A nationwide general strike is taking place in Spain today in protest of the crippling austerity measures and harsh economic reforms that have been put in place to appease finance ministers in the Eurozone. Barcelona, Madrid, Malaga, and Valencia have seen the strongest turnouts as Prime Minister Mariano Rajoy feels the full force of a discontent nation.
Union-led pickets have sprung up in and around crucial transport routes, large factories and core food stores. It has been reported that energy suppliers have seen requirement down by 20% today, in a statistic that displays the severity of the situation in Spain. Protestors and trade unions are angry at the newly elected centre-right government for new legislation which has made it easier for companies to sack workers, cut wages, and modify employment conditions. Furthermore Mariano Rajoy is expected to announce an additional €40 billion in spending cuts tomorrow in line with the Eurozone’s newly formed fiscal compact.
Student protestors have blocked the A6 – one of the main roads in and out of Madrid – causing a disruptive traffic jam in the capital city. Nissan and Seat factories are facing complete lockdown and so is Valencia’s majorwholesale market. The main city food warehouse in Malaga has suffered a similar fate, as pickets have successfully brought integral parts of the country to a standstill.
Over 470 flights have been cancelled on a day when only 25% of train and bus services are in operation; people are proving prepared to put their jobs on the line to stand up against – what they see – as a self-defeating austerity drive.
The Spanish economy shrunk by 0.3% in the final 3 months of 2011 and is expected to drop by another 1.7% in 2012. Their GDP deficit of 8.5% last year is 5.5% above the Eurozone-imposed target of 3.0%; Mariano Rajoy plans to reduce the deficit this year to 5.3% which seems a torrid task – even though it will still leave the country with almost double the designated debt level. The difficulty of the task at hand, and the fierce resentment felt by the Spanish population, can be explained simultaneously by taking a look at Spain’s unemployment figures; with the jobless rate at 23% and over half of all young people unemployed, the situation in Spain is drastic.
Greek unionists have taken heed of the Spanish effort and have voiced a call-to-arms for a European-wide revolt against the heads of the Eurozone and their “exploitative” austerity measures. The view held by these public and private sector workers is that a small group of powerful people (the Eurogroup of Eurozone finance ministers and the heads of European parliament) are putting policies into place that do not meet the needs of the people; moreover they feel that these new measures are “totally unjust and totally counterproductive”.
The political unrest in Spain has had a negative effect on the financial markets with the Euro Exchange Rate losing out by 0.40% against both the Pound and the US Dollar. Spanish stocks have plunged and 10-year sovereign debt yields have re-risen to 5.45%. Investors are fearful that the protests could combat – what they view – as economic progress in the form of cuts and concessions. Markets tentatively await Mariano Rajoy’s Budget tomorrow as they attempt to weigh up the overall position of Spain’s economy. If finances prove unhealthy in the autonomous – and economically weaker – Spanish regions, and central bank assistance is needed, then expect this to have an adverse effect on Spain, and by default the Eurozone as a whole.