SPAIN’S CHICKEN AND EGG MOMENT

In good times people are happy, they start homes and there is a beneficial knock-on effect for the economy. However the financial crisis has put paid to that. Easy credit for purchasing property has dried up as too have the building projects.


In 2008 some 450,000 new homes were started in Spain. Josep Oliver, the senior professor of applied economy at the Universidad Autónoma de Barcelona, predicts that in the coming seven or eight years the figure will be between 140,000 and 160,000. This was the average figure in the country in the 1970s.

He lays the blame on the economy, unemployment, lack of financial resources and the credit required for a couple to start a new life together. The professor also believes that the generation now aged between 35 and 40 will have been the last to have been produced during a period of high birth rate (the 1970s).

So as the birth rate falls there will be less young people to start homes and families in the future. This will have repercussions on internal demand and private consumption which will be reflected in the nation’s economic growth.

In short for the economy to be reborn, babies have to be born. A true chicken and egg situation!