Thursday, January 29, 2009

When All Else Fails, There's Always Plan E

The official confirmation this week that the Spanish economy is in recession hardly attracted comment, it was something we already knew was going to come. Every week seems to bring a grimmer prediction of the economic outlook for 2009, and for 2010 too if these predictions turn out to be correct. First it was the European Union who caused genuine fright with their prediction of Spanish unemployment perhaps reaching 19% before things started to improve. This week it's the turn of the IMF, and they are no more optimistic about the timing of the recovery.

Finance minister Pedro Solbes provoked a strong reaction the other week when he suggested that the government had more or less exhausted its options for dealing with the crisis. Their best hopes for this year are more or less dependent on a scheme which has now been rebadged as Plan E. Around 8 billion euros have been assigned to government approved projects run by local authorities, essentially it is an old fashioned public works scheme. The government claims that only 5 municipalities in the whole country have not submitted any plans under the scheme. The hope is that it will create work for 200-300,000 people who might otherwise end up unemployed. On current trends this implies some impact on the rate of increase in unemployment, but not enough to stop it from rising considerably throughout 2009.

The plan isn't just intended to try and slow down the dramatic increase in Spain's unemployment rate. Throwing money the way of the ayuntamientos also helped to quell a growing rebellion of municipalities who suddenly found that their main source of funding - the construction industry - had stopped providing them with big bags of cash. The absence of any kind of reliable municipal funding mechanism was on display, but the government's plan seems to have postponed that issue at least for another 12 months. Not that the government intends to let the municipalities take the credit for the scheme, acceptance of a project includes the obligation to display a prominent sign on each site proclaiming that it forms part of Plan E, and that the money has come from the government. Blessed are the sign makers, for they shall go forth and multiply.

6 comments:

Colin said...

I nearly didn't read this as I assume the E stood for the obvious . . .

BTW - 'thoomp' suddenly morphed into a real word - 'misses'. Which is a first, I think.

No spam to my blog as yet . . .

Colin said...

assumed

charee - Chinese male name.

Graeme said...

"I nearly didn't read this as I assume the E stood for the obvious"

I thought those were the ones you liked to read Colin. I'm disappointed.

Colin said...

Yes, I do but one can have too much of a good thing . . .

tanbangi - Sexual intercourse in Africa

Troy said...

The town hall out here in Caceres has decided to make up the budget black hole left by plummeting land re-zoning deals by using Gallardon's strategy. Suddenly there is an interest in dogshit on the streets and cars parked on sidewalks.

The police have now given out a total of 7 fines but are grumbling about the extra work cutting into their chat time. The town hall will soon find that it's not quite enough to cover expenses.

I wonder if a mathematician could come up with a formula predicting exactly how much of that money destined for town town halls around country makes it onto the streets and exactly how much makes it into the very large pockets of a few...wait, doesn't take a mathematician for that one.

Graeme said...

Based on the experience of my visits to Caceres - perhaps a bit out of date - a botellón tax should raise some money.