News / Europe

Spanish Economic Crisis Threatens to Sink Euro Currency

Unemployment line in Spain
Unemployment line in Spain
Henry Ridgwell

Spain is among the latest European countries to introduce tough austerity measures that may not be popular at home, but are deemed necessary to keep the country afloat. Spain, alongside Greece, is among those European countries with massive public debts and economies widely deemed vulnerable to a crash that could drag the euro with it.

It is 7:30 in the morning in the north of Madrid, and the queue for the job center is already stretching around the block.
Among those in line is Patricia Martinez. She used to be a nurse, but seven months ago she was laid off. Now each morning she arrives here to try to find new work. She is not having much luck.

"The reality is that economically it is fatal, but emotionally for people too it can also be terrible.  I do not know what is happening, not just in Spain, but in Europe and the world," she said.

Patricia's story is all too familiar.  Spain has the highest unemployment rate in Europe at 20 percent, and it is likely to get worse.

Europe is haunted by the fear of huge public debt. Spain's debt totals more than 11 percent of its GDP. Although its economy is far larger, investors fear that Spain, like Greece, might soon be unable to pay its creditors. So the government is slashing public spending by $18 billion over two years.

Economist Javier Ortega at London's City University says Spain's debt has been rising sharply in recent years. "The reason is essentially this increase in unemployment, because there are more unemployment benefits to be paid.  So now there is a problem of credibility of what the government is going to do, and of course the situation is different to situations in other periods because now there is a common currency," he said.

Debt collection is now big business in Spain and it has got a highly visible face. One company called 'El Cobrador del Frac' specializes in shaming their targets into paying up, by dispatching debt collectors dressed in top hats and tuxedos to shadow their targets.  he company's commercial director Juan Carlos Rodriguez says business is booming.

"The construction industry is among the worst hit.  It all began three or four years ago when there was construction boom.  Then with the crash, nobody would finish the work.  Nobody got paid.  In Andalusia in the south of Spain especially you can see the results of this," he said,

On the southern coast - known as the Costa del Sol - block after block of apartments lie empty or half finished, many of them designed for foreign buyers who have long since abandoned the idea of investing in Spain.

Inez Rix of Direct Property Auctions specializes in helping owners who are now struggling to sell their place in the sun. "It was absolutely crazy here in the boom times.  It was really in the late 1990s or 2000s.  Prices were just going up and up, people were asking for anything they could get away with.  Now there are hundreds of places like this across the Costa Del Sol because developers have run out of money, and of course the banks have pulled out," he said.

The debt crisis is threatening to sink the euro currency, so the European Union has pledged to guarantee loans totaling around a trillion dollars.  But in return, governments must slash public spending.

The prospect of wage cuts and pension freezes has prompted street demonstrations. Unions have called for a nationwide strike in September, against plans to make it easier for companies to hire and fire workers.

Economist Javier Ortega says Europe must become more competitive."For our European welfare state to be maintained there have to be changes. Essentially we have to adapt more quickly to competition from other countries. It is not like in the past," he said.

Europe may have emerged from recession, but its effects are only now becoming clear. With the euro currency under threat, the pain of government cuts will be felt for many years to come.

For job-hunter Patricia Martinez, this day brought no change of luck. And like millions of people across Spain, she will be back again in the morning looking for a new job and wondering how the situation can improve.

You May Like

In China, Mixed Signals on Ebola Controls

How authorities are monitoring at-risk individuals remains unclear, including whether there are quarantines for Chinese health workers returning from West Africa More

Video Women Voters Anxious Ahead of US Elections

Analysts say if women are focused on national security, it could be bad news for Democrats More

Solar's Future Looks Brighter

New technology and dropping prices are contributing to a surge in solar power More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Women Voters Anxious Ahead of US Electionsi
X
October 31, 2014 4:10 AM
Public opinion polls show American voters are deeply dissatisfied with their government and anxious about threats from abroad. This is especially true for a key voting group both Republicans and Democrats are trying hard to win over: women. Analysts say if women are focused on national security, it could be bad news for Democrats, with majority control of the Senate at stake. VOA’s Cindy Saine looks at the crucial role women voters will play in deciding the elections.
Video

Video Women Voters Anxious Ahead of US Elections

Public opinion polls show American voters are deeply dissatisfied with their government and anxious about threats from abroad. This is especially true for a key voting group both Republicans and Democrats are trying hard to win over: women. Analysts say if women are focused on national security, it could be bad news for Democrats, with majority control of the Senate at stake. VOA’s Cindy Saine looks at the crucial role women voters will play in deciding the elections.
Video

Video Victorious Secularists Face Challenge to Form Government in Tunisia

Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Africa Tells its Story Through Fashion

In Africa, Fashion Week is a riot of colors, shapes, patterns and fabrics - against the backdrop of its ongoing struggle between nature and its fast-growing urban edge. How do these ideas translate into needle and thread? VOA’s Anita Powell visited this year’s Mercedes Benz Fashion Week Africa in Johannesburg to find out.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.

All About America

AppleAndroid