2008–2014 Spanish financial crisis
[3] The Spanish government supported the critical development by relaxing supervision of the financial sector and thereby allowing the banks to violate International Accounting Standards Board standards.[when?][how?
][citation needed] The banks in Spain were able to hide losses and earnings volatility, mislead regulators, analysts, and investors, and thereby finance the Spanish real estate bubble.[when?
][4] The results of the crisis were devastating for Spain, including a strong economic downturn, a severe increase in unemployment, and bankruptcies of major companies.
[5] Even though some fundamental problems in the Spanish economy were already evident far ahead of the crisis, Spain continued the path of unsustainable property led growth when the ruling party changed in 2004.
[7] During the third quarter of 2008 the national GDP contracted for the first time in 15 years, and, in February 2009, Spain (and other European economies) officially entered recession.
[13] If Spain applied and received a PCCL package, irrespective to what extent it subsequently decided to draw on this established credit line, this would at the same time immediately qualify the country to receive "free" additional financial support from the European Central Bank (ECB), in the form of some unlimited yield-lowering bond purchases.
[30][31] Due to the lack of its own resources, Spain has to import all of its fossil fuels, which in a scenario of record prices added much pressure to the inflation rate.
The rise in prices, combined with the recently implemented austerity measures and extremely high unemployment, are heavily impacting the livelihood of Spanish citizens.
Nevertheless, this practice was greatly relaxed during the housing bubble, a trend to which the regulator (Banco de España) turned a blind eye.
Instead the problem was rolled over with the extension of the remaining real estate companies debts, while the central government bailed once and again banks and cajas alike.
Golden parachutes have been prevalent: it has been speculated that this was because of the fear that laid-off senior members would talk about the sector's rampant malpractice.
[11] Bank stress tests would enable the Spanish government to make a formal request for the €100 billion credit line.
[38] Restrictions on the credit line exempting funds from covering "legacy assets" suggests limits to the planned banking bailouts.
Historically it would borrow the difference from foreign banks (i.e., interbank lending) but reduced access led to a greater reliance on ECB loans.
[44][45] After having completed substantial improvements over the second half of the 1990s and during the 2000s, which put a few regions on the brink of full employment, Spain suffered a severe setback in October 2008, when it saw its unemployment rate surging to 1996 levels.
[47] Spain's unemployment rate hit 17.4% at the end of March 2009, with the jobless total now having doubled over the past 12 months, when two million people lost their jobs.
Spain, as in other southern European nations, relies heavily on the inter-generational family structure for a significant portion of the social safety net.
Roughly 68% of young people are willing to leave the country to search for a job, and those with college degrees are willing to settle for working at so-called minijobs for a paycheck.
[59] There are now indications that established immigrants have begun to leave, although many that have are still retaining a household in Spain due to the poor conditions that exist in their country of origin.
This was largely due to ballooning tax revenue from the housing bubble, which helped accommodate a decade of increased government spending without debt accumulation.
[3] Prime Minister Mariano Rajoy announced on 11 July 2012 €65 billion of austerity, including cuts in wages and benefits and a VAT increase from 18% to 21%.
[77] After a more recent review, Moody's maintained Spain's investment-grade credit rating, removing the pressure on the country's debt.
[78] This decision by Moody's assured that Spanish bonds will continue to gain investor support; yields fell 5.50%, a level last seen in April 2012.
The Eurogroup announced intentions to provide up to 100 billion euro to the Fund for Orderly Bank Restructuring to the Spanish government.
Since then, the country's borrowing costs have reached levels deemed unsustainable in the long run, raising the prospect of a second aid program for Madrid following the 100 billion euro lifeline it obtained for its banks in June.
[81] Spain expected the European Commission to approve the restructuring plans of the banks needing aid on 15 November 2012 and then to authorize the disbursal of the first credit line of up to 100 billion euros within three weeks after that.
[82] Due to reforms already instituted by Spain's conservative government, less stringent austerity requirements were included than for earlier bailout packages for Ireland, Portugal, and Greece.
By April 2013, unemployment had risen to 27%, but decreased to around 15%-16.1% as of February 2018, and Spain became one of Europe's fastest-growing economies, thus demonstrating that the country was improving.
The Statute of Autonomy included a package of laws that gave more power to the region and would have recognized Catalonia as a nation, although one still within Spain.
Catalan president Artur Mas instead scheduled an independence referendum for 2014, which was downgraded to being a more informal ballot after further intervention by the Constitutional Court.
