

I’ve seen this unemployment for myself. There are 200,000 inhabitants of my city (Alcalá de Henares) and every morning as I leave the house I used to see a queue of a hundred or so people. Initially surprised that the Spanish could queue, I presumed bemusedly that it was to the bank at the end of the street. In fact, I discovered the queue turns around the corner at the bank, last another hundred years before veering into the jobcentre.

Spain has thus seen a sharp increase of pressure on the state, and has seen borrowing surge beyond 10% of GDP, seeing the sharpest deterioration of government debt compared to relatively low pre-crisis levels.

The President of the Government of Spain (aka Prime Minister) Zapatero, chairing the EU council, has seen the Commission set particularly ambitious consolidation targets for Spain due to the very high starting points for borrowing there.

Zapatero has shown considerable effort to advance, having already announcing a VAT hike for this year. Today he cancelled a trip to Brazil so he could help to push through some Labour Reform personally. The conservative party (El Partido Popular) has been in the town square all week, and I have collected no fewer than three “no VAT increase” leaflets. I duly explain my three points; I am foreign. I am socialist. I am in favour of the hike. The VAT hike for this year, from 16% to 18%, (and there could be the case for a further increase after that) might do less damage than increasing income taxes. The Populares did not share my point of view.

As Spain will is showing very slow signs of recovery I would not be surprised to see more tax hikes in the near future to offset spending. The low rates of income tax might be a good place to start.

There is also some room to reduce government spending given its high share in GDP. Hopefully if the necessary spending cuts can be achieved such an increase in income tax could either be avoided or at least softened significantly. However, the consumer sector here is so fragile, I am inclined to be sceptical.

In any case, I’m off on a trip to Lisbon tomorrow, then I’m leaving Spain for good on June 3rd. Hope you like the blog relaunch!

Conservatives keep uncharacteristically quiet

The government is in trouble, its President is struggling with a huge crisis, so the Spanish conservative party, El Partido Popular is getting excited.

However, its leader, Mariano Rajoy, has hardly been seen in public over the past few weeks, since the government announced its policy to reform pensions.

Though his PP followers are putting pressure on him to ask for the upcoming elections, Zapatero‘s resignation or even a “motion of censure”, Rajoy has been strangely hesitant and it is making the party nervous.

A good example was a political meeting (in Spanish, a “mitin”, seriously) in Granada where the PP leader was due to speak. Around 10,000 supporters gathered and expected fireworks in Rajoy’s speech; they were soundly disappointed.

Instead, Rajoy weaselled out completely:

We have to keep the peace and remain calm. The Government isn’t doing it, so the PP must.
What I want is for Zapatero to come to Parliament and tell us what he’s going to do and how he’s going to do it.

He then went on to talk about his own “plan”, without divulging a single element of this supposed agenda.

Soraya Sáenz de Santamaría, (PP parliamentary spokesperson) and Mariano Rajoy in the Congreso

A few days later, Zapatero did come to Parliament, as he has done on more occasions than any of his predecessors, the debate took place, yet the PP took a back seat. Instead, it was a group of Catalan ‘nationalists’ that was most fierce in its criticism, in an attempt to steal PP votes when elections soon take place in Catalonia. The Partido Popular remained almost silent throughout, preferring to speculate in the newspapers about the timing of those particular elections.

The PP is avoiding at all cost that public debate shifts focus onto their Opposition. At the moment, the pressure is on the government as it is forced to make tough decisions and strict measures. When a journalist finally managed to get hold of the Partido Popular‘s parliamentary spokesperson, Esteban González Pons and ask why, if the government is fairing so poorly, they not ask for the forthcoming regional elections, he was told:

“Zapatero has a mandate and a parliamentary majority. We are a constructive opposition. So we are going to listen to him, and if they [the PSOE] ask for our help, they will have it.”

Coincidentally, ZP did ask for help on his Economic Recovery Package, in my previous post, but such help was not forthcoming. The debate on the economic crisis was quite technocratic, particularly ZP’s speech.

The strategy is quite clear; Rajoy wants to project an image of tranquillity against the frantic pace the Socialist Government is setting. The PP is currently around 45% against the PSOE’s 40% in the polls, and the “plan” seems to be to keep quiet and wait for a victory in expected regional and local elections to act as a springboard in 2012.

Brown should take a lesson from ZP

Zapatero, President of the Government of Spain was on top form last night in Malaga, where he made a surprisingly powerful speech to party members.

Play it through, even if you don’t understand Spanish. ZP has been the centre-left President of the Government since 2004, and has been fiercely criticised over the fact that Spain has been hit harder than most by the recession.

In the clip, he makes an incredibly important point that Gordon Brown would do well to repeat. Zapatero challenges Rajoy, leader of the Spanish conservative party (El Partido Popular) to be a little bit more constructive.

Here’s my rough translation of the most important part, from 0.45 to 1.08:

This is why I ask Rajoy to come and presents his proposals. I’m not asking him to take responsibility for the government, I’m asking him to take responsibility for Spanish society.

I’m not asking him to help the government, I’m asking him to help our country!

However, the PP has been surprisingly quiet as of late. Funny that.

With My David Cameron change is possible!

Though many aspects of Spain are incredibly backwards, there’s something incredibly modern about their politics.

They don’t have silly minority parties like the Lib Dems, they don’t have mad communist parties like in France, and they actually talk about the problems instead of personalities, unlike Britain.

What most struck me though, is their campaigning, and I have two main examples of how Spain is miraculously ahead of the game.

Here’s the first example. You are all familiar with this picture of Obama with the slogan “Change.” below:

I then realised that this ground-breaking piece of imagery was nothing but a jumped up PSOE campaign from 1982. Have a glance at Felipe Gonzalez:

The topline reads “Vote PSOE” and the slogan means “For change.” Suspicious, no?

Anyway, this is just an aside compared to what I want to go into. My second example pertains to the infamous Conservative Cameron poster campaign:

Which bears an amazing resemblance to the Spanish Conservative Party’s (el Partido Popular) election posters in 2008, which was also just a picture of their leader with a slogan. Take a look at “Make it to the end of the month” “With Rajoy it’s possible“:

Note that the British Tories decided to drop the blue coloured background.

So, the next interesting development is that in Britain, everybody lauded the ingenuity and resourcefulness of the My David Cameron website for it’s (very good, I shall add) instant poster parody maker of the above poster, and subsequent campaign editions. However, back in their elections in 2008, that’s right, they had their own DIY-Rajoy poster generator!

And they call it New Media!

Clicking with the Spanish

I’ve been in Spain for just about a week now, and it’s quite an adjustment.

Moving from France to Spain is a larger leap than England to France. Equally, I am trying to make the transition from the workplace to the classroom.

My first impressions have been formed, and they tell you more about me than they do the locals.
Principally, I feel much more foreign here than I ever did in France. In Nice, my nationality was more like a funny hat that I would bring out and wear from time to time. Here, it’s a lot more permanent simply because of genetics; I don’t (as far as I know) look even the remotest bit Spanish, the locals react as such.

Even thus, my identity is still a bit confused. In Nice, I was so connected through my job to the town and the region PACA that I feel much more at home speaking with the French students than I do the English.

Then when you add my personality into the mix it becomes even more complex. Friend and colleague Jack Penrose, well known for his linguistic elegance and amateur poetry (rumoured) described me as “someone who flushes before he’s finished pissing.” I would translate that phrase as “time-efficient”. My life is divided into hour-long blocks of time; I enjoy darting from one meeting to another, getting from A to B. I love my Blackberry, I hate downtime.

This “time-efficiency” trait is a direct contradiction with the Spanish way of life.

Everything is closed, all the time, and nobody cares about anything. If it is agreed to meet at 1200, may god help the person who turns up at 1210, particularly if they find we’ve already left.

At the risk of being compared to Hugh Abbot, I find it’s much more difficult to click with Spanish people as we don’t seem to have very much in common. Hopefully that will change once classes start and I get involved with the PSOE (that the Spanish Labour / Socialist party… you know… the one with Zapatero in it.)

Of course it’s early to start making wild generalisations, but there really is a key difference in the mood of this part of my placement. In France, I was integrated and absorbed in the culture, ethic and identity. In Spain, I feel like I am looking at society through a lens.