"Lo primero, el empleo" was the Partido Popular's slogan in Spain's recent elections. There's a "des" missing somewhere from that phrase. Today's unemployment figures here are once again dramatic. 22.85% of the workforce, 5.273 million people unemployed. There is now a serious expectation of Spain hitting the figure of 6 million unemployed, and that could even happen in 2012 on current trends. How distant now seems the time when a total of 4 million unemployed was regarded as an awful, unacceptable, prospect.
Is the 6 million figure alarmist? Well, let's consider what is likely to be the result in employment terms if the IMF's recent forecast of a 1.7% decline in the Spanish economy for this year turns out to be accurate? A deliberately provoked recession which can only lead to greater destruction of employment, and today's figures demonstrate clearly that the rate of that destruction continues to be enormous. But if that sounds bad, there is a further problem to consider. The IMF's estimate, and the Spanish government's own 1.5% estimate, don't take into account the likely effects of the additional 2% deficit reduction that is being demanded following the overshoot on 2011's deficit target.
Those extra 25000 million euros of cuts which have to be made if the deficit target for this year is to be met can only accelerate the terrible downward spiral. You cut more, your tax income decreases further whilst social spending on unemployment goes up. So you need to cut even more, your national debt increases instead of decreasing, you miss your deficit targets anyway and where do you end up? In the same position as Greece, Portugal and Ireland. It's not as if the outcome of all of this is a mystery any more, this has been happening in all the countries which have been "rescued" by the EU.
The Spanish government knows this will happen, and behind the scenes is believed to be attempting to negotiate a relaxing of the relentless drive towards austerity madness. Whilst officially denying it. Even the IMF, for god's sake, has finally woken up to what is really going on and warns that no good will come of this. The Bank of England, of all institutions, releases a report on the need for a new international framework to stop one financial crisis after another from wrecking the prospects of economic recovery. It's probably at least 20 years late but hey!
However, those who continue to sail complacently towards Fantasy Island on the always tranquil waters of the Sea of Fiscal Consolidation and Structural Reform remain oblivious to the perfect storm that is forming. Meanwhile Captain Rajoy was about to help the most disadvantaged passengers off the ship when he slipped and fortuitously fell into a passing lifeboat. Now he sits in a deckchair on the shore with his copy of Marca on his lap telling people that he will do what needs to be done. It's a terrible, man-made, shipwreck.