03/03/2017 00:00
He may be not the most popular man in Spain but Mariano Rajoy, the Spanish prime minister, can take some credit in the remarkable turnaround of the Spanish economy. Five years ago it appeared that Spain's economic future looked exceptionally grim. The severe worldwide recession had hit Spain hard; unemployment rocketed, thousands of people lost their homes and the economy went into meltdown. Rajoy promised to fix the economy; most people were rather sceptical. But a mixture of luck and a business plan from the government has ensured that the economy is back on track, with levels of economic growth not seen since the boom days.
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Spain is outperforming its peers of the "Club Med" even if its growth its fueled by the ECB. Compare this with the unexistent economy growth in Italy - benefiting from the current ECB government bonds purchase as well - and you get the full picture. It looks like Spain enjoys much more disciplined and country-focused politicians. Of course, nation-wide macro-economic performance indicators such as GDP do not tell the full story because of wide cross-regional differences, but the same holds true for other European countries like Germany.
Miracle.? So how come Spain still has the second highest unemployment rate in the EU,second only to Greece.? And how come it is eye-deep in debt and narrowly missed having to pay a huge financial penalty for not meeting it's agreed debt repayments,a decision that was made because it was felt that a financial penalty would only make things worse for Spain,some miracle.
The weakness of the whole monetary system remains a major threat. The Spanish banks are woefully undercapitalised and with the constant and increasing rumblings of nationalism in the European block the Spanish economy remains on very shaky foundations.
Rajoy has achieved a remarkable turnaround of the main Spanish economy. But , how much has been repaid to the European Central Bank, of the huge borrowed debt ?.