Spain is only slowly emerging from the crisis

The economy is growing, unemployment is falling – and the Spaniards did not even have to use half of the EU aid to the banks. The Iberians are out of the woods, it seems. But they are far from doing well.

By Reinhard Spiegelhauer, ARD radio studio Madrid

Spain is out of the line of fire for now. The European bailout program – specially put together for the banks – is running out, and nobody is saying any more that the country needs further help. After all, the government has not even used half of the credit line of up to 100 billion euros.

In addition, Spain’s economy is finally out of recession and the number of people registered as unemployed has been falling for several months. For Economy Minister Luis de Guindos it is clear: Spain is on the way out of the crisis – and Professor Rafael Pampillon from the renowned IE Business School in Madrid agrees: "Yes, we have economic growth, consumption has picked up again, we are creating jobs and we have price stability. "

Stabilization at a low level

However, it is about stabilization at a low level. The unemployment rate is still over 25 percent, and the forecast growth of 0.7 percent for 2014 will not bring the amount of jobs that would be necessary to bring unemployment down significantly.

The rate will remain high for a long time, says Professor Pampillon. It could only decrease significantly if people disappear from the statistics. For example, when unskilled immigrants return to their homeland or the unemployed simply no longer register with the office.

You have to face the facts, says Pampillon: After the collapse of the real estate bubble, the Spanish economy is in the process of reorienting itself. More high-quality goods and services would be exported. Those who only master simple physical activities hardly have a chance. It will take some time before the labor market can cope with the structural change.

Depending on the rest of Europe

Professor Pampillons is even one of the more pro-government experts – Jose Carlos Diez, economics professor at another private university in Madrid, assesses the situation even more skeptically in comparison: "We have to bet that there will be real growth in Europe," says Diez . "Private consumption in France and Germany is stagnating, so growth is difficult to achieve."

When it comes to exports out of the euro zone, Spain also suffers from the strength of the euro. "We are out of the recession, but face full headwinds: low growth, hardly any new jobs, low consumption."

Diez accuses the government of two failings in particular: It was a mistake not to fully exhaust the aid loan. There are still risks in the banking sector – the number of private loans at risk of default is still increasing. In order to absorb the corresponding losses, the Spanish financial institutions actually need more capital – and also to provide the necessary investment loans to small and medium-sized companies.

The fear of relapsing into crisis

Above all, however, Prime Minister Rajoy did not oppose the German austerity dictate vehemently enough, Diez criticizes. The EU as a whole must give the economy greater impetus, otherwise the euro crisis could soon return. Spain must represent its interests more emphatically:

"It’s really sad to hear your Prime Minister say in an interview that Germany has a plan. If the EU is a community of friends, then you first consult together. When we are dealing with opponents here, they Withhold information from each other and stalk, then I agree with Groucho Marx: Stop the world, I want to get out. "

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