THE gloom in Spain is almost palpable. Yet two years on from the protests begun in Madrid by young Spaniards known as
los indignados, most accept their lot with resignation. The government of Mariano Rajoy is unpopular, but so is the opposition. And whereas many other stricken euro-zone countries blame the Germans for their woes, Spaniards recognise that they are paying for their own excesses, especially the burst property bubble.The numbers are grim. The economy is in deep recession. In the first three months of the year GDP shrank for a seventh quarter in a row. The public finances remain stretched, with the budget deficit at 7% of GDP. Bond yields have fallen, but the credit crunch for small firms is worsening. Corporate bankruptcies are running at ten times pre-crisis levels. And unemployment is at a record 27% (see
article).Spain could be the biggest test for the euro. Four countries—Greece, Ireland, Portugal and most recently Cyprus—have been bailed out and are in programmes agreed on with the “troika”...
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