No one really knows what’s in store for us in 2014, but in Spain there’s one thing that’s certain. In January, Spain will exit the EU’s bank bailout programme, as Ireland has just done.
Jeroen Dijsselbloem, President of the EU’s Eurogroup, speaking at a meeting of the group of finance ministers, declared "Both countries have always shown strong commitment towards the implementation of their programmes. This has shown results, as the recent developments on the financial markets have demonstrated. The Irish and Spanish people have gone through a difficult period, but I am now confident that their efforts will pay off in the coming years. Now these economies are back on the road to recovery. We fully support Spain’s decision to exit the programme. Spanish banks are now stronger, more resilient, and supervision and regulation have been tightened.”.
Spain has taken the bold step of declining a precautionary European Stability Mechanism (ESM) credit line in reserve. The ESM is a rescue fund created to provide a safety net for heavily indebted governments. Well, that’s confidence for you, even though sadly, it’s not a confidence shared by quite a few reputable financial commentators
As you’ll probably recall, in June 2012, the Eurogroup approved up to 100 billion euros for the recapitalization of Spanish banks, who were hit by the collapse of the real estate/construction sector. In the event, the Spanish government only drew on the north end of some 42 billion euros of the funds available to it.
So what does Spain have to do from now on. Well 60000 firms are now exporters – that’s 9% up on last year. It’s reckoned this has been aided by lower wages, getting Spain’s labour costs quite close to those of Germany.
Experts say that Spain must continue to leave behind it’s old economic model – like the one that relied on speculative asset bubbles, such as property, and unsupportable private debt. They say an export driven economy, without brittle bubbles, is the way forward, and so perhaps there is now a little glimmer of light at the end of that gloomy economic tunnel.