Still Pain in Spain

by Andrew Stuttaford

The Daily Telegraph:

Total economic output slumped 0.7pc from the previous quarter, the steepest decline since the second quarter of 2009, after a 0.3-pc dip the previous quarter. The report by the National Statistics Institute showed the recession, which started in the final months of 2011, still tightening its grip on the eurozone’s fourth-largest economy. Just days earlier, a separate report showed Spain’s unemployment rate shot to 26.02 percent in the fourth quarter – the highest level since the re-birth of Spanish democracy after death of General Francisco Franco in 1975 – as 5.97 million people sought in vain for work. Latest figures also showed that gross domestic product for the whole of 2012 declined by 1.37pc, slightly better than the 1.5-pc contraction predicted by the government…

Economy Minister Luis de Guindos said in Davos, Switzerland on Friday that he expected the economy to return to growth in the second half of 2013. But activity is being curbed by his government’s programme of spending cuts and tax rises, aimed at saving €150bn between 2012 and 2014, prompting mass street protests.  The government has vowed to lower the public deficit from the equivalent of 9.4 percent of annual gross domestic product in 2011 to 6.3pc in 2012, 4.5pc in 2013 and 2.8 pc in 2014. Analysts say those targets will be hard to reach in a period of declining economic activity.

But at least the euro is safe!

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