Spain, in pain, turns to the right


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The Independent Online

Last-minute upsets of divine magnitude notwithstanding, next Sunday's elections in Spain should see the right-wing Partido Popular sweep into power by its biggest ever winning margin over the Socalist party in nearly two decades.

However, rather than a vote for change that the PP's electoral slogans are asking for and clearly getting, the near total reconfiguration of Spain's political landscape in a week's time is arguably little more than a gigantic plea by its increasingly beleaguered electorate for help. Lots of it.

It is no secret that the country's economy is on its knees. And after seven years of Socialist rule that have seen unemployment rocket to five million in the worst recession since the so-called "years of hunger" in the 1950s, for a fair segment of the Spanish probably any change surely feels better than what they are currently enduring.

Sadly, 22 per cent unemployed, more than triple the 2008 total, is just one of the factors in Spain's perfect economic storm.

For the rest, take your pick from economic growth at a near-standstill, estimates of 21 per cent of Spaniards beneath the poverty line, car sales at their worst in nearly 30 years, toxic banking debts from the burst construction bubble at around €176bn, and at least 40 per cent of town halls in severe financial trouble. All this, and a budget deficit that remains stubbornly off target despite major cutbacks.

This week, too, no-one needed reminding of the fears that the Greeks and Italians could, in the not too distant future, be joined by Spain as Europe's next economic pariah.

As the latest gloom-filled EU report on Spain showed on Thursday, the short-to-mid prospects of the country pulling back from the brink are low. Certainly with the construction industry, the country's most important economic motor, in ruins – nearly a million properties lie empty, and mortgages down by 47 per cent on 2005 levels – there is little chance of a revival there.

Tourism, Spain's second biggest economic pillar, is supposedly on the rebound. But there is a catch.

A recent study in Andalusia, one of Spain's most popular destinations for foreign visitors, showed that whilst hotels registered a slight increase on the 20,539,000 overnight stays they received in 2007, the hotels themselves employ 10 per cent fewer staff than a year ago. And this goes right across the board: in fact the EU said Thursday it has no expectations that unemployment will drop in Spain until at least 2013, even if the economy has an upturn.

The statistics confirm abundant anecdotal evidence of recession-battered businesses who have fired perhaps a quarter of their cleaners or office staff. But there is plenty more proof of hard times of the visual variety

Almost every medium-sized village or larger in Spain seems to have its own collection of never-used empty housing and industrial estates. Lamp-posts rusting, tarmac buckling, and pedestrian crossings fading in the sun, they are like high tide marks of an economic boom turned to bust in record time.

Alongside those industrial estates, it is more and more common to see fields being reploughed and gardens replanted as – in one unexpected development of the recession – some rural life reflourishes. In Granada's fertile Vega plain, local residents say the number of allotments used has tripled since 2008.

Agriculture is one escape route. But emigration, the old social and pressure valve release during the bad old days of the Franco dictatorship, is back on the agenda, too.

Reliable figures are hard to come by, but ever since 2007 and the economy nosedived, the Spanish newspapers have been regularly running series on Spain's bright and not-so-bright young things trying to find their way in Germany, the USA, and the UK. With 46 per cent youth unemployment according to latest statistics, there are few other options but to pack your suitcase.

It is a small wonder that the PP currently have a 17 per cent advantage in the opinion polls – particularly as their manifesto, a cure-all mixture of promises for lower business taxes, less stringent employment laws, and less red tape for companies, looks designed to capture the maximum number of votes whilst causing the minimum offence.

However, as election day creeps closer, the proclamation by the PP's number two, Maria Dolores de Cospedal that 21 November will be the first day of the end of the recession, is beginning to ring a shade hollow.

The realisation is sinking in that whoever is in power, this recession is too big a hole to be dug out of at speed and from a company's point of view it seems there is a lot of red tape to be cleared, too, before industry's green shoots can start to flourish again.

In a recent survey by the World Bank on the best countries to do business in , Spain was ranked a lowly 133rd. Hardly an encouraging prospect for future foreign investors.

On the far side of the Pyrenees, though, the main concern is that should Italy's economy founder completely, Spain will be the next domino in the pile to crack. Witness the rise in Spain's debt risk premiums to 424 points on Thursday, a historic maximum seven points up on the 417 it reached at the beginning of August and the highest since the euro's introduction in 1999.