EUROZONE’S FOURTH LARGEST ECONOMY STILL STRUGGLING
The economy of Spain contracted by 0.3 percent between July and September – its fifth straight quarter of negative growth. In fact on a year-to-year basis, Spain’s economy – the fourth largest in the Eurozone – has contracted by 1.6 percent.
These numbers are obviously terrible news in a country where unemployment currently stands at a whopping 25 percent. They are also terrible news for the Eurozone as a whole – and for economies that rely on Europe as a market for exports (like South Carolina).
Spain’s response to this ongoing disaster? Tax hikes on its people (a value-added tax was implemented last month) and a bailout from the so-called “European Stability Mechanism” – the latest European bailout fund. After that it could rely on the equivalent of an unlimited charge card from the European Central Bank.
Will these measures work?
It’s doubtful. In fact earlier this month Standard and Poor’s downgraded Spain’s credit rating and said the nation’s long-term fiscal outlook was “negative.”