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Eurozone crisis live: Spanish crisis deepens as recession confirmed Eurozone crisis live: Spanish crisis deepens as recession confirmed
(40 minutes later)
2.59pm: German finance minister Wolfgang Schäuble has offered the Spanish government some (much needed) support today.
Speaking at a meeting in Santiago de Compostela, Galicia, Schäuble said Spain was on the right track (hat-tip to Reuters, which is snapping his comments now).
Schäuble added that the next meeting of the European Council will look at ways to stimulate investment in Europe, but cautioned that talking about growth did not mean Europe was changing its focus on austerity.
Spanish economy minister Luis de Guindos is also attending the event in Santiago de Compostela. He remains on message, declaring that austerity is not incompatible with growth.
Fans of 'expansionary fiscal contractions' will nod at de Guindos's comments, but others may argue that Europe's slump into recession tells a different story.
More as it comes in....
2.32pm: The stories of life in Spain continue to come in. Here's a couple more (with thanks to my colleague Hannah Waldram)
Staralfur gives this view, from the capital of Catalonia :
2 things
I lived in Barcelona for years just around the corner from Sagrada familia - i know about life in Spain. If you "party" during pride etc you are going to get ripped off - plain and simple. Same with Gracia festival, you could get a liter of watered down piss for €10, or follow most of the locals and buy a six pack of estrella for €6 and enjoy your night.
In non festival Spain (ie, real life)....a jarra of beer, even sitting in a plaza will rarely go above €4. A bar 3 minutes walk from home here in Madrid (Barrio Guindalera, not as central or flash or fabulous as say Chueca or C/Serrano) full of locals, run by gitanos from Andalucia - and the most expensive beer you can get is €2.50. Just over the road in a cerveceria (again fully "local") €4 for a jarra.
I know you can't let facts from someone that lives in Spain get in the way of a good argument...as you were!
And robert232 provides a voice of experience:
I've lived here for 37 years and through several recessions. The social life you describe has always been this way. Believe me the recession is biting but the bars are always seem full.
Lots more stories in the comments below - and earlier round-ups here and here.
2.02pm: Across the Iberian peninsula, Portugal's government has insisted today that it will meet its deficit reduction targets without inflicting new pain on its citizens (in addition to what's already lined up).2.02pm: Across the Iberian peninsula, Portugal's government has insisted today that it will meet its deficit reduction targets without inflicting new pain on its citizens (in addition to what's already lined up).
Speaking in Lisbon, finance minister Vitor Gaspar said the Portuguese government expects to lower its deficit to 1% of GDP by 2013, and just 0.5% of GDP in 2016.Speaking in Lisbon, finance minister Vitor Gaspar said the Portuguese government expects to lower its deficit to 1% of GDP by 2013, and just 0.5% of GDP in 2016.
He added that this plan does not foresees any additional austerity measures this year or in subsequent years, on top of those already included in Portugal's €78bn bailout.He added that this plan does not foresees any additional austerity measures this year or in subsequent years, on top of those already included in Portugal's €78bn bailout.
Speculation has been swirling for weeks that Portugal might need a second aid package, despite repeated denials from Lisbon. Gaspar rejected such talk today, saying the country needs to be ready to return to the bond markets before September 2013 [under its current plan, this is the date when Portugal is expected to borrow from the international markets again].Speculation has been swirling for weeks that Portugal might need a second aid package, despite repeated denials from Lisbon. Gaspar rejected such talk today, saying the country needs to be ready to return to the bond markets before September 2013 [under its current plan, this is the date when Portugal is expected to borrow from the international markets again].
Looking at the bond markets today, Portuguese sovereign debt is trading at a hefty discount to its face value, giving its 10-year bonds a yield (effectively the interest rate) of 10.7%.Looking at the bond markets today, Portuguese sovereign debt is trading at a hefty discount to its face value, giving its 10-year bonds a yield (effectively the interest rate) of 10.7%.
That's sharply lower than the 17% level recorded at the end of January, suggesting investors are less worried about Portugal. Still some way to go before yields are below the 7% mark (seen as the 'danger zone' in the City), but an encouraging sign?.... That's sharply lower than the 17% level recorded at the end of January, suggesting investors are less worried about Portugal. Still some way to go before yields are below the 7% mark (seen as the 'danger zone' in the City), but an encouraging sign?
Traders may be calculating that Portugal will not need additional support. Or they may reckon that a second bailout would not involve any haircuts for them (following the difficult saga of the Greek debt swap).
1.25pm: Many thanks to those of you in Spain who have written about the impact of the Spanish double-dip recession on your lives, in the comments below.1.25pm: Many thanks to those of you in Spain who have written about the impact of the Spanish double-dip recession on your lives, in the comments below.
Here's a few of our favourites:Here's a few of our favourites:
staralfur wrote from Madrid:staralfur wrote from Madrid:

Being the capital, the effect of the recession seems to be diluted. The cafes in our Barrio are always full, I really don't think this is a "stereotypical view" of Spain. I'm Irish, and whenever I am back in Ireland i am ever more suprised how easy it is to get tables in a bar and restaurant on a Saturday night. In my Barrio, two new bars have opened recently and both are doing a great trade.
Being the capital, the effect of the recession seems to be diluted. The cafes in our Barrio are always full, I really don't think this is a "stereotypical view" of Spain. I'm Irish, and whenever I am back in Ireland i am ever more suprised how easy it is to get tables in a bar and restaurant on a Saturday night. In my Barrio, two new bars have opened recently and both are doing a great trade.
Unemployment is of course rife. Our company is in the middle of a re-jig and 90 people will be losing their jobs in the next 8 months (though 120 more will be coming, they are a different business area so there will be little chance for the redundant ones to be re-provisioned).Unemployment is of course rife. Our company is in the middle of a re-jig and 90 people will be losing their jobs in the next 8 months (though 120 more will be coming, they are a different business area so there will be little chance for the redundant ones to be re-provisioned).
Outside the city is of course a different story, people my own age that have never worked and probably won't for the next 10 years. The government reforms have just made it easier to fire people, and is being used as a great excuse by companies to downsize and stay that way.Outside the city is of course a different story, people my own age that have never worked and probably won't for the next 10 years. The government reforms have just made it easier to fire people, and is being used as a great excuse by companies to downsize and stay that way.
Another reader, saza takes issue with suggestions of long Spanish lunches...Another reader, saza takes issue with suggestions of long Spanish lunches...
I also work and live in Spain, and these two hour lunch breaks I've been reading about here in the comments are competely unreal. It's clear that in Spain there is a slow gap emerging between those who have and those who have not. The ones who have do so because they pay less taxes than they should, they don't pay national insurance on their staff, and spend the money which they save as a result on fancy cars and dresses. The ones who have less and less are, yes the unemployed, but also those employed by the state, i.e. teachers, administrative staff, doctors, nurses... who not only get their wages docked but also have their income tax increased, all in an effort to make up for those who should and do not pay their fair share.
And let me make one thing clear that the Guardian and the press in general fails to comment on, the Rajoy government is taking the opportunity to dismantle the social progress that Spain has made in the last thirty years, all in the name of the economic problems.		I also work and live in Spain, and these two hour lunch breaks I've been reading about here in the comments are competely unreal. It's clear that in Spain there is a slow gap emerging between those who have and those who have not. The ones who have do so because they pay less taxes than they should, they don't pay national insurance on their staff, and spend the money which they save as a result on fancy cars and dresses. The ones who have less and less are, yes the unemployed, but also those employed by the state, i.e. teachers, administrative staff, doctors, nurses... who not only get their wages docked but also have their income tax increased, all in an effort to make up for those who should and do not pay their fair share.
And let me make one thing clear that the Guardian and the press in general fails to comment on, the Rajoy government is taking the opportunity to dismantle the social progress that Spain has made in the last thirty years, all in the name of the economic problems.
More from saza here.More from saza here.
xxgorrasxx questions the validity of the latest unemployment data:xxgorrasxx questions the validity of the latest unemployment data:
I live and work between Spain and UK and I can assure that the 25% unemployment rate is not real. Many people are working (in black they call it in Spain...they don't pay taxes) and getting the goverment money for unemployment. The recession is quite mild, comparing with the UK one. I have got the feeling that Spain is fighting really hard to get in to the South American and North African markets, and that is where the Spanish companies are focusing. In fact, they are doing it better than UK...but there is a difference. Spain doesn't own the Financial Times and The City, that is why they are suffering attacks from markets all the time.I live and work between Spain and UK and I can assure that the 25% unemployment rate is not real. Many people are working (in black they call it in Spain...they don't pay taxes) and getting the goverment money for unemployment. The recession is quite mild, comparing with the UK one. I have got the feeling that Spain is fighting really hard to get in to the South American and North African markets, and that is where the Spanish companies are focusing. In fact, they are doing it better than UK...but there is a difference. Spain doesn't own the Financial Times and The City, that is why they are suffering attacks from markets all the time.
vercors writes:vercors writes:
I came to Spain 5 years ago, a year before the recession took hold. At that time, I could cherry-pick from a number of teaching jobs on permanent contract, now working as a free-lance 'autónomo' is the most viable option available. As has been previously stated, the problem is that exercising the right to work self-employed here means you're clobbered every month for massive social security contributions which are not income-adjusted above a certain ceiling, which is a huge disincentive to many.I came to Spain 5 years ago, a year before the recession took hold. At that time, I could cherry-pick from a number of teaching jobs on permanent contract, now working as a free-lance 'autónomo' is the most viable option available. As has been previously stated, the problem is that exercising the right to work self-employed here means you're clobbered every month for massive social security contributions which are not income-adjusted above a certain ceiling, which is a huge disincentive to many.
I would also say that the way of thinking of many Spanish tends towards the traditional preference for dependence on one employer, which means they're in difficulty straightaway if that employer has to resort to restructuring. Despite all this, most seem to get by and to be in reasonable spirits. If anything, the social culture of going out to bars and cafés acts as an antidote to the hard times people are going through and family solidarity remains an important cushion for the young.I would also say that the way of thinking of many Spanish tends towards the traditional preference for dependence on one employer, which means they're in difficulty straightaway if that employer has to resort to restructuring. Despite all this, most seem to get by and to be in reasonable spirits. If anything, the social culture of going out to bars and cafés acts as an antidote to the hard times people are going through and family solidarity remains an important cushion for the young.
While InSpain gives this insight:While InSpain gives this insight:

I run several businesses in Spain both in Madrid and on the Costa del Sol. In Madrid turnover has fallen between 30% and 50%.......property owners are however still reluctant to reduce sky high rents!
I run several businesses in Spain both in Madrid and on the Costa del Sol. In Madrid turnover has fallen between 30% and 50%.......property owners are however still reluctant to reduce sky high rents!
Marbella is slightly better as there is a high proportion of high earners and tourists that want to have a good time whilst they are on holiday. ....but it still depends on which sector you are in.Marbella is slightly better as there is a high proportion of high earners and tourists that want to have a good time whilst they are on holiday. ....but it still depends on which sector you are in.
People who say that one doesnt see any effect of the recession just dont have their eyes openPeople who say that one doesnt see any effect of the recession just dont have their eyes open
Even so people do not now go out during the week - almost not at all - as before but weekends do still get very busy.Even so people do not now go out during the week - almost not at all - as before but weekends do still get very busy.
It is ok to complain about Spaniards going out, but after nearly 30 years promoting this sector as a growth area for employment to supplemant the loss of manufacturing jobs it seems totally wrong to now target it as if it were bad - hence the increase in unemploymentIt is ok to complain about Spaniards going out, but after nearly 30 years promoting this sector as a growth area for employment to supplemant the loss of manufacturing jobs it seems totally wrong to now target it as if it were bad - hence the increase in unemployment
Shopping centre owners are currently returning up to 50% of the contractual agreed rents in order just to retain tenants and not have vacant space - spending has reduced dramatically - but people do go for a walk aroundShopping centre owners are currently returning up to 50% of the contractual agreed rents in order just to retain tenants and not have vacant space - spending has reduced dramatically - but people do go for a walk around
This follows our earlier selection of comments from Spain here. Please keep them coming :)This follows our earlier selection of comments from Spain here. Please keep them coming :)
12.46pm: Here's another sign of public anger in Spain over the economic crisis -- Ladrones' or 'thieves' scrawled on the wall outside a branch of BBVA, Spain's second-largest bank, in Madrid12.46pm: Here's another sign of public anger in Spain over the economic crisis -- Ladrones' or 'thieves' scrawled on the wall outside a branch of BBVA, Spain's second-largest bank, in Madrid
(The photo was taken this morning, not clear how recent the graffiti is).(The photo was taken this morning, not clear how recent the graffiti is).
Speaking of banks -- Standard & Poor's followed up on this morning's "negative ratings actions on 16 Spanish banks" (see 7.58am) by cutting its rating on Santander UK by one-notch, to A from A+. That's less severe than the two-notch downgrade handed to Banco Santander this morning (from A+ to A-), which S&P said partly its "high systemic importance within the 'supportive' UK banking sector'.Speaking of banks -- Standard & Poor's followed up on this morning's "negative ratings actions on 16 Spanish banks" (see 7.58am) by cutting its rating on Santander UK by one-notch, to A from A+. That's less severe than the two-notch downgrade handed to Banco Santander this morning (from A+ to A-), which S&P said partly its "high systemic importance within the 'supportive' UK banking sector'.
12.30pm: In the currency markets, sterling just hit a new 20-month high against the euro.12.30pm: In the currency markets, sterling just hit a new 20-month high against the euro.
The pound traded as high as €1.2311, its highest level since June 2010, continuing the steady rise seen in recent weeks. Last week's news that Britain is (like Spain) back in recession does not appear to have dented sterling's appeal.The pound traded as high as €1.2311, its highest level since June 2010, continuing the steady rise seen in recent weeks. Last week's news that Britain is (like Spain) back in recession does not appear to have dented sterling's appeal.
This graph shows the pound vs the euro since the start of 2010.This graph shows the pound vs the euro since the start of 2010.
Peter O'Flanagan of Clear Currency believes the euro will hit new lows against the pound soon, predicting that the the move down could be "very swift". He added:Peter O'Flanagan of Clear Currency believes the euro will hit new lows against the pound soon, predicting that the the move down could be "very swift". He added:
The pound was one of the top performers last week and showed impressive resilience despite UK GDP figures showing a second consecutive contraction of the economy and a technical recession in the UK.The pound was one of the top performers last week and showed impressive resilience despite UK GDP figures showing a second consecutive contraction of the economy and a technical recession in the UK.
12.03pm: Unemployment has risen in two-thirds of European countries since the eurozone crisis began, as austerity hit growth and jobs.12.03pm: Unemployment has risen in two-thirds of European countries since the eurozone crisis began, as austerity hit growth and jobs.
That's one key conclusion from the International Labour Organisation's latest report into the global employment market, released this morning. The ILO report warns that labour market imbalances are becoming more "structural", which means that people who are falling out of the employment market will be unable to climb back even if the jobs market recovers.That's one key conclusion from the International Labour Organisation's latest report into the global employment market, released this morning. The ILO report warns that labour market imbalances are becoming more "structural", which means that people who are falling out of the employment market will be unable to climb back even if the jobs market recovers.
Raymond Torres, author of the report, commented:Raymond Torres, author of the report, commented:

The trends are especially worrying in Europe, where the unemployment rate has increased in nearly two-thirds of these countries since 2010; but labour market recovery has also stalled in other advanced economies, such as Japan and the United States.
The trends are especially worrying in Europe, where the unemployment rate has increased in nearly two-thirds of these countries since 2010; but labour market recovery has also stalled in other advanced economies, such as Japan and the United States.
More details here. We'll have a full story up shortly.....More details here. We'll have a full story up shortly.....
11.32am: Tensions are rising in Greece ahead of Sunday's general election.11.32am: Tensions are rising in Greece ahead of Sunday's general election.
Evangelos Venizelos, the former finance minister and new leader of the Pasok party, urged voters to resist the lure of extremist parties, in an attack on the "goose-stepping" far-right. He told Reuters that the ultra-nationalist party Golden Dawn was an "extreme phenomenon", adding:Evangelos Venizelos, the former finance minister and new leader of the Pasok party, urged voters to resist the lure of extremist parties, in an attack on the "goose-stepping" far-right. He told Reuters that the ultra-nationalist party Golden Dawn was an "extreme phenomenon", adding:
I believe they are an example of fascism and we radically oppose them. It's an offence to our history and to parliament.I believe they are an example of fascism and we radically oppose them. It's an offence to our history and to parliament.
Golden Dawn is polling between 4.1% and 5.7%, enough to win seats in the Athens parliament. It is campaigning vigorously on an anti-immigration platform, with slogans such as "Greece belongs to Greeks".Golden Dawn is polling between 4.1% and 5.7%, enough to win seats in the Athens parliament. It is campaigning vigorously on an anti-immigration platform, with slogans such as "Greece belongs to Greeks".
Venizelos also held a series of election rallies over the weekend. He told an audience in Athens that Greece could meet its obligations without additional tax hikes, and predicted a "gradual and safe exit" from the current aid package by 2015.Venizelos also held a series of election rallies over the weekend. He told an audience in Athens that Greece could meet its obligations without additional tax hikes, and predicted a "gradual and safe exit" from the current aid package by 2015.
He told party supporters that the worst was now behind them:He told party supporters that the worst was now behind them:

We can assure Greek citizens that returning to a normal life, to normal conditions- to decency, to safety - is near. It's almost upon us,.
We can assure Greek citizens that returning to a normal life, to normal conditions- to decency, to safety - is near. It's almost upon us,.
"The final countdown has already started. We have gone through the biggest chunk of a difficult and tough path. It's the final part that is left."The final countdown has already started. We have gone through the biggest chunk of a difficult and tough path. It's the final part that is left.
11.02am: After a steady start to the trading week, some European stock markets have fallen back this morning. Confirmation of Spain's recession, and the news that eurozone inflation was higher than expected last month, have combined to push shares lower.11.02am: After a steady start to the trading week, some European stock markets have fallen back this morning. Confirmation of Spain's recession, and the news that eurozone inflation was higher than expected last month, have combined to push shares lower.
Here's a round-up:Here's a round-up:
UK FTSE 100: -0.54%, down 31 points at 5745
Spanish IBEX: -0.61%, down 43 points at 7102
Italian FTSE MIB: -0.57%, down 84 points at 14694
French CAC: -0.7%, down 23 points at 3242
German DAX: +0.1%, up 6 points at 6807		UK FTSE 100: -0.54%, down 31 points at 5745
Spanish IBEX: -0.61%, down 43 points at 7102
Italian FTSE MIB: -0.57%, down 84 points at 14694
French CAC: -0.7%, down 23 points at 3242
German DAX: +0.1%, up 6 points at 6807
And some comment from Yusuf Heusen, sales trader at IG Index:And some comment from Yusuf Heusen, sales trader at IG Index:
Once again, the Spanish ulcer is providing cause for concern; anti-austerity protests took place over the weekend, and this morning we have had news confirming that Spain slipped back into recession in the first quarter of 2012. In addition, S&P has downgraded 11 of Spain's largest banks, mirroring its move last week on the national sovereign debt rating.Once again, the Spanish ulcer is providing cause for concern; anti-austerity protests took place over the weekend, and this morning we have had news confirming that Spain slipped back into recession in the first quarter of 2012. In addition, S&P has downgraded 11 of Spain's largest banks, mirroring its move last week on the national sovereign debt rating.
10.38am: Guillaume Menuet, economist at Citi, has predicted that the Spanish people must suffer deeper austerity before the country returns to growth:10.38am: Guillaume Menuet, economist at Citi, has predicted that the Spanish people must suffer deeper austerity before the country returns to growth:
Menuet told Reuters:Menuet told Reuters:
Spain's still very much recession and we think that this isn't going to improve soon. It's likely they'll have to create more fiscal tightening in order to catch up if they wish to avoid going in to plan, and that's going to be counterproductive.Spain's still very much recession and we think that this isn't going to improve soon. It's likely they'll have to create more fiscal tightening in order to catch up if they wish to avoid going in to plan, and that's going to be counterproductive.
Last Friday, Madrid published a new economic stability plan that predicted that GDP would shrink by 1.7% in 2012, followed by 0.2% growth in 2013.Last Friday, Madrid published a new economic stability plan that predicted that GDP would shrink by 1.7% in 2012, followed by 0.2% growth in 2013.
That's more optimistic than the latest IMF forecasts -- for Spanish GDP to shrink by 1.8% this year, and only grow by 0.1% next year.That's more optimistic than the latest IMF forecasts -- for Spanish GDP to shrink by 1.8% this year, and only grow by 0.1% next year.
10.22am: More euro gloom -- inflation across the eurozone came in at 2.6% this month, according to data just released by Eurostat.10.22am: More euro gloom -- inflation across the eurozone came in at 2.6% this month, according to data just released by Eurostat.
That's a slight fall on March's 2.7%, but higher than the 2.5% predicted by economists. Higher inflation means there is less chance of the European Central Bank cutting interest rates again soon (the ECB meets this week).That's a slight fall on March's 2.7%, but higher than the 2.5% predicted by economists. Higher inflation means there is less chance of the European Central Bank cutting interest rates again soon (the ECB meets this week).
Howard Archer of IHS Global Insight commented that high oil prices continue to drive up the cost of living, and predicted that the ECB will leave borrowing costs unchanged:Howard Archer of IHS Global Insight commented that high oil prices continue to drive up the cost of living, and predicted that the ECB will leave borrowing costs unchanged:
The ECB seems generally reluctant to take Eurozone interest rates any lower given current and likely continuing sticky consumer price inflation, and significant concerns among some of the bank's governing council members about the longer-term inflationary impact of the massive liquidity that the ECB has provided to banks.The ECB seems generally reluctant to take Eurozone interest rates any lower given current and likely continuing sticky consumer price inflation, and significant concerns among some of the bank's governing council members about the longer-term inflationary impact of the massive liquidity that the ECB has provided to banks.
10.05am: Over in Greece, some alarming consumer spending data has just been released. Retail sales fell by 13.0% in February, in volume terms, compared with the previous year.10.05am: Over in Greece, some alarming consumer spending data has just been released. Retail sales fell by 13.0% in February, in volume terms, compared with the previous year.
That's worse than the 10.6% fall recorded in January, indicating that the pace of decline is actually accelerating as Greece's long recession continues.That's worse than the 10.6% fall recorded in January, indicating that the pace of decline is actually accelerating as Greece's long recession continues.
9.54am: Last weekend's protests against Spanish austerity showed that prime minister Mariano Rajoy has become a clear target for protesters, just six months after winning the last general election by a landslide.9.54am: Last weekend's protests against Spanish austerity showed that prime minister Mariano Rajoy has become a clear target for protesters, just six months after winning the last general election by a landslide.
This photo was taken in Bilbao yesterday, where thousands of people attended an anti-austerity rally.This photo was taken in Bilbao yesterday, where thousands of people attended an anti-austerity rally.
The caption reads "With the salaries of King Juan Carlos and Rajoy, medicines could be paid for". That's a reference to the recent decision to scrap free medicine for pensioners (under the new plan, they must pay 10% of the cost).The caption reads "With the salaries of King Juan Carlos and Rajoy, medicines could be paid for". That's a reference to the recent decision to scrap free medicine for pensioners (under the new plan, they must pay 10% of the cost).
Rajoy remained tight-lipped over the details of his austerity plans during last year's election compaign. That was understandable – there's little to be gained electorally by promising to slash benefits and hike taxes, but Rajoy may be reaping the consequences now (support for his People's Party has fallen by 8 percentage points in the last month).Rajoy remained tight-lipped over the details of his austerity plans during last year's election compaign. That was understandable – there's little to be gained electorally by promising to slash benefits and hike taxes, but Rajoy may be reaping the consequences now (support for his People's Party has fallen by 8 percentage points in the last month).
You could also argue, though, that Rajoy is the victim of Brussels' intransigence. As the Financial Times put it:You could also argue, though, that Rajoy is the victim of Brussels' intransigence. As the Financial Times put it:
The truth is, Mr Rajoy finds himself in an impossible situation. For all the talk of European solidarity, the EU has insisted that his deficit-reduction plan should proceed at an excessive pace. This was bound to trigger a popular backlash.The truth is, Mr Rajoy finds himself in an impossible situation. For all the talk of European solidarity, the EU has insisted that his deficit-reduction plan should proceed at an excessive pace. This was bound to trigger a popular backlash.
9.30am: Spain's return to recesssion throws the spotlight on the dire state of the Spanish economy. The unemployment rate hit a new record high of 24.4% last Friday, its property bubble has burst, and its banks may need a €120bn bailout.9.30am: Spain's return to recesssion throws the spotlight on the dire state of the Spanish economy. The unemployment rate hit a new record high of 24.4% last Friday, its property bubble has burst, and its banks may need a €120bn bailout.
Louise Cooper of BGC Partners has warned this morning that Spain is "close to imploding", under the impact of austerity and its real estate crisis. It could be Ireland all over again, only worse. After all, the Irish government has injected €64bn into its banking sector over the last few years, and Dublin at least had the advantage of "a reformed and pro business economy", she argues.Louise Cooper of BGC Partners has warned this morning that Spain is "close to imploding", under the impact of austerity and its real estate crisis. It could be Ireland all over again, only worse. After all, the Irish government has injected €64bn into its banking sector over the last few years, and Dublin at least had the advantage of "a reformed and pro business economy", she argues.
Cooper writes:Cooper writes:
According to the World Bank, the Irish economy was worth US$206bn in 2010 and Spain's economy US$1407bn - thus the economy of Spain is seven times that of Ireland (which makes sense given that Spain is home to 47 million people and Ireland home to about 4.5 million). So assuming that Spain's property bubble and bust is equivalent to Ireland's (and there are many reasons why it may be smaller or larger) then the equivalent cost of bailing out Spanish banks for a comparable property bust could be (I stress the could) be seven times €64bn, which equals €448bn!According to the World Bank, the Irish economy was worth US$206bn in 2010 and Spain's economy US$1407bn - thus the economy of Spain is seven times that of Ireland (which makes sense given that Spain is home to 47 million people and Ireland home to about 4.5 million). So assuming that Spain's property bubble and bust is equivalent to Ireland's (and there are many reasons why it may be smaller or larger) then the equivalent cost of bailing out Spanish banks for a comparable property bust could be (I stress the could) be seven times €64bn, which equals €448bn!
This is an extraordinarily large number and is the reason why so many Spanish bankers and politicians are so reticent to confront the scale of the problem....Once the size of the disaster has been glimpsed, it is difficult to go back and pretend it does not exist.This is an extraordinarily large number and is the reason why so many Spanish bankers and politicians are so reticent to confront the scale of the problem....Once the size of the disaster has been glimpsed, it is difficult to go back and pretend it does not exist.
9.02am: We'd love to hear the views of Spain-based readers about the news today that the country is back in recession.9.02am: We'd love to hear the views of Spain-based readers about the news today that the country is back in recession.
Here are a couple of early contributions, from the comments below:Here are a couple of early contributions, from the comments below:
Yellowsnow argues that Spain never really left recession:Yellowsnow argues that Spain never really left recession:
Anyone who actually lives here would know that there has been no second dip. We are still as much in the shit as when all this started to hit back in 2009. I've never seen so many business closed or "local en alquier"(office to let) signs in the high streetsAnyone who actually lives here would know that there has been no second dip. We are still as much in the shit as when all this started to hit back in 2009. I've never seen so many business closed or "local en alquier"(office to let) signs in the high streets
..
EastEndGeordie, who lived through the UK recessions of the 1980s and 1990s, suggests some Spanish workers have not yet realised the severity of the situation:EastEndGeordie, who lived through the UK recessions of the 1980s and 1990s, suggests some Spanish workers have not yet realised the severity of the situation:
I currently live and work in Spain and it feels very odd. It doesn't feel like a country in recession with 25% unemployment. I remember the UK recessions of the 80s and 90s and they felt a lot worse.I currently live and work in Spain and it feels very odd. It doesn't feel like a country in recession with 25% unemployment. I remember the UK recessions of the 80s and 90s and they felt a lot worse.
I don't know if the Spanish are in denial. The Spaniards I work with still enjoy the 2 hour lunches, 2 coffee breaks and great social lives. The shops are full as are the bars and cafes. The Spanish are not very productive and they don't seem to care. I have told my colleagues what recessions usually feel like and they look horrifiedI don't know if the Spanish are in denial. The Spaniards I work with still enjoy the 2 hour lunches, 2 coffee breaks and great social lives. The shops are full as are the bars and cafes. The Spanish are not very productive and they don't seem to care. I have told my colleagues what recessions usually feel like and they look horrified
It won't hit home until a large bank goes bust or one of the overspending regions goes cap in hand to Madrid, until then, the Spanish will not worry as it is only teenagers and young people who are out of work and most of the middle aged, middle class workers don't care.It won't hit home until a large bank goes bust or one of the overspending regions goes cap in hand to Madrid, until then, the Spanish will not worry as it is only teenagers and young people who are out of work and most of the middle aged, middle class workers don't care.
8.43am: Even before Spain's double-dip recession was confirmed (at 8am BST today), prime minister Mariano Rajoy was insisting that his government would not relax the pace of its austerity drive.8.43am: Even before Spain's double-dip recession was confirmed (at 8am BST today), prime minister Mariano Rajoy was insisting that his government would not relax the pace of its austerity drive.
As tens of thousands of Spanish people took to the streets on Sunday, Rajoy was telling a gathering of his conservative People's Party that there was no alternative to his plans. He said:As tens of thousands of Spanish people took to the streets on Sunday, Rajoy was telling a gathering of his conservative People's Party that there was no alternative to his plans. He said:
We are implementing a series of reforms that are more positive, necessary and required than ever.....Spain needs deep structural change, not makeup.We are implementing a series of reforms that are more positive, necessary and required than ever.....Spain needs deep structural change, not makeup.
Spain is aiming to cut its deficit to 5.3% of GDP this year -- a tougher target than the 5.8% which Rajoy initially felt was achievable, but less onorous than the 4.4% target which Brussels originally set.Spain is aiming to cut its deficit to 5.3% of GDP this year -- a tougher target than the 5.8% which Rajoy initially felt was achievable, but less onorous than the 4.4% target which Brussels originally set.
8.30am: As regular reader meljomur points out in the comments below, Britain also slipped back into a double-dip recession last week.8.30am: As regular reader meljomur points out in the comments below, Britain also slipped back into a double-dip recession last week.
By my reckoning, there are now eight eurozone countries in recession, and eleven in the EUropean Union as a whole.By my reckoning, there are now eight eurozone countries in recession, and eleven in the EUropean Union as a whole.
Apart from Spain, the other seven are Belgium, Ireland, Italy, the Netherlands, Portugal, Greece and Slovenia.Apart from Spain, the other seven are Belgium, Ireland, Italy, the Netherlands, Portugal, Greece and Slovenia.
Looking outside the eurozone, but within the EU, we can include the UK, Denmark and the Czech Republic.Looking outside the eurozone, but within the EU, we can include the UK, Denmark and the Czech Republic.
Spain and the UK are among the first countries to report data for the first three months of 2012. So it's possible that more countries could join the list in the weeks ahead (or that some of those in recession might climb out again).Spain and the UK are among the first countries to report data for the first three months of 2012. So it's possible that more countries could join the list in the weeks ahead (or that some of those in recession might climb out again).
8.20am: The news of Spain's recession (see 8.05am) has long been expected. This graph shows how it only managed weak economic growth through 2010 and most of 2011, before beginning to contract last autumn.8.20am: The news of Spain's recession (see 8.05am) has long been expected. This graph shows how it only managed weak economic growth through 2010 and most of 2011, before beginning to contract last autumn.
The red bar charts show quarterly GDP changes, while the blue line tracks the year-on-year change.The red bar charts show quarterly GDP changes, while the blue line tracks the year-on-year change.
The data shows that Spain's recovery from the last recession was rather weak, even before the eurozone crisis struck.The data shows that Spain's recovery from the last recession was rather weak, even before the eurozone crisis struck.
8.05am: It's official - Spain has suffered a double-dip recession.8.05am: It's official - Spain has suffered a double-dip recession.
The Instituto Nacional de Estadistica has announced that the Spanish economy shrank by 0.3% in the first three months of 2012. That follows a 0.3% contraction in the final three months of 2011.The Instituto Nacional de Estadistica has announced that the Spanish economy shrank by 0.3% in the first three months of 2012. That follows a 0.3% contraction in the final three months of 2011.
That puts Spain back into recession for the first time since it returned to growth at the start of 2010. The 0.3% contraction is actually slightly better than analysts had forecast.That puts Spain back into recession for the first time since it returned to growth at the start of 2010. The 0.3% contraction is actually slightly better than analysts had forecast.
On an annual basis, Spain shrank by 0.4% in the last quarter.On an annual basis, Spain shrank by 0.4% in the last quarter.
The full details are here on the INE website (pdf, in Spanish).The full details are here on the INE website (pdf, in Spanish).
7.58am: With impeccable timing, Standard & Poor's just announced that it has taken 'negative actions' on 16 Spanish banks, following last Friday's two-notch rating downgrade.7.58am: With impeccable timing, Standard & Poor's just announced that it has taken 'negative actions' on 16 Spanish banks, following last Friday's two-notch rating downgrade.
Details here.Details here.
7.50am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis.7.50am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis.
We're focusing on Spain this morning. The latest Spanish GDP data will be released in the next few minutes, and it is certain to confirm that Spain has fallen back into recession.We're focusing on Spain this morning. The latest Spanish GDP data will be released in the next few minutes, and it is certain to confirm that Spain has fallen back into recession.
The data (due at 9am CEST, or 8am BST) will heighten the pressure on the Madrid government, following last Friday's credit rating downgrade. Yesterday, unions organised marches in cities across Spain in protest at the government's economic plans.The data (due at 9am CEST, or 8am BST) will heighten the pressure on the Madrid government, following last Friday's credit rating downgrade. Yesterday, unions organised marches in cities across Spain in protest at the government's economic plans.
Elsewhere today: political tension is rising in France and Greece ahead of this weekend's elections. François Hollande launched a message of defiance against Angela Merkel over the eurozone fiscal pact yesterday, leaving France's likely next president on a collision course with Germany's chancellor.Elsewhere today: political tension is rising in France and Greece ahead of this weekend's elections. François Hollande launched a message of defiance against Angela Merkel over the eurozone fiscal pact yesterday, leaving France's likely next president on a collision course with Germany's chancellor.