Spain is the third largest country in Europe. Over the years it has enjoyed a remarkable growth in the economy; this economy included a small deficit or an even surplus. Since the country joined the Eurozone, it has had many benefits on low rates. These rates increased the number of people owning their own homes. A financial crisis broke out in 2008, resulting to a recession that created the highest unemployment rate in Spain. The country`s borrowing rate increased, hence the interest rates increased leaving the investors in absolute panic because of solvency. Since 2010, the Government has tried to curb this deficit, which even brought down the center Government. This recession has not only affected the country but also the economy of the rest of the world. Most of the affected people were investors who invested in the economy of Spain, the exporters who largely export most of their products to Eurozone countries, and the employees of Spain who were got unemployed.
Spain, Europe’s third largest nation, is divided into five different regions namely; Green Spain, Inland Spain, The Pyrenees, Mediterranean Spain and Southern Spain. Spain`s climate is less temperate than the rest of Europe (Kohen and Elias, 1992). Over the years, Spain has enjoyed remarkable growth in its economy; this is because it kept a strict budgetary order of either having a small deficit or a surplus. The country enjoyed many benefits after joining the Euro Zone, as it delighted in low rates. With this aid, Spain got
the highest rates of homeownership; more than 8 of every 10, Spanish owed a home (The New York Times, 2012). In 2008, a financial crisis broke out, resulting to a recession that caused Spain`s unemployment rate to increase rapidly. Its borrowing rates increased, leading to concerns over solvency by investors who, had to pay high interest rates. Due to the size of Spain`s economy and the weakening of banks, it became the worst scenario facing the European Union. Since 2010, Spain has tried to push a series of austerity measures that are meant to curb its deficit. This crisis brought down the center-left Government in Spain. Austerity is an economic policy aimed at reducing the Government`s deficit. In April 2012, Spain’s unemployment rate reached 24.4%, they recorded the highest percentage in Europe and many employees were laid off from the public sector. In September the same year, the European Central Bank promised to buy endless amounts of bonds so as to lower the interest rate for Spain, who were pushed towards the economic edge by the markets. Many people are becoming concerned about the costs incurring from further delays because this may threaten Spain`s economy into deeper recession. In October 2012, Spain`s unemployment rate increased to 25%, a sign of deepening recession (The New York Times, 2012). Spain`s economy plays an important role in the World’s economy. This is because different countries and businesses in the World depend on the economy of Spain. If the Euro or the European banks fall, the lenders will feel the pain of lending, because it’s closely connected to the financial system of the U.S. The manufacturers will continue to suffer if the Euro decreases. The recession can cause unemployment and a dying economy in the U.S. If the banks in the U.S freeze, it will be hard to borrow or get loans for cars or houses. This will cause a market meltdown (CBS News, 2012). People tend to think of the fall of the Euro as a European or debt crisis but many economists state that it’s not a debt crisis but a currency crisis. This is because of the losses the manufacturers like General motors, Ford, Whirlpool and Apple incur. During the second quarter of the year they reported losses of $361 million. These companies counted losses during this period of recession (CNN, 2012). The economy of Spain creates threats to some of the World’