There’s a good deal of political scrambling going on in Spain right now. Even though the governing conservative party won the most votes in Sunday’s general election, it wasn’t enough to secure control of the parliament. In fact, the result was so fractured it’s not clear yet how the parties will organize a coalition to govern the country.
Spain’s economy was in deep trouble a couple of years ago, but has been coming out of recession, even growing about 3 percent lately. But on it’s way to recovery, the Spanish government enacted tough austerity measures that left many Spaniards financially strained and angry at the leadership.
“The middle class, the small and medium-sized firms, were squeezed so hard during the crisis,” said Gayle Allard, a professor at the IE Business School in Spain. “It’s fair to say that the recovery rested on their backs and not on any help from the government.” Allard points out that the government has been engulfed in corruption scandals.
Meanwhile, even as the economy recovers, it still feels like “a pretty bad recession to most people in Spain,” said Mark Weisbrot, co-director of the Center for Economic and Policy Research. He said high unemployment, particularly among Spanish youth, makes the recovery feel quite distant for many.
“I think people were not actually convinced that the austerity worked, and I think there’s very good economic reasons for them not to believe that,” he said, highlighting examples of low oil prices and interest rates that have helped spur growth.
During Spain’s last economic crisis, there was concern that problems in Spain’s economy would harm Europe overall. Brian Lawson, an economic and financial consultant for research firm IHS in Spain, said this round of political instability is unlikely to create the same kind of wider economic risk to Europe.
“Effectively, there has been an unlimited backstop from the European Central Bank, which has prevented the risk of economic and financial meltdown within the Eurozone as previously feared,” said Lawson. “The current uncertainty is not helpful for Spain, but it would be very exaggerated at this stage to talk of a repetition of the previous crisis.”
Spaniards aren’t the only European voters tiring of austerity measures. Voters in Greece and Portugal have also pushed pro-austerity parties from leadership. Desmond Lachman is a fellow at the American Enterprise Institute, and said Sunday’s election is evidence of that discontent.
“The Spanish economy was beginning to grow, it was beginning to show signs of healing,” said Lachman, “but if we now have a period of political uncertainty, political instability, that’s the last thing that Spain needs. “
Lachman said if the parties can’t form a coalition, Spanish voters may have to head back to the polls in a few months.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.
Give today and get our limited edition tote.