Social Action Now!

An objective view to worldwide social issues

Economic crisis in Spain

The Economic Crisis began in Spain in 2007 and six years later, the situation is still deplorable. Although the latest news are good regarding to 2 years ago, unemployment is one of the variables of greatest concern continues to increased about 26%. The expectations for next year are right optimistic. The Prime Minister claimed that the Spanish economy will grow and therefore, we will soon put an end to this horrible phase and celebrate a new life full of illusion and motivation. Many people no longer believes in anything … We’ll see in two years if what they said was true.

The economic policy makers did not have capacity to deal with the situation becoming increasingly optimists as is reflected in the statements of Zapatero September 2007 and January 2008: ” Spain has entered the Champions League in the world economy” , ” Spain is able to achieve full employment.”The party was in power did not want unclog the bubble that had developed either by naivete or by their own interest and it was very difficult to slow.

The political posts were optimistic without thinking whether it could prevent the housing bubble. There was a demand so great that people kept buying as an investment, which then turned out a failure since it came to a time when everything fell and it demonstrated the overvalued that it had acquired the property.

First, the monetary policy followed by the European Central Bank, since 2001, which kept the reference interest rate at very low levels for the cyclical (PANOECONOMICUS,2011,3,PP.309-328, Francisco Carballo-Cruz), since the other European countries they had a sustainable development to not convenient for have high in interest rates.

The Bank of Spain cautioned that figures were unsustainable and knew that the growth would fall, but the politicians chose to ignore because that supposed to make a change in the economic structure and slow down the growth.(PANOECONOMICUS,2011,3,PP.309-328, Francisco Carballo-Cruz).

Banks were unable to support the economy and gave the increase of the bubble, which could have been avoided:

  1. Improving information on housing prices
  2. Reducing the tax relief housing on income tax: in Spain, having to pay for housing deducts the income statement, which incentives to buying. Therefore if tax relief is reduced, the excessive buying housing is braked.
  3. Increase the pressure inspector on businesses and real-estate agreements.

During Zapatero’s government they took place some economic policy measures in order to revive the economy. It created the Plan E which was considered to give economic support to businesses and families, encourage employment and modernize the economy but this plan financed by public funds came at the hands of public administrations city councils, those who decided about some public works to invest money.

plan-e-plan-zp-2

Tourism continues to be the most valued economic variable and the only sector that relies certain stability now and the end of the year. Tourism is a very good source of income since we are a tourist country. One of the advantages which have some countries in Europe are that nowadays despite of not be having the best time, there is business confidence, this is one of the things that we need in order for the tourism sector move on .This means that although they are not earning much money, they are confident that our company has a future.This situation is what makes them consume in the tourism sector.

playa-de-levante

Respondents ensured that the beginning of the recovery from the crisis will be late 2014 or even after 2015. If this were true, it would be seven years of crisis.

The worst sectors in production and billing: are construction and contracts. However, the indicator with worst performing has, is investment. From the business point of view nobody runs the risk to buy machinery because the bank will not finance and you do not trust that you can get the money you have invested in the machinery. A few years ago, people could buy a house as an investment, nowadays nobody runs the risk since there is sufficient demand for rental.

Sources:

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