Spain. No brightening was seen during the year in the
economic crisis that hit Spain very hard. The credit and
real estate bubble that burst had put the country in a
downward spiral. According to
countryaah, the newly-appointed Conservative government
invested in new savings packages with increased VAT, reduced
unemployment benefits, continued frozen wages and sharp cuts
in health care and education. Nevertheless, unemployment
continued to rise and rose to over 25% during the year, and
for young people over 50%. The budget deficit was large and
government debt grew.
Confidence in the state's finances was at the bottom.
Market interest rates were pushed upwards and were around
7%, which was considered a pain limit that could not be
passed without external support. Much of the turbulence
centered on the crisis banking sector. In June, the EU
agreed to emergency loans of up to EUR 100 billion to cope
with the banking crisis. The state gradually took control of
four banks, and in November the EU approved the
restructuring plans for them.
But despite constant rumors that Spain would at any time
become the fourth euro area to apply for EU funding, and
despite the clear sign of such support, no Madrid request
for money came from the EU. The reason was assumed to be
that Prime Minister Mariano Rajoy wanted to highlight that
Spain was doing well and that he wanted to avoid tough
reform programs dictated from the outside. Instead, he
presented a tight budget in September, with austerity
measures of 40 billion euros.
A few general strikes were announced and hundreds of
thousands of people gathered in protest against the cuts.
The demonstrations degenerated several times in violence. A
well-known suicide in November, when a 50-year-old woman
jumped off the balcony when she was to be evicted, aroused
great anger and resulted in an agreement on a two-year halt
for evictions of the most vulnerable. The crisis in the real
estate sector had led to 400,000 people being evicted from
their homes in a few years.
An effect of the crisis was also a strong separatist
wave, despite the fact that several indebted regions were
forced to ask the central government for emergency loans.
The question was raised whether the country would ride out
the difficulties with its borders intact. In the regional
elections in the Basque country in October, the nationalist
party PNV and the separatist Bildu together won a clear
majority. At the same time, however, Rajoy's conservative
government party went ahead in the regional elections in
Galicia, which was interpreted as voters there nonetheless
accepting the crisis management policy.
Catalonia was the region that particularly challenged the
central government of Madrid. When the Catalans gathered in
Barcelona on their national day in September, more than a
million people participated, and something unexpected came
to focus on independence. Catalonia's Prime Minister Artur
Mas announced a new election in November and expressed the
view that a referendum would then be held on independence.
However, the election results did not give a completely
clear answer. Mas's right party CiU lost mandate, although
it remained the largest. Instead, the separatist left party
ECR went ahead. The two stood far apart, even though they
shared the demand for strengthened self-government.