The strength of Eurozone economies has been severely hit in the past few weeks and questions have risen up on several EU countries to ‘put things right’ regarding their sovereign debts in a given time frame. Spain, along with Greece, was down in the ratings issued by agencies last week, and is being considered as an economy which is likely to default.
The Spanish economy was very badly had hit by the credit crisis as it was very highly leveraged in property. Spain has been seeing rising tourism and higher demand for property for the last decade or so, but the present credit crisis hit it so badly that unemployment was seen at a staggering 24 percent when the crisis struck.
At present, unemployment in Spain is around 19 percent. It is likely to exceed 20 percent in the coming year. The consumer spending is likely to dip on a year to year basis this Christmas due to the high unemployment.
Spanish Prime Minister, Jose Luis Rodriguez Zapatero has promised to decrease the budget deficit and has made it a matter of prime importance. He said that he understands the size of the problem and that it needs to be prioritized above other economic targets.