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Is Spain’s “lost decade” officially over?

Author:   |  February 6th, 2018

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The years between 2008 and 2018 have seen more downs than ups for Spain, but the future really does appear bright.

The years between 2008 and 2018 have seen more downs than ups for Spain, but the future really does appear bright.

Cast your mind back to 2008. The sun was certainly shining on Spain that year, with the nation’s football team a few months away from winning Euro 2008 and embarking on a glorious four-year period of sweeping all before them. In tennis, Rafa Nadal was at the top of his game, in July overcoming Roger Federer in the Wimbledon Men’s Final that is widely regarded as the greatest game of tennis ever played

Tourism was, as ever, booming, and while there were rumblings of discontent afoot, Spain’s economy was still performing pretty strongly, riding the credit-fuelled boom years of 2003-2007 to deliver plentiful employment opportunities under a liberal and well-liked socialist government.

The entire edifice came crashing down, however, in the autumn of that year as the sub-prime mortgage crisis in the US caught fire and began decimating banking, construction and industrial sectors right around the world.

Spain was precariously positioned. Its own economy, while relatively varied, was too reliant on the construction bubble, and when the pin prick came the expected deflation was more of a nuclear blast: almost overnight bankruptcies swept through the real estate sector, mortgaged-to-the-hilt homeowners lost their jobs, and property prices began to shrink, ending at once the short-term notion that property was an easy way to a quick buck.

The years that followed – while still a golden age for the nation’s sporting heroes – were painful for the average Spaniard. Many expats who had made a life for themselves in Spain upped sticks and headed back to the UK, Ireland, Sweden or on to Dubai, leaving behind distressed properties and closed businesses. Young Spaniards saw the writing on the wall too, with Spanish numbers in British and German cities increasing by the tens of thousands every year between 2009 and 2014.

Many were right to leave. Spain’s unemployment rate soared to more than 25% by 2012, with youth unemployment at above 50%. That’s right: for a couple of years, more than one in two Spaniards under 25 years of age did not have a job. And worse: they had little hope of finding one.

Property activity slowed to a trickle, with new build homes almost non-existent in 2013. However, green shoots of recovery were beginning to emerge, not just in Spain but across Europe.

After a few painful EU bailouts befell Greece, Spain, Ireland and Italy, the harsh austerity measures enacted in these countries may have felt painful for those on the receiving end, but the medicine did the trick: by 2014 these countries were out of recession, and Spain had even begun to post property price and sales increases in its strongest regions of the Costa del Sol and Madrid.

Why do I write this? Well, February 2018 marks ten years since the first warning signs of impending recession were issued. It marks, perhaps, the end of Spain’s “Lost Decade”, although in truth the past couple of years have been very positive for the country. A “lost eight years” doesn’t quite have the same ring to it, and besides: while recovery and confidence have been the names of the game since 2015, it is only really now – in 2018 – that the cynics and the critics are accepting that they were wrong, and that Spain really is on an even-keel, and a path towards sustained growth.

In home sales, property prices, mortgage lending, job growth, tourism, industry and agriculture, Spain is purring again. Youngsters have come home, armed with skills in the English and German language and boosted for the better by their experiences overseas, and while Brexit remains a minor inconvenience, Spain continues to be the number one port of call for Europeans keen on retiring, moving to or working in the sunshine.

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