I was speaking to a young couple from Madrid a couple of weeks back. They were on a camping holiday, a treat paid for partly by their respective parents. Things were very bad in Spain, they told me, and both were most concerned about getting work. The young lady said: "Everybody's going to either Madrid or Barcelona ... really the only two places in the country where you can find anything. It's not good in the north (of Spain), and the south is just devastated."
"Yes," agreed the young man, "And nobody wants to give the young a job. ... It's always the same, your qualifications are fine but you have no experience."
Both thought that this holiday would be their last for a long time.
As one of the countries that has been in and out of the firing line of world markets, testing the government's resolve to curb a high budget deficit, Spain is executing a stiff programme of spending cuts and tax rises. This is made even more unbearable for its population by the disastrous unemployment rate.
As of July, Spain's unemployment, seasonally adjusted, stood at 21.3 per cent, with a jobless figure of 4.9 million in a country of 46 million.
It is but a distant memory now, but in May 2007 the unemployment level was "only" 7.9 per cent, the lowest figure recorded during the past quarter-century, and for the last two years the country has been in recession.
The Spanish government however, have to date made their priority getting the budget deficit down; the plan is to reduce last year's 9.2 per cent shortfall to Gross Domestic Product to 6 per cent in 2011. Despite this squeeze, government sources were of late still predicting growth this year of 1.3 per cent "led by exports" and were looking for a small reduction in the level of unemployment - maybe to 19.5 per cent average for 2011.
In a report on 29 April, Bloomberg Businessweek quoted José Luis Martinez at Citigroup in Madrid saying: "The market consensus is around 0.7 per cent," for 2011 growth. That even this might be difficult to achieve if the deficit reduction programme falters, thus spooking the markets, becomes apparent on reading Bloomberg's 16 September headline: "Spanish Regions Debt Surges to a Record, Bank of Spain Says."
Spain's 17 semi-autonomous regions, which manage more than a third of public spending, saw their outstanding debt increased from 11.6 per cent of GDP in the first quarter to 12.4 per cent at the end of the second quarter to total €133.2 billion ($183.7 billion), putting pressure on the central government to rein in spending or miss its deficit reduction goal.
Adding to Madrid's worries, Fitch downgraded five of Spain's regions last week, including Andalusia and Catalonia, citing weak economic recovery and rising debt levels, while Moody's noted that the regions "are behind schedule to meet deficit targets" and categorized the regions as "credit negative." Both agencies appear to be looking to Madrid to effect cuts and make good their own central government deficit target or risk a possible sovereign debt downgrade.
An idea of the seriousness of the unemployment situation and the strains being placed upon both central and regional governments can be had from an article in The Reader on 30 July 2011, outlining Andalusia's unemployment levels. It noted that by the end of the second quarter, the region's unemployment had actually fallen by 8,700 from the first-quarter total, though this was much less than hoped, to just over 1 million and fractionally under 30 per cent of the workforce. Parts of the region are higher still with the Province of Almaria registering 35.29 per cent and Cordoba, 33.33 per cent.
Throughout much of the country, youth unemployment reaches 44 per cent.
On Monday, opposition Popular Party leader Mariano Rajoy told Daniel Wools of the Associated Press, that if victorious in the forthcoming elections he would lower taxes on small- and medium-sized businesses by five percentage points. Such firms make up the vast majority of Spanish companies. Rajoy said that he would also lower the tax on corporate profits if these profits can be shown to create jobs.
Although Rajoy was critical of the current Socialist government under Prime Minister Jose Luis Rodriguez Zapatero raising the value added tax to 18 per cent as a deficit-cutting source of revenue, he did admit that he would, if elected, keep it at that level for the time being. (At 18 per cent, it is one of the lower rates currently applied in the EU).
Rajoy is the favourite to become Spain's next prime minister and is well ahead in opinion polls of his Socialist rival, Alfredo Perez Rubalcaba, but sees only hard times ahead for his country, concluding: "Nobody has a magic wand."
It's going to be a long and hard slog for more than Spain.