Spain in recession says Bank of Spain

According to the Bank of Spain’s economic bulletin for March, the country has already slipped back into recession, as the year started with more job losses and a slow down in economic output.

“The most recent information relating to the beginning of 2012 confirms a continuation of the contraction of activity in the first quarter of this year,” the report said.

Although the bank did not give exact figures the report said the contraction was mainly due to a decline in private consumption in January and February, falling to levels not seen since 2010. New car registrations and retail sales were both down in the first few months of the year. Export growth also slowed registering an increase, but 5.4% lower than that of Q4, 2011.

Following a drop of 0.3% in the fourth quarter of 2011, and the fall in Q1 this year, Spain is, technically, already in a second recession. Two consecutive quarters of economic contraction is considered to be a recession.

After a small, but noticeable increase in output towards the end of 2011 it looked like we might miss the second recession but the poor start to this year has changed that, putting Spain back where it was this time in 2010.

This country needs some serious change to get it out of this financial battle and 27 billion in spending cuts is not the way. Where are the new jobs coming from? Where is the incentive for business investment?

Changes announced in Friday’s budget include freezing public sector workers’ salaries and reducing departmental budgets by 16.9%. That’s a good idea for saving money but is it going to help public sector workers who are currently struggling to live? With some of the highest petrol prices in Europe (on Friday I paid 150.41€ for a litre of unleaded 95) and increasing costs across the board I don’t think this will help anyone.

Deputy Prime Minister Soraya Saenz de Santamaria said the nation was in an “extreme situation” and that “Our top priority is to clean up public accounts.”

Well, there is the problem. It seems to me that the governments top priority is to look better amongst it’s EU friends, rather than helping it’s people who are losing their jobs and their homes right across this failing nation.