RECESSION HITTING SPAIN
The recession may have taken some Spaniards by surprise, but its consequences will be felt for many years. After posting average annual gross domestic product growth of 3% over the past decade, Spain's economy is now expected to contract by around 3% this year. Unemployment already stands at 16%—the worst in the European Union—and many economists reckon the level could hit 20% by 2010, the highest since the early 1990s.
"The crisis is getting worse and worse," says Fernando Ballabriga, director of the economics department at ESADE business school in Barcelona. "If things don't pick up in three or four months, companies will run out of money. People are now in a panic"
The severity of the crisis is forcing policymakers to take a hard look at the country's growth model.
Keep reading. Meanwhile, Zapatero is readying a cabinet shuffle
Jose Luis Rodriquez Zapatero, the prime minister, could announce the move midweek following weeks of speculation. Mr Solbes, who has held the economy portfolio since the socialists came to power in March 2004, has faced growing criticism over what was perceived as attempts to downplay the economic crisis.
Newspaper reports on Monday said he would leave the government to be replaced by Elena Salgado, the minister for public administration.
No surprise that the Economy minister is going away after his disastreous management. But we may go from Guatemala to Guatepeor (in English that would be from Islamabad to Islamaworse): Elena Salgado, who is allegedly going to replace Solbes, doesn't have any economy experience whatsoever. Which means that when the government would need to focus itself on the economy, Zapatero raises the political component of his cabinet, instead of the economic one. The man is a genius.
UPDATE. Spanish media are reporting that Zapatero has been at the Zarzuela palace, King Juan Carlos' official residence, earlier this morning to inform him of the changes in the government: although the King doesn't have any executive powers as Spain is a constitutional monarchy as, say, the UK, it's costumary that everytime there's a change in the cabinet, the prime minister meets with him prior to announce the changes publicly.
Zapatero will appear in a press conference at 1:15pm local time (7:15am Eastern) to announce who the new ministers will be.
(I have a lunch meeting that I cannot move, so I won't be able to blog about this until later in the afternoon; if anyone needs me for a perspective on this, send me an email and I'll get back to you as soon as I can. If you have my phone number, feel free to call)
UPDATE II. Back in really late; lunch meeting was long, then it took me hours to get back home since traffic was totally crazy: pouring in Barcelona, and some weird thing on my street, was cut by police, lots of cruisers with lights on etc (haven't been able to learn what it's all about). Had to answer all the email and do some work, so no time to blog today, sorry.