"Financial Times Desacredita a Zapatero de Cara a las Elecciones"

Financial Times ha puesto en entredicho las políticas económicas zapateriles, y sobre todo se ha mofado de ese vomitivo optimismo del que hace gala Zp. En este interesantísimo artículo, el prestigioso diario económico le aclara un poco el panorama al “alumno de las dos tardes”, demostrándole que tal vez la situación económica le pase factura de cara a las Elecciones. No obstante, seguro que, en estos momentos hay alguien en Moncloa preparando el habitual discurso de que “alguien que dice cosas así contra Zp, irremediablemente tiene que pertenecer a la DERECHA EXTREMA”. En fin, lean y disfruten.

Only last September, José Luis Rodríguez Zapatero, the Spanish prime minister, announced that Spain had joined the “Champions’ League” of world economies. Europe’s fifth largest economy was growing so robustly, and creating so many jobs, it would soon be richer than Germany in per capita terms, Mr Zapatero predicted.

That euphoria was short-lived. December saw a spike in inflation, a rise in unemployment and a slowdown in the economy, as the international credit squeeze gripped Spain. The government recently lowered its estimate for economic growth in 2008 from 3.3 per cent to 3.1 per cent, a figure many economists consider is still too optimistic. Inflation last month of 4.3 per cent was at the highest level in more than a decade.

Worse, house prices in many parts of the country have started falling, further undermining confidence in the economy. Some over-indebted families now owe more to their banks than their houses are worth.

International financial gridlock has brought Spain’s credit-fuelled surge to a rude halt. Families and businesses are feeling the pain. Suddenly, Mr Zapatero’s Socialist party is less confident about winning a general election called for March 9.

The mood is especially sombre in provincial towns such as Igualada, a prosperous textile and leather manufacturing centre near Barcelona in the north-east.

“I’ve been a bank manager for 28 years and I have never lived through a situation as dramatic as this,” says the branch manager of a regional savings bank, who asked not to be named. “House prices in this town have fallen by 20 per cent, there is no demand, and no mortgage finance. Savings banks have cut off funding. Before the credit crunch, I used to do 12 mortgages a month. Since August, my branch has approved only one new loan.”

He says that for the first time, clients are handing in the keys of their homes and walking away from their debt problems. “With the fall in house prices, families are giving up. They don’t see the point of struggling on with their mortgage payments.” Repossessions, he says, are on the rise.

Some property developments have been stopped, and Igualada, a busy town of 38,000 people, is dotted with idle construction sites and foundation holes.

Developers with recently completed projects were in an even worse bind, the bank manager said. “Because property prices are falling, buyers who put a downpayment on a flat are going back on their agreements. They prefer to lose their deposits than to be trapped in a negative equity situation.”

In Madrid, the Bank of Spain, which acts as financial regulator, and the country’s banking lobbies insist that the lending business remains sound. Only 0.9 per cent of some €1,700bn ($2,500bn, £1,270bn) in outstanding loans are officially classified as non-performing, according to the bank. Spanish banks have set aside enough provisions to cover a three-fold increase in bad loans.

But in Igualada, bank managers of regional and national savings banks – all of whom asked not to be named – say that official statistics are not telling the full story. Developers in Spain raise bank credit on the basis of the downpayments they receive. “In an environment of falling house prices, we have no way of knowing how many units have actually been sold, or how many sales will fall through,” says one banker.

Many real estate developers are in financial difficulties. Astroc and Llanera, two well-known developers on the Mediterranean coast, have gone bust, while non-performing loans in the sector have risen by 48 per cent in the past year to €1bn, according to the Bank of Spain. Banks have €293bn in outstanding loans to property developers.

Businessmen in Igualada, meanwhile, complain that banks have begun to call in loans. “In the past, banks here would tide you over difficult times because they knew you and your business. This is a small town, where personal relationships matter,” says the owner of a catering company. “Now banks are so cash-strapped they are refusing to roll over my credit facilities”. Spain’s economy has become the main election battleground, which promises to be a tight race between the ruling socialists and the opposition Popular party.

Mariano Rajoy, the Popular party leader, last week accused the socialists of “squandering” the economic bonanza inherited from a Popular party government four years ago.

Mr Zapatero’s party views the downturn as temporary. “One bad quarter does not cancel out 15 good ones,” says Jesús Caldera, labour minister. To reassure business voters, Pedro Solbes, Spain’s respected finance minister, has been persuaded to serve a second term if Mr Zapatero is re-elected.

Both parties are promising tax cuts and the judicious use of government surpluses to soften the impact of the credit squeeze. But analysts are divided over whether the slowing economy will benefit the ruling socialists or the conservative opposition.