Times might be tough for Britain as it enters a second recession and long-term unemployment remains at its highest rate in 16 years, but when compared to Spain, Britain’s economic future is downright rosy, writes Richard Miranda.
Spain’s unemployment rate is three times that of Britain, with more than one out of every two 18-24 year olds currently unemployed. Its economy is caught in a whirlpool of floundering banks, rising borrowing costs and pressure from Europe to impose harsh austerity.
My dad is Spanish and I lived in Spain from September 2008 until July 2009. Having family in Spain and actually being there for the bursting of the housing bubble and the beginning of the recession mean that I have been well aware of Spain’s precarious economic situation. However, although I realised Spain was in trouble, I never imagined that ‘La Crisis’ would last for so long and leave the country, the fourth largest economy in the euro-zone, in such dire straits. Not many Spaniards did either.
Victoria San Juarez, a friend of mine from Salamanca now working as a doctor in Las Palmas in the Canary Islands, told me: “I’m very lucky because I graduated just in time to be able to get a job with a long-term contract…but among many of my friends getting any work is difficult. There’s an increasing sense of fatalism.”
I spoke to my cousin Javier López, a police officer for the Policía Nacional in Galicia, about his own experience of the recession. Having been a police officer for eight years previously, he has seen the number of hours he works per week halved over the last three years.
“Nearly everyone I work with has been affected by the crisis,” he said. “But with unemployment here so high, [my wife] Selene and I are just thankful to still be working.”Robert González Moral, my ex-flatmate from my year spent at Salamanca University, confirmed that “the level of anger and disillusionment among the students here [in Salamanca] has increased over the last couple of years.”Although he is currently not working, his parents own a flat in Salamanca where he is able to live rent-free. However, many of his friends from his hometown of Ledesma, a small town in rural Castilla y León, are “unemployed and living in a town in the middle of nowhere at their parents’ houses with no way out”. There were never many prospects in Ledesma, but now there are equally few elsewhere.He concluded: “It’s hard to be positive about the future.”
This is especially true when esteemed economists such as Tyler Cowen are predicting that “it will not end until there is, at the bottom, an absolute and total crash.” It will take a long time for Spain to recover and it is going to get worse before it gets better. It’s hard to calculate exactly the long-term economic and psychological damage this could cause its citizens, but it will undoubtedly leave many scars, especially among its young people.
Last week Spanish Prime Minister Mariano Rajoy announced that the government would be mposing severe cuts of €65 billion over the next two years to reduce the public debt, the harshest economic measures for over fifty years.
Rajoy, who has had to renege on his campaign promise of cutting taxes, starkly explained the decision to aggravate a second recession: “The Spanish can not choose whether to make sacrifices. We do not have that freedom.” The light at the end of the tunnel seems impossibly far away for Spain.
The measures, which will affect everyone from the unemployed to pensioners to government workers, immediately sparked off protests in the capital that led to over seventy people being injured.
According to Nobel Laureate economist Paul Krugman, the cuts will not only lead to another recession but will further drive Spain’s unemployment rate up, already the highest in Europe at roughly 25%.
In a perverse way, the example of Spain offers hope for Britain. Things may seem bleak for many, but Britain’s youth have much better opportunities available and are much less ideologically radicalised than their Spanish counterparts. The challenges facing Britain and its young people are large, but by no means insurmountable.
But as Britain heads into a second recession, Spain offers a warning as well. Britain’s youth need to be engaged and included in the discussion of their future, and steps must be taken sooner rather than later. Britain still has a chance to avoid the emergence of a “lost generation”. For Spain, sadly, it might be too late.