By J. Mac Holladay, founder and CEO.
I have just returned from two weeks in Spain and Portugal. The trip was another Washington and Lee University Alumni College experience starting in Barcelona and ending in Lisbon. My wife and I extended our trip in Madrid by several days.
The overwhelming feeling I got throughout the trip is the difficult state of the economy in both countries. What we have termed The Great Recession, they call The Crisis. And for them, it is NOT over.
Spain’s official unemployment rate is 26% with little prospects of it coming down anytime soon. That is coupled with a 63% labor force participation rate (the same as the US). While Spain’s exports are increasing, only 4% of the nation’s firms export and many of them are not consistent exporters. The rising Euro threatens this strategy as many of its top customers are in Africa, Asia, and Eastern Europe. One hopeful sign is that over 75,000 Spaniards have received micro-loans (up to 25K euros) from 2008 to 2011 in order to start small businesses. Another hopeful sign for both countries is a recent rise in consumer confidence. Portugal’s confidence index rose 22 points to 55 in the third quarter, Spain’s by 8 points to 56 – confidence in Germany (92) remains notably higher. It was evident too that Portugal has not recovered from The Crisis with countless empty buildings in Lisbon. The tourism sector is providing the majority of new jobs. Many of them are low paying.
It is clear that basic services are being neglected. There is graffiti everywhere, even on some national monuments. That was particularly true in Portugal. When we arrived in Madrid, the street cleaners were on strike and the city was filthy. Even the Plaza Mayor was littered with trash. Neither visitors nor the citizenry will accept that situation for long.
There is no question that the most powerful person in Europe is not in Spain or Portugal but in Germany. Chancellor Angela Merkel has assumed a position of leadership by default in protecting the European Union and its currency. We should not forget that our financial meltdown is what began this terrible cycle. While we have serious and continuing problems in many parts of the country, nothing compares to the suffering and difficulty I saw in Spain and Portugal.