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An opened economy works
wonders
IF TODAY'S Spain is deeply different from that of 1975, it owes a big debt, often unacknowledged, to the 14 years of government (1982-96) by the Socialist Party (PsoE) under Felipe Gonzalez. For a start, he showed that Spain could swing left without arousing scares about reds under the bed. He dismantled much of the state ownership and some of the bureaucratism inherited from Franco. He kept Spain in NATO, and then led it into the European Union. Yet today's Spain is, in turn, deeply different from that of Mr Gonzalez: it is a solid economic success.
For that, thank four things: EU membership and the opening of the economy; successive devaluations in the difficult early i99os; the psychological shock of the 1993-94 crisis, when unemployment hit almost 25%; and now first-round membership of the euro zone. And one thing more: the election, in 1996, of the conservative People's Party (PP), under Jose Maria Aznar, a true believer, not just a pragmatic one, in shrinking the economic frontiers of the state. He did not win an absolute majority in parliament then, needing help from, notably, the Catalan "nationalists". But last March he won again, this time with an overall majority; and he deserved it.
The economic figures need no spin-doctor: real GDP growth of 4%, or very near it, for four years in a row; employment up from n 11.7m in 1994 to 14.6m now, and unemployment down from 24% to less than 14%; long-term interest rates down from 15% in 199o to less than 6%; not least, public spending, which hit 49.5% of GDP in 1993, now below 42%, and a general government deficit (financial operations apart) shrunk from 7% in 1995 to very close to zero.
Not all the figures are perfect. About one-third of all workers are now on short-term contracts, which spell flexibility to employers but insecurity to those they employ. The fall in unemployment is slowing, and at 13.7% (by the usually accepted measure, though a rival one puts it several points lower) it is still huge. Wages this year have not even kept up with prices, let alone added the share of growth that a workforce can reasonably expect. The currentaccount deficit would...