[QODLink]
Inside Story
Spain: Is austerity the answer?
As growing discontent over cuts threatens the country's stability, we discuss Spain's way out of the crisis.
Last Modified: 21 Jul 2012 16:10

Hundreds of thousands of Spaniards have launched massive protests against the centre-right government's latest measures, following more than a week of demonstrations across the country.

The parliament has approved a package of $80bn of spending cuts and tax hikes which are likely to deepen the recessionin which the eurozone's fourth-largest economy is mired.

"Austerity is the only option, given that Spain does not have enough resources to fund the liabilities of the public sector and the bailouts of the banks, [but] it is not the way to further growth. Austerity is only going to retard economic growth."

- Antonio Cabrales, a professor of economics

Under the bailout memorandum, 14 banking groups that make up about 90 per cent of Spain's banking system will be tested for their recapitalisation needs in a review due to be completed by the second half of September.

Madrid expects $36.6bn in a first tranche of money that will be available immediately for state-rescued banks that urgently need funds.

Spain's three biggest banks - Banco Santander, BBVA and Caixabank - are not expected to need extra capital.

According to an independent audit, the immediate problems were limited to four banks: Bankia, CatalunyaCaixa, NovaGalicia and Banco de Valencia, the last three of which have been nationalised.

Now there are signs of growing discontent at the economic pain being heaped on the Spanish public.

So, is austerity the answer to Spain’s economic woes? And will the Spanish people accept it?

Joining presenter Divya Gopalan to discuss these issues are guests: Susana Martin Belmonte, an economist and author of Nada esta Perdido (Nothing is Lost); Antonio Cabrales, a professor of economics at Universidad Carlos III de Madrid and a contributor to the Spanish Nada es Gratis Blog; and Jesus Gallego-Garcia, the international coordinator of the General Union Of Workers' Public Services Federation.

"Spain has been a very responsible country and is still a responsible country. We are starting to be irresponsible, actually, in the way we are implementing austerity measures and the only thing we are getting into - is being a poorer country. The only thing that has been proven is that these austerity measures have no effect whatsoever in the credibility of the country."

Jesus Gallego-Garcia, the international coordinator of the Public Services Federation


SPAIN'S BANKS:

  • Last month the Fitch rating agency downgraded Spain’s credit rating
  • Package of public sector cuts & tax rises was announced last week
  • Germany & Finland's parliaments voted in bailout for Spanish banks
  • New bailout offers up to 125bn euros to the country’s banks
  • This means, austerity measures will raise vat from 18 per cent to 21 per cent
  • Spanish economy is struggling with weak banks, rising debt & recession
  • Spain has the highest rate of unemployment in the eurozone at 24 per cent
  • More than 50 per cent of Spanish people under the age of 25 are unemployed
  • It is the fourth eurozone member to seek financial assistance


558

Source:
Al Jazeera
Topics in this article
People
Country
City
Organisation
Featured on Al Jazeera
Muslim volunteers face questioning and threat of arrest, while aid has been disrupted or blocked, charities say.
Six months on, outrage and sorrow over the mass schoolgirl abduction has disappeared - except for families in Nigeria.
ISIL combatants seeking an 'exit strategy' from Mideast conflict need positive reinforcement back home, analysts say.
European nation hit by a wave of Islamophobia as many young fighters join ISIL in Syria and Iraq.
Featured
Lack of child protection laws means abandoned and orphaned kids rely heavily on the care of strangers.
At least 25 tax collectors have been killed since 2012 in Mogadishu, a city awash in weapons and abject poverty.
Since she was 16-years-old, Scottish Nationalist Party's Sturgeon has strove for independence from the UK.
Armed group's ransom success with German hostages marks a re-emergence, as authorities investigate ISIL links.
Western nations are moving into the resource-rich country after decades of disinterest, challenging China's interests.
join our mailing list