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.
Greater growth, less unemployment, a lower deficit. The Spanish economy is starting to pull out of the Great Recession following a lost decade, according to Brussels’ revised forecast for Spain, released on Thursday. According to European Union leaders, the Spanish economy will grow faster than other member states, at a pace of 2.8% in 2017 (half a percentage point more than in the previous forecast) and 2.4% in 2018. Not even the deficit, which will close at 3.2% of GDP this year, just one tenth of a point above the target, seems to be an issue anymore. The previous forecast, released in February, had talked about a deficit of 3.5%.
Here in Alcalá we have seen the first new houses built last year, after years of no movement at all.
This growth comes on the back of 10 years of hardship during which Spain tackled reforms, digested the real estate crash and raised exports. But deep scars remain in the form of elevated debt levels and job market troubles. At more than 18%, the jobless rate remains clearly above the average for developed nations, and two labor reforms have encouraged competitiveness at the expense of salary levels and job security.
Now, tourism has helped Spain, as we noticed here at El Guarda too. The security concerns over resorts in north Africa and to a lesser extent the eastern Mediterranean has meant that Spain has welcomed a record number of tourists of all nationalities. This has helped reduce the unemployment rate and tourist spending power has meant that many local businesses have prospered. But there are dangers ahead. Sooner or later resorts in north Africa will start attracting tourists again. The weaker pound following Brexit will mean that British tourists will be curbing their spending and of course there is Brexit. Spain is one of Britain’s principal trading partners. Spanish businesses have invested heavily in Britain over the last decade. In the same time we see that compensated by the travellers from outside the EU that heavilly benefit from the low EURO for some time now.
For the time being at least Rajoy can feel rather proud of his economic track record and we can be happy with him.