Tuesday, 11 October 2016

Bloomberg Suggests Lack of Spanish Government is Blessing in Disguise

Bloomberg Suggests Lack of Spanish Government is Blessing in Disguise

Spain is doing very well without a government
Most economists would be driven crazy by the idea that a country could go nine months with no one at the helm. Spain is currently a strange situation where the opposite seems to be true however. The country hasn’t had a leader since last December when the national election resulted in a hung parliament. The country went back to the polls in June but, once again, no party was able to secure a majority or a coalition.

Things haven’t changed much since June. The leaders of the parties refuse to budge and are not accepting any peace offerings made to them. It’s looking like Spain could face an unprecedented three elections in one year and the third one could even take place on Christmas Day.

While it seems like such a thing could lead to economic disaster things are actually going well for Spain. Things are going so well that the political analysts at Bloomberg are suggesting that this lack of leadership could be more of a blessing for Spain as they navigate their way out of a recession as living in Spain continues to go well.

No one is quite sure how but the stats don’t lie and they say that Spanish GDP grew 3% this year; which is better than most other European countries. There are plenty of reasons why there as this growth but main underlying factor seems to be that Spain has always had a decentralised government with local authorities and bureaucracy meaning that Spain has always been good at taking care of itself.

It’s different from the UK where London could be considered the centre of power. Spain is a country with many regional powerhouses including Barcelona, the Valencian economy along the Mediterranean, the cultural capital of Seville, and other places of power such as Malaga, Santander, Bilbao and San Sebastian.

The bumper tourism season this summer has also helped a lot with jobs created organically rather than through some kind of employment program. This has worked perfectly in combination with the employment reforms acting Prime Minister Mariano Rajoy and his PP introduced that allow businesses to come to their own agreements with unions. The end result is a strong and liberal job market.

The Bloomberg piece is basically suggesting that Spain has a lot of policies and regulations that allow it to run itself for the near future at least. It’s obvious that there will need to be some leadership at some point so things can be tweaked but, right now, Spain is pretty much on autopilot and things are going quite well and has kept the cost of living relatively low. 

Many hope it continues for as long as it can.