The recovery will be slow, the damage is severe and return to achieve the preconditions for the economic crisis rocking the world will take time, according to economists agree. In Europe the situation is: before the first positive signs of some of its major economies, all eyes agree that the upturn will be, at least one long-term plan.
Meanwhile, citizens of the Old World continue to suffer the consequences of increased economic turmoil since the Great Depression of the early 30s.
The first to enter, the last to leave
Spain have not felt the effects of injection of optimism that the European Central Bank today was applied to the continental economy battered by announcing that a global recession “has bottomed.”
Beyond the expected rebound in the Ibex which led to the bag to a volume of transactions that had not since October of last year, leading economic analysts prefer to remain cautious about the Spanish situation. The economy of the country, shortly before the international financial meltdown should also withstand earthquakes of the collapse of the housing sector, yet seems to fit true to the phrase that defined it a few months inside and outside the Iberian peninsula: “Spain has been the first European country to enter the crisis and will be the last to leave. ”
While any trial on the chance that this prediction is fulfilled or not in the future, the evidence shows on its realization are deeply rooted in the present.
The most recent of these signals has given the government of José Luis Rodríguez Zapatero to announce the delivery of a subsidy of 420 euros per month with immediate and retroactive for all the unemployed who failed to collect unemployment insurance. This benefit, which will be greeted by 300,000 people, involves the disbursement of 400 million euros and the worsening of the deficit skyrocketed and even unsuspected limits.
However, what most worries critics of government economic policy is not the measure itself but the context in which it was made and the possibility that the authorities continue to increase public spending. Cornered by an unemployment rate of 18.1%, equivalent to 4.14 million unemployed people, the Spanish government decided to abandon the negotiating table with unions and business on a working system reform by refusing, along with the trade unions, to reduce by 5% social contributions (or payroll taxes). In this way, and without the constraint posed by consensus with the business classes, the government of Rodriguez Zapatero took, with the implementation of this massive subsidy, the first step to compensate for the unilateral destruction of 1.76 million jobs produced between July 2008 and July this year.
However, the crisis has diminished the impact these days in major Spanish cities where, despite the sharp drop in private consumption, the streets look as deserted as it has always happened in the holiday month of August.
But widespread flight to resorts, which seems to have been affected by the worrying economic situation, reaches only amounts to standardize the reason why many shades down in the shops. According to statistics recently released by the National Federation of Autonomous Workers Associations (ATA), 500 small businesses have closed each day between January and July this year due to the overall decline in economic activity. The number takes on another dimension when one considers that 100,510 self-employed workers have lost their jobs, and that the ATA estimates that by year’s end that number will climb to 200,000 unemployed.
Other key indicators such as the annual fall of 4.1% of gross domestic product that the government recently reported, deflation and falling consumption, have formed a cocktail deferred dream of meeting the light at the end of the tunnel of despair economic only at the end of 2010. A whole year, having already suffered complete another recession, anguish and uncertainty, that Spain will need more than just a simple injection of good omens.
Holidays “at home”
Italy is far left behind the recession. And in this summer’s torrid economic crisis is felt not only on the beaches of the peninsula, not as full as in the past, but in the cities, not as empty as in previous years.
By the crisis, many Italians have had to sacrifice their holidays, shortening, reducing the weekends, or directly, eliminating, to the chagrin of the hotel industry, gastronomy and tourism in the country, complaining of low activity.
This was a true reflection of what happened on Saturday, August 15, the traditional holiday of Ferragosto (on which celebrates the feast of the Assumption of the Virgin), a date truly “holy” for Italian families, often together on the beach or the mountains to celebrate a holiday that falls right in the middle of the summer holidays. Although Rome was like a city “ghost”, there was a mass exodus of people, as in the past, but many Romans stayed home.
According to a study by Ama, the company that collects garbage in Rome, in fact, during the holiday of Ferragosto the city was not deserted as: the 1,759 tonnes of garbage collected, an increase of 746 tonnes of waste on the same day last year …
In a trend closely related to the crisis, named last year by the New York Times as “staycation”? Contraction between “stay” and “cation” being at home, on vacation, in major Italian cities is estimated to presence of residents during the summer of 2009 has grown by 20%. “The data show the increase of large retailers, between 5 and 20%, and increased presence in the pools, 20%,” said Massimo Todisco, director of the Observatory of Milan, confirming that when pockets are thin, no choice but to stay home.
He only stopped “the descent into hell”
With a meager growth of 0.3% of GDP in the second quarter of this year, France has just emerged from the recession technically, but the devastating effects of 12 months of contraction continue to be felt persistently about the economy and, especially, in society.
“In economics, not out of a recession to enter a period of growth as we pass from winter to spring. It takes many months before the effects would be visible,” said economist Jean-Paul Fitoussi. That’s why most experts expected that the real recovery just might start in the second half of 2010.
The second quarter results only indicate that, for the moment, the French economy stopped its long descent into hell. That’s why politicians, economists and financial officers say they avoid overly optimistic, since these figures must be confirmed by subsequent revisions and, above all, because the latest statistics for the whole of 2009 are a preview to a fall in GDP of 2% 2.5%.
In France, the recovery was due to launch in the industry (+1.1%), and more particularly the automotive sector (+5.6%, after a fall of 9.7%), thanks to a premium to the replacement of older vehicles decided by the government. That trend had repercussions on exports, which rose 1%.
But the immediate projections are not optimistic. The ability of private business investment continues to decline, according to the National Institute of Statistics and Economic Studies (INSEE), while the labor market is continuing to deteriorate: this year will be destroyed 700,000 jobs and the unemployment rate should reach 10% of the active labor force, according to figures from the National Interprofessional Union for Employment (UNEDIC). The public finance deficit increased, in turn, very rapidly since early this year to reach 86,600 million. In the same period of 2008 the figure was of 32,800 million euros.
In the field of consumption things are not much better. It is true that French homes withstood the crisis better than their Spanish counterparts, British and Americans, more concerned with debt-reduction in spending. But this positive attitude could be temporary.
First, because the rising price of raw materials could reduce the reserves they have yet. Second, because the accelerated elimination of jobs will continue for a long time at a fast pace. In this context, the return to activity in early September after two months of school holidays is announced decidedly morose.