By Tim Corfield of Shrewsbury based Griffin & King Licensed Insolvency Practitioners
"The problem is solved', said French President Nicholas Sarkozy just five weeks ago but we have seen recently that Spain is the next Eurozone country facing a crisis.
Spain is the fourth largest Eurozone economy and the twelfth largest in the world.
• Spanish GDP last year was almost five times that of Greece.
• Unemployment in Spain in March hit a record of 24% which is by far the highest in the industrialised world and more than doubles the 10% Euro average.
• Almost one half of Spain’s young people are unemployed.
• Over 8per cent of banking loans are not being sustained.
In a bid to boost employment the Spanish Government passed new laws making it easy to cut wages and lay people off. The Spanish Unions have responded with a general strike and there have been serious political protests.
Spain has now tipped back into recession with GDP shrinking in the first quarter. The Government predicts a 1.7% contraction in 2012 which many analysts consider optimistic. As the economy slows, tax revenues fall and welfare payments rise which makes the fiscal position worse. The Government admit that the public debt will hit 80% of GDP by the end of the year.
Spain must repay nearly 12 billion Euro Bonds by the end of April and another 13 billion Euro loan at the end of July.
I hope Sarkozy has this all under control. As indicated in the press, the King of Spain has still managed to get away from it all... with a spot of elephant hunting. Not the best PR.
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