Thursday 24 January 2013

What will Spanish unemployment be in 2017?

Because it is not a very pretty site today. In fact it is at nearly 60% for under 25's!

As much as we think a potential 2017 UK referendum on Europe is a long time away, it maybe much further than the average man on the street, or even Ed Milliband thinks.

A country like Spain should not have to suffer with such massive levels of social misery. Spain remember did not even stoke up a banking crisis or a have a crazed government borrowing from every body's future.

Spain was a victim of the political decision to join the euro currency. The euro had low interest rates and this over-heated the Spanish economy to epic proportions, causing a huge property bubble which has now brought disaster to the country.

Yet for now, as BQ noted yesterday re Greece, the people are not clamouring for a Euro exit; perhaps clinging to nurse for fear of something worse.

But worse is to come. Spain is in its second recession and won't escape that until next year. Losing jobs at a rate of 2000 a day, that is another half a million people out of work. And in today's fast moving world, having no skills and not keeping up with developments will take huge chunks off your potential earning power.

It is only 2013, the Euro crisis has received a hefty kick down the road last year and people have quickly forgotten about the dreadful underlying macro-economic disaster that is baked into the Euro project.

It may well end up that all this 2017 focus becomes entirely redundant and not just because the Tories probably won't be in Government....

8 comments:

Blue Eyes said...

I remember reading in the mid 1990s that one very good reason for Britain to be wary of joining the Euro was exactly this, that our housing market would swing even more wildly because of its sensitivity to interest rates compared with France and Germany. Euro rates would be too low for Britain, it was said.

Ireland had exactly this problem, and their economy started overheating quite soon after 1999. Ireland even begged to have their joining exchange rate uprated so as to mitigate some of the risk.

If Britain *had* joined we would be in the same mess as Spain or worse, although interest rates might have been very slightly higher during the upswing due to British inflation. The only reason we haven't collapsed entirely is because of QE and devaluation.

Britain would have left the Euro by now.

I think there's a huge risk of comparing apples and pears though. Most continental countries do not have the same constitutional experience as us. I expect Spanish people fear a return to chaos more than they fear a few years of grinding recession. I expect the Greeks feel that the EU and Euro is about the only lifejacket they have.

Britain is a bit more confident about its institutions than many other EU countries. That is why we can talk about whether the EU is right for us or perfect as it stands. We have a long tradition of challenging our ruling elite.

I would say though, CU, that you are getting a bit like Vince Cable. He predicted 23 of the last five recessions.

yahoo.com said...

Seems obvious that for an EU to be stable it needs to put the block on national ambition. "You, Spaniards, get back to waiting at table, Greeks, make those holiday beds, Italians - fancy shoes for you, Oh and you work for peanuts". Don't like that idea?

OK, we join a race to the bottom - "please Sir can we have the car factory here Sir". Factory? - yes because the service economies and the knowledge economies are chimeras, either only marginally exportable or only a few are bright enough to make exportable knowledge - that is taxable. The macro-economic disaster is not baked into the Euro project, it is baked into Old Europe.

The Euro project is trying hard to prevent the disaster turning into a forest fire. At best it will be a slow burn of real wages and property values. The sacrifice is being made by Greece/Spain et al (who would be better out) in order that France/Germany/UK can smoulder away slowly. Let us hope they stay in or we all get burnt.

hovis said...

I agree with BE's thrust about continental experience. The cultural and political experience of both Spain and Greece is very different to ours. Military dictatorship in living memory and in Greece's case an agressive and larger neighbour to the east. (Yes I know that shpould be handled by NATO, but that country is also a NATO member and did sweet FA in '74.)

DtP said...

I'm sure there's a Keiser Chief's song about what's coming to a theatre in Madrid any week soon.

I know it's not terribly sexy, certainly not whilst I was working for the Tories but all through my degree and post grad I always focussed on unemployment as the biggest social ill. That it saps all energy and can deskill entire communities. Spain has a history of fucking loony government too and this is a tipping point of cluster fuck proportions.

Oh bugger!

Budgie said...

The UK is far worse economically than the EZ. We also lack sufficient manufacturing capability to recover. In contrast the euro will survive and we will eventually be begging to get in.

That is not what I want, of course. But Cameron has not the sense and foresight to sort out our economic problems which will continue to fester. Then its just a matter of size, and who blinks first. If we carry on as we are doing the EZ (the EU is moribund) and the USA will be around in a decade but we won't.

Anonymous said...

@budgie
Jeez.... Where are we going then ? Sinking into the sea ? You talk piffle Sir.
I can't be certain but I think you were one of the commentards exclaiming the immenent demise of the euro and ez this time last year...... There I bit..

Ryan said...

"And in today's fast moving world, having no skills and not keeping up with developments will take huge chunks off your potential earning power."

That is really the crucial problem for Spain. For years it has been living on a mirage of an economy built on unlimited cheap debt that allowed people the possibility to buy property they didn't really need on the basis that the existence of so much cheap debt ensured rapid investment growth. Before that Spain had an economy that was based on using EU subsidies to undercut their EU partners to make exports of cars and food products cheaper. Neither economic model could be supported forever.

Frankly, Spain hasn't had a viable economy that wasn't underpinned by cheap handouts from the banks or from the EU since it became a democracy. The "loony" governments referred to above were an expensive luxury that Spain could afford while the real money was coming in the form of free handouts.

But Spain is not the only problem for the EU, since the EU has made the same mistake in Eastern Europe, creating client states dependent on the EU for cash. Huge amounts of EU money are being plowed into Poland right now, causing misallocation of investment capital. Many projects exist in Poland that are only there at all to provide a plausible excuse for EU funding. Companies in Poland are not interested in exporting outside the EU, they are only interested in using their EU funding to undercut suppliers in Germany and France. The EU economic model has resulted in too much "chasing the tail" with international competitiveness ignored.

As I said yesterday, Franco-German leadership of the EU is a busted flush. If the UK votes decisively to stay in the EU then the stage is set for a UK with an increasing population to take over control of the EUs key institutions and direct it to be more to our liking.

Agence communication said...

this is right and true ..."" s much as we think a potential 2017 UK referendum on Europe is a long time away, it maybe much further than the average man on the street, or even Ed Milliband thinks.

A country like Spain should not have to suffer with such massive levels of social misery. Spain remember did not even stoke up a banking crisis or a have a crazed government borrowing from every body's future.

Spain was a victim of the political decision to join the euro currency. The euro had low interest rates and this over-heated the Spanish economy to epic proportions, causing a huge property bubble which has now brought disaster to the country.
""