Investment is slumping. Unemployment in August was 11.3%, a third higher than a year earlier, the biggest jump for 30 years. The economy grew by just 0.1% between the first and the second quarters of this year, the slowest pace since 1993.
It is now almost certainly contracting. So sharp was the deterioration that Mr Zapatero (pictured above with Pedro Solbes, his finance minister), who had earlier refused to acknowledge that there was any economic crisis, interrupted his August break to hold an emergency cabinet meeting.
“Spaniards went on holiday in party mood and came back to find there was no champagne left, nor even any decent wine,” sums up Fernando Fernández, a former IMF official who is now rector of Nebrija University near Madrid.
Great while it lasted
The fiesta had indeed been splendid. Spain has undergone an extraordinary transformation since Francisco Franco died in 1975 and his long dictatorship came to an end. Democracy was swiftly consolidated. A deeply conservative Catholic society has metamorphosed into an almost self-consciously tolerant one.
In the 1960s two-fifths of Spaniards still toiled on the land, many of them living in poverty. Now only 5% work in agriculture. Spain has become a vibrant, middle-class urban society.
Social and political change went hand in hand with economic progress. Between 1994 and 2007 the economy grew at an average annual rate of 3.6%. During that period unemployment fell from 24% to 8%, even though many women joined the labour force and some 5m immigrants arrived—and were absorbed with scarcely any sign of tension. For most of the past decade Spain has been responsible for creating about one in every three new jobs in the euro zone.
By 2007 total employment had risen to 20m, from only 12m in 1993. When Spain joined the forerunner of the European Union in 1986 its income per person was only 68% of the club’s average; in 2007 its income per person was 90% of that of the 15 EU members before its latest expansion. Living standards are now higher than Italy’s.
The improvement in Spaniards’ lives is instantly visible. Many elderly people are short, stunted by the hunger they suffered as children in the hard years of fascist autarky after Franco won the civil war of 1936-39. Young Spaniards are strikingly taller than their grandparents, exemplified by Pau Gasol, who measures seven feet (2.13 metres) and was voted the most valuable player when Spain won the latest world basketball championship.
Spain is not just a desirable place to live—though it is that, attracting northern Europeans who have bought second homes in order to enjoy the Spanish combination of sun, good public services and a relaxed way of life.
In 2006 it was the world’s ninth-largest economy measured at market exchange rates and the twelfth-largest at purchasing-power parity. It is the sixth-biggest net investor abroad.
The economic boom began under Franco, who abandoned autarky in the late 1950s. He turned the management of the economy over to technocrats from Opus Dei, a lay Catholic organisation, who opened it to foreign trade and investment.
But a bigger change came in 1986 when Felipe González, a Socialist prime minister, led Spain into Europe. Foreign direct investment flooded in as multinationals set up car and other factories to take advantage of relatively low wages.
Jueves, 26 de noviembre
Grupo Cenyt
Juan Carlos Ureta
Luis Llopis Herbas
Jesús Pérez
Ramón Tamames
Luis C. Sánchez
