The Spanish are poorer

It appears that the per capita income of Spaniards has gone on declining in 2010 in relation to its previous levels; but also, and even more worryingly, with respect to the European average. In 2010, according to the Eurostat data released on Tuesday, it stood eight points below the average of the 17 countries of the euro zone and exactly equal to the average of the 27 EU states.

At the beginning of the crisis, in 2007, Spanish per capita wealth was on the up and up, standing at 105 percent. Even in the following year it remained above the average, at 103 percent. Only Greece and Italy have seen a worse decline. On the one hand, the most prosperous countries are holding out better. On the other, the newly arrived countries in Eastern Europe have taken better advantage of EU aid and incentives to modernization.

The explanations for the specific sluggishness affecting the Spanish economy (which, however, does not cancel out the huge progress in convergence registered since Spain joined the bloc in 1986) are obvious: the huge differential rate of unemployment and the brutal shrinkage of the construction sector, which was once the driving force of growth.

At the same time, the research services that prepare predictions on the Spanish economy are already pointing to the first signs of stagnation and even of recession for part of 2012, tendencies that have already been noticed by the OECD and the IMF. Any loss of economic output will bring with it additional difficulties in complying with the objectives of reducing the public deficit to six percent and 4.4 percent in 2011 and 2012 respectively. The worst of it is that the experts are forecasting that the destruction of employment will continue through 2012, leading to a rate of joblessness in excess of 22 percent.

The chief usefulness of these somber data resides in the fact that they define the setting within which the incoming Popular Party government must structure the main lines of its economic policy. Just like the outgoing administration, the new one will face a complex task of squaring the circle, in which it must at the same time restructure the public finances ? to which end the reduction of deficit is indispensable ? and relaunch the process of growth. For the last of these it is desirable to increase expenditure on production, and public investment.

While it is true that these two prescriptions are mutually contradictory, it is also true that certain governments, such as that of the new Italian Prime Minister Mario Monti, are trying to render them compatible by means of a serious commitment to austerity in every class of dispensable expenditure, combined with selective measures to stimulate demand. This is a very difficult and delicate task, but by no means an impossible one.