The data released yesterday of Spain's GDP in the third quarter, which grew by 0,5% against a much more modest performance of the other major eurozone countries (0,1% in Germany, 0,3% in France and -0,1. 2014% in Italy), seem to indicate that the country is emerging from the crisis. This trend is in line with the forecasts for the two-year period 2015-1,2, revised upwards, 1,7% and 0.8% respectively, and well above those – revised downwards – for the euro area average ( 2015% in 1,1 and 2015% in XNUMX).
What is the key to this result, considering that just three years ago the government asked for European help to restore its banking system? After all, in the first half of the 3s, Spain was the model to follow. The country grew at a sustained pace – over 5% -, basing its development on the expansion of construction (15% a year). Demand was stimulated by the low interest rates enjoyed by Spain as a member of the Monetary Union, but also by favorable fiscal conditions (for example the possibility of deducting 50% of mortgage payments) and by credit institutions, in particular in particular the local banks (the so-called cajas), willing to offer mortgages even for XNUMX years and free to act thanks to almost non-existent supervision.
When prices begin to fall in 2008, the bubble bursts. In just under two years, the budget balance went from a 2% surplus to a 4.2% deficit. The situation escalates rapidly. In 2009, the government announced the nationalization of the banks that financed the real estate bubble. But it is clear that the measure is not enough. We begin to think about possible European aid, which is granted in July 2012, with the green light for a plan of 100 billion euros. The first tranche of 40 billion already arrives at the end of 2012 and serves to recapitalize Bankia, Novagalicia, CatalunyaCaixa, Banco de Valencia. In return, the Spanish government signs a Memorandum of Understanding in which it undertakes to continue with fiscal consolidation (in 2012, the deficit was 10.6%, far from the 6,3% target) and to implement structural reforms aimed at restore competitiveness to the economy.
Spain thus becomes, at least as regards the banking sector, the fourth country in the euro area under European bailout. In the eighteen months of the programme, the government profoundly changed the country's productive structure. And not only through internal devaluation, i.e. the compression of costs and wages, which is always talked about. Prime Minister Rajoy, thanks to a strong electoral mandate, has launched a package of reforms – very similar to Schröder's Agenda 2010 – which has involved all sectors of the economy. Starting with the labor market, a sector blocked by dualism and a poor link between wages and productivity. Several measures have been adopted to give greater flexibility both internally (for example, the possibility for the employer to change the worker's wage conditions and hours) and externally (for example, making reinstatement optional and reducing the compensation to 33 days per year of work against the previous 45). For those who take on permanent contracts without firing, the cost of labor has been reduced: contributions for start-ups have gone from 265 euros a month to 50 euros. A measure, the latter which increased in 2012, the number of self-employed by about 70 thousand units.
To deal with an inefficient and costly bureaucracy, in October of the same year the government set up a special Commission for the reform of the Public Administration (CORA, Spanish acronym) with the task of reducing the administrative burdens that create obstacles to the economic activity of companies and individuals. To date, of the 219 measures taken, 44 have been implemented and of the remaining over 50% are nearing completion. At the same time, the Spanish Competition Authority was reformed and eight other authorities were merged. As regards the rules, the bankruptcy proceedings of small and medium-sized enterprises have become faster, concluded without judges and at low cost. Doing business just got easier. The Entrepreneurship Law of June 2013, among the many measures, also introduced the possibility of setting up a company in 24 hours.
The entire education system has also been reformed. From university, with the introduction of more meritocratic procedures, particularly in recruitment matters, to research - through a series of subsidies -, to school (the goal is to reduce the high school dropout rate which is equal to 25% against an EU average of 13%), with the centralization of the evaluation system which has substantially reduced the discretionary power of the regions.
The last major sector that remains to be reformed is taxation. To this end, the government has set up a group of experts to study how to make Spanish taxation simpler, more efficient and more growth-oriented. Various proposals are currently being studied, including the reduction of social security contributions paid by companies to be compensated with an increase in VAT (from 21% to 22%) by moving some products to the highest class, the 15% cut in the rate for newly established companies and 20% of the net result for self-employed workers who start an economic activity. Prime Minister Rajoy seems willing to follow most of these suggestions since he announced that in 2015 there will be room for a strong reduction of the tax burden after years of fiscal consolidation.
On 23 January 2014, Spain exited the bailout programme. According to the government, the country has become "credible, solvent and has regained the trust of its European partners". In fact, Spain is the fastest recovering eurozone economy. It came out of the recession already in the third quarter of last year. Per capita GDP is returning to pre-crisis levels. Investments are beginning to arrive from abroad to the point that foreign car manufacturers have invested 5 billion euros in 17 plants in two years. To date, Spain is the second largest machine-producing country in Europe: 2 million machines, compared to the 600 produced in Italy. Unemployment remains high but there is a trend reversal. From the peak in 2013 (26.1%), the percentage of jobless fell slowly: in 2014 to 24.6% and to 23.5% in 2015, the minimum since 2011. However, one in two young people in Spain is unemployed (in July, the level reached 53,7%). An alarming fact that signals the need for further reforms on the labor market.
In essence, the recovery is underway, but it is slow and not without uncertainties. This is why Pademos, the new party born a year ago from the circles of the radical left, is advancing. The leader Pablo Iglesias, thanks to his oratory skills and a certain calmness, invades the televisions always using the same argument: the program agreed with the Troika is not working since it imposes a very high social cost. There are those who argue that the growing success of Podemos is favored above all by the scandals that are engulfing Rajoy's party, but also that of Pedro Sanchez, the new promise of the centre-left. What is certain is that, to date, Podemos is the leading Spanish party: polls currently show it at 25%. Not much is known about the political program yet. For now, Iglesias in his recent speeches insists heavily on the cancellation of the debt, which in Spain is reaching 100% of GDP. Perhaps we forget that a large part of this debt is in the hands of Spanish citizens and institutions, who would be the first to be affected by such a restructuring.
