The rocketing cost of jobless benefits (Moi ici: O desemprego, por cá, vai continuar a subir em 2010) has added 3pc of GDP to the budget deficit. Mr Zapatero has ordered all ministries to cut 8pc of discretionary spending to help plug the gap left by collapsing tax revenues. (Moi ici: Até Agosto, yoy, o dinheiro recolhido pelo Estado tinha caído 15% e os gastos tinham crescido 4%) The axe is likely to fall on research and big projects such as high-speed railways. (Moi ici: Funny!)
The root cause of Spain's trouble is that it joined monetary union before its economy was ready. (Moi ici: E a nossa, estava em melhor estado?) EMU halved Spanish interest rates almost overnight. Real rates were minus 2pc for much of this decade. Combined private and corporate debt reached 230pc of GDP, funded by French and German savings.
The credit boom masked a steady decline in productivity over the last decade. Spain's unit labour costs have risen by about 30pc compared to Germany."