Spaniards pessimistic about economy despite reassurances
Investors have given deficit-ridden Spain a beating in the markets this week, and the government here is scrambling to convince anyone who will listen that it won’t need a financial bailout as did Ireland and Greece.
But a feeling of powerlessness is spreading among Spaniards, who see their country’s fate as increasingly out of their hands, and out of the hands of their leaders.
“I am thinking definitively about which country to emigrate to,” said Sarah Babiker Moreno of Madrid, an unemployed researcher. “I feel our government has a total lack of control over what is happening. The outcome depends on the appetites of the markets, not on Spain, and I think that is a national sentiment.”
Moreno, 31, watched with dismay this week as the Socialist government pledged to scrap a $560 monthly subsidy for the long-term unemployed. The benefit is certain to become yet another welfare casualty in a raft of new austerity measures due to be approved by the Cabinet on Friday.
The changes also include a wave of privatizations and tax breaks to spur the expansion of small and medium-sized companies. Together, they are the response of Prime Minister Jose Luis Rodriguez Zapatero’s government to a volatile week in which the cost of state borrowing hit record highs.
The $113-billion international bailout of Ireland last weekend failed to calm investors who wonder whether Portugal and Spain will be next in line for a rescue, despite a $19-billion Spanish austerity plan approved in May to tame a budget deficit equal of 11% of gross domestic product. The deficit for the first 10 months of the year was cut in half compared with the year-earlier period.
The roller-coaster situation has increased Spaniards’ gloom.
“The future is black,” said Francisco Galan, owner of a butcher shop in central Madrid. “The world’s bad, but Spain is worse off. I now know four people who have lost their homes. I’m worried.”
Galan, 45, has seen evidence of the crisis in the shrinking purses of his customers. Not long ago, they opened their wallets to buy jamon serrano, a dry-cured ham beloved by Spaniards, “but now they buy plain cooked ham at half the price,” Galan said. “Steak is off the menu too.”
Like many of his compatriots, Galan blames reckless banks for creating a crisis that workers, whose retirement age is being raised to 67, are now paying for. He professes not to understand economics, but even he can see that the outlook is grim.
“Would you invest in Spain?” he asked pointedly. “I don’t trust this government.”
Many people share his pessimism. More than 70% of Spaniards think the economy will be the same or worse in a year’s time, according to a recent poll.
Spain is grappling with a domestic crisis regardless of market interference. The end of the real estate boom in 2008 robbed an economy of its motor and resulted in the loss of millions of jobs. Banks were exposed to billions of dollars in bad loans.
Now 1 in 5 Spaniards in the workforce is unemployed, with the jobless rate among those younger than 25 topping 40%.
“Spain is in a complicated situation,” said David Navarro, a portfolio manager at Inversis Banco. “Construction used to make up 15% of our GDP. International trade and exports will foster future growth, but this requires structural changes to our economy. The policies being put in place now will take years to bear fruit.”
So far investors haven’t shown much patience. The government is fighting hard to win back the confidence of the markets, but it also must battle to win back the faith of its own people, including Pepa Jimenez, 42, a grocer who summed up her feelings as “impotence.”
“I know whole families who are out of work. I am afraid that my children will have to emigrate like my parents,” she said. “I don’t know what the solution is, but I don’t see anyone taking Zapatero seriously. He has no influence.”
Healy is a special correspondent.
