Spain

Spain's powerful world empire of the 16th and 17th centuries ultimately yielded command of the seas to England. Subsequent failure to embrace the mercantile and industrial revolutions caused the country to fall behind Britain, France, and Germany in economic and political power. Spain remained neutral in World Wars I and II but suffered through a devastating civil war (1936-39). A peaceful transition to democracy following the death of dictator Francisco FRANCO in 1975, and rapid economic modernization (Spain joined the EU in 1986) gave Spain a dynamic and rapidly growing economy and made it a global champion of freedom and human rights. The government continues to battle the Basque Fatherland and Liberty (ETA) terrorist organization, but its major focus for the immediate future will be on measures to reverse the severe economic recession that started in mid-2008.

Economical characteristics

• Currency: Euro (ISO code: EUR)
• Central bank discount rate: 3% (May 2009)
• Commercial banks lending rate: 11.02% (31 December 2008)
• is part of the Eurozone

See also: Inflations#Vellon inflation in Spain

See also: Panic of 1866

Crisis in Spain

Spain, the euro zone's fourth largest economy, has stagnated as other European economies begin to recover from the global economic downturn. The bleak outlook for Spain, which has debt obligations three times that of Greece, has raised the specter of a broader debt crisis.

Spain massively invested into production of renewable energy, creating a bubble. No other country has given such broad support to the construction and production of electricity through renewable sources. According to a study of March, 2009, for every renewable energy job that the State managed to finance, on average 2.2 jobs would be destroyed. The rising energy costs were complained about by large energy-intensive producers, some companies have frozen their expansion plans, scaled down their operations or considered leaving the country altogether. In 2010, Spain has started to cut subsidies to reduce energy prices.

In 2006, the height of the housing bubble, 760,000 houses were constructed; more than the 650,000 started that year in France and the United Kingdom, with a combined populations almost triple that of Spain. Between 2001 and 2008 around four million new houses have been built and the average number of housing units completed per year was 565,000, more than double the figure of 250,000 for the previous decade. This is equivalent to the construction of twelve dwellings per thousand inhabitants, far in excess of the European average of five per thousand.

In 2009, after the collapse of the construction sector caused by the bursting of the housing bubble and the effects of the global economic crisis, the number of housing units started to fall to 160,000, and there were almost 700,000 housing units in stock (that is, completed but unsold).

In second quarter of 2010, Spain's unemployment rate rose to 20.09 percent, up from 20.05 percent from the previous quarter. It is the highest level in 13 years, and it comes despite a rise in seasonal jobs for the summer. The figure means 4.6 million people are jobless in Spain. By 2009, unemployment among people ages 16 to 24 was 42.9 percent, the highest in Europe.

In March, 2011, Moody's downgraded Spain's credit rating, citing worries over the cost of the banking sector's restructuring, the government's ability to achieve its borrowing reduction targets and grim economic growth prospects.

See also: Great Recession

See also: 2010 European sovereign debt crisis

Statistics

Statistic / Year	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008
GDP (million USD)	617 880	580 673	609 108	686 247	883 667	1 044 250	1 130 200	1 232 350	1 437 910	1 604 230
Govt. debt (% of GDP)	61.103	58.924	54.439	52.975	48.321	47.277	38.376	34.085	30.084	33.801
Govt. revenue (% of GDP)	31.182	31.059	31.054	27.430	26.629	25.647	26.183	26.975	27.741	24.459
Govt. expenses (% of GDP)	32.052	31.277	30.488	26.739	25.550	26.041	24.952	24.989	25.193	26.271
Debt to revenue (years)	1.960	1.897	1.753	1.931	1.815	1.843	1.466	1.264	1.084	1.382

References

Note: statistical data was rounded. Different sources may use different methodologies for their estimates. Debt to revenue is calculated by dividing the two variables from their original ('unrounded') values. It represents how long it would a government take to repay its entire debt if it used its whole revenue for this purpose.

Links

• Spain on Wikipedia
• Central bank of Spain
• Studies from the Library of Congress (1986-1998)
• BBC country profile
• A Spanish Entrepreneur vs. The State by Sterling Morton, November 2005
• Spain's Dire Choice: Flee The Euro Or Crush Its Own Wages by Gregory White, September 2010
• New Light on the Prehistory of the Theory of Banking and the School of Salamanca (pdf) by Jesus Huerta de Soto, 1996
• Spain's Dropout Generation by Jaime Levy Moreno, June 2010
• Mercantilism in Spain by Murray N. Rothbard, from An Austrian Perspective on the History of Economic Thought, vol. 1, May 2010
• Downgraded Spain decides to shelve worthless enviro-energy projects by David Freddoso, April 2010
• Job Losses From Obama Green Stimulus Foreseen in Spanish Study by Gianluca Baratti, March 2009
• Spain orders drastic caja clean-up to win confidence and fight off EMU debt contagion by Ambrose Evans-Pritchard, February 2011
• The Comuneros: The Revolt and Its Lessons by Peter C. Earle, April 2011