Workers leave Spain as unemployment continues to increase and recession worsens

Worsening Economic conditions in Spain is causing many people to leave the country in the pursuit of work somewhere else. Many of the country's population is now unemployed and many businesses are going bankrupt everyday.

There are some staggering data coming out of Spain with more than 50% Youth unemployment and also total unemployment is at 24%. This is causing many people to worry about Spain's Economic future because if half of the young population is unemployed they are not gaining the skills which will be necessary if the country does recover.

Bloomberg reported earlier today (25th June) that Spain’s population has fallen from last year, this is the first time the population has fallen since 1971. This has been caused by the harsh economic conditions has many people are leaving the country to look for work somewhere else.

The graph above shows the GDP growth rate of Spain and it shows that Spain has seen six consecutive quarters of negative growth.With the worsening Economic conditions I do not see these statistics improving within the near future.

Spain’s economy has been another victim of a property boom, in the years leading up to 2008 Spain’s GDP continued to grow, however this was underpinned by a housing bubble which was financed through cheap loans too risky clients all across the country.

Housing prices increased 44% from 2004 to 2008 but since the underpinning of the property boom they have tumbled more than a third. Due to the long periods of growth Spain actually had very little debt but because of the harsh economic problems they are experiencing they have had to borrow a large amount of money from the bond markets.

However all of this borrowing has put Spain into even more trouble I believe, this is because eventually Spain will have to pay this money back, but with a declining economy and large unemployment, where are they going to get the tax revenue to pay back the loans?

I believe that without a radical solution from the Spanish government, Spain will default on its loans in the coming years. This because with a declining economy and huge unemployment Spain will find it very difficult to repairs its debts.


Daniel Butler

Sources: Yahoo Finance , BBC news , Bloomberg , Trading Economics