(Agencies) September 15th marks a year since the beginning of the world’s worst recession since 1929; Obama sternly warns Wall Street about greed, though there is room for optimism… and the European Commission announces that Spain is expected to come out of it later than the rest of the top 5.
The Commission’s contained optimism about the evolution of the recession, at short and medium XXX does not include Spain in its forecast.
According to Joaquín Almunia (Photo: El País), EU’s Commissioner for Economic and Monetary Affairs and Spain’s former Minister of the Economy, announced yesterday that the Spanish economy will shrink half a point more than had been foracast, to 3.7% in 2009. What is worse, Spain is expected to lag behind the rest of Europe, which will be led by France and Germany. Almunia said that Spain’s recession is “shallower but longer” than the rest.
Too many eggs, too few baskets
The reason for Spain’s dragging its feet, according to Brussels, lies in “adjustment to imbalances accumulated over the last ten years”. In layman’s language, relying too much on the construction industry, high family debt, the deficit and high reliance on external finance (i.e. too many eggs in too few baskets). As a result, loss of employment during the first half of the year will mean less consumption, less disposable income and less investment and savings.
Employment, or lack of it
However, the biggest problem is employment, which the latest news predicts could reach 29% throughout the country by the end of this year. While no figures came from Brussels, Almunia predicts “much larger” figures than the average for Europe.