Tag Archives: Austerity

Spain and Rajoy: Still Waiting



Over two weeks on from the landslide election that gave Mariano Rajoy and Spain’s conservative Partido Popular a seemingly unstoppable majority and details about just what they plan to do to help put the country back on track remain vague. This week saw the first meeting of the national parliament and two cabinet postings, coming from, as expected, two long time party figures. However, short of again pointing out what the country now faces and promising no miracles as Spain looks ahead to almost non-existent growth in 2012 and a possible slip back into recession, Rajoy remained coy about what exactly he plans to do after being sworn in on December 21st. Given the scope of the challenges ahead and the reality that much of the country’s market stability and ability to continue borrowing under sustainable rates are now subject to forces beyond their own borders, it is not terribly surprising that Rajoy is taking his time unveiling actual policy proposals or appointees, including the highly anticipated finance minister. However, given the dour mood the country now finds itself in and the run-up time Rajoy and the PP had with the confident knowledge that they would indeed hand the outgoing PSOE a significant defeat, its difficult to understand why the new prime minister would hold out on offering even a hint that he came to the table with a few solutions. Instead, the incoming head of state has simply said he would offer no new revenue streams through taxes and would expand cuts to government services, though he left the deeply unpopular hits to health and education to the community level. Already hitting communities hard in Catalonia and Castile and Leon, these cuts will likely rise to make way for planned tax cuts aimed at small and medium sized businesses that Rajoy has placed at the center of his plan to kick-start job creation and chip away at the country’s 21 percent unemployment rate.

There is undoubtedly some sense to being clean and clear with a population that will be called upon to sacrifice for the greater good over the next few months but I find it hard to understand why Rajoy would offer so much salt without a little sugar. Is there not some plan he can offer to raise spirits and allow people to look beyond the difficulties of 2012 beyond, if we work hard, we’ll soon be back to zero? Is there not some solution he could offer that would help the Spanish economy adapt and evolve rather than, I plan to do exactly what the last party has been doing, but more? Furthermore, given the heavy evidence that has emerged to suggest simple austerity in the name of deficit reduction will do little to spur the growth Spain so desperately needs now, is it out of line to ask, beyond more of the same and broad promises to “reform the banking sector, the public sector and the labour market, and introduce greater competition in communications, energy and transportation, and open the way to economic growth starting after 2012, creating jobs,” what exactly does Rajoy plan on doing to move Spain forward?

As the holidays approach and businesses shutter for the new year, it seems increasingly unlikely any real answer to that question will come before 2012 arrives, leaving Spain to do what they are growing sadly accustomed to doing – waiting for a leader with a plan.

Image: Financial Times

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