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

Video Getting to Zero AIDS Infections

More than 35 million people around the world are infected with HIV, a disease that is both preventable and treatable

Children, Childhoods Lost in European Refugee Crisis

According to UNICEF, 190,000 children applied for political asylum in Europe in the first 9 months of this year - twice as many as last year

What Happened When I Landed in Antarctica

Refael Klein chronicles what it's like to visit one of the coldest, most desolate places on Earth

This forum has been closed.
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.
With HIV, Can We Get to Zero?i
Carol Pearson
November 29, 2015 1:23 PM
The theme of this year's World AIDS Day is "Getting to Zero." The U.N. says new HIV infections have been reduced by 35 percent since 2000 and AIDS-related deaths are down by 42 percent since the peak in 2004. VOA's Carol Pearson takes a look at what it might take to actually have an AIDS-free generation.

Video With HIV, Can We Get to Zero?

The theme of this year's World AIDS Day is "Getting to Zero." The U.N. says new HIV infections have been reduced by 35 percent since 2000 and AIDS-related deaths are down by 42 percent since the peak in 2004. VOA's Carol Pearson takes a look at what it might take to actually have an AIDS-free generation.

Video Political Motives Seen Behind Cancelled Cambodian Water Festival

For the fourth time in the five years since more than 350 people were killed in a stampede at Cambodia’s annual water festival, authorities canceled the event this year. Officials blamed environmental reasons as the cause, but many see it as fallout from rising political tensions with a fresh wave of ruling party intimidation against the opposition. David Boyle and Kimlong Meng report from Phnom Penh.

Video African Circus Gives At-Risk Youth a 2nd Chance

Ethiopia hosted the first African Circus Arts Festival this past weekend with performers from seven different African countries. Most of the performers are youngsters coming form challenging backgrounds who say the circus gave them a second chance.

Video US Lawmakers Brace for End-of-Year Battles

U.S. lawmakers are returning to Washington for Congress’ final working weeks of the year. And, as VOA's Michael Bowman reports, a full slate of legislative business awaits them, from keeping the federal government open to resolving a battle with the White House over the admittance of Syrian refugees.

Video Taiwan Looks for Role in South China Sea Dispute

The Taiwanese government is one of several that claims territory in the hotly contested South China Sea, but Taipei has long been sidelined in the dispute, overshadowed by China. Now, as the Philippines challenges Beijing’s claims in an international court at The Hague, Taipei is looking to publicly assert its claims. VOA’s Bill Ide has more from Beijing.

Video After Terrorist Attacks, Support for Refugees Fades

The terrorists who killed and injured almost 500 people around Paris this month are mostly French or Belgian nationals. But at least two apparently took advantage of Europe’s migrant crisis to sneak into the region. The discovery has hardened views about legitimate refugees, including those fleeing the same extremist violence that hit the French capital. Lisa Bryant has this report for VOA from the Paris suburb of Cergy-Pontoise

Video Syrian Refugees in US Express Concern for Those Left Behind

Syrian immigrants in the United States are concerned about the negative tide of public opinion and the politicians who want to block a U.S. plan to accept 10,000 Syrian refugees. Zlatica Hoke reports many Americans are fighting to dispel suspicions linking refugees to terrorists.

Video Thais Send Security Concerns Down the River

As Thailand takes in the annual Loy Krathong festival, many ponder the country’s future and security. Steve Sandford reports from Chiang Mai.

Video Islamic State Unfazed by Losses in Iraq, Syria

Progress in the U.S.-led effort to beat Islamic State on its home turf in Iraq and Syria has led some to speculate the terror group may be growing desperate. But counterterror officials say that is not the case, and warn the recent spate of terror attacks is merely part of the group’s evolution. VOA National Security correspondent Jeff Seldin has more.

Video Belgium-Germany Border Remains Porous, Even As Manhunt For Paris Attacker Continues

One of the suspected gunmen in the Nov. 13 Paris attacks, Salah Abdeslam, evaded law enforcement, made his way to Belgium, and is now believed to have fled to Germany. VOA correspondent Ayesha Tanzeem makes the journey across the border from Belgium into Germany to see how porous the borders really are.

Video US, Cambodian Navies Pair Up in Gulf of Thailand

The U.S. Navy has deployed one of its newest and most advanced ships to Cambodia to conduct joint training drills in the Gulf of Thailand. Riding hull-to-hull with Cambodian ships, the seamen of the USS Fort Worth are executing joint-training drills that will help build relations in Southeast Asia. David Boyle reports for VOA from Preah Sihanouk province.

Video Uncertain Future for Syrian Refugee Resettlement in Illinois

For the trickle of Syrian refugees finding new homes in the Midwest city of Chicago, the call to end resettlement in many U.S. states is adding another dimension to their long journey fleeing war. Organizations working to help them integrate say the backlash since the Paris attacks is both harming and helping their efforts to provide refugees sanctuary. VOA's Kane Farabaugh reports.

VOA Blogs