Along with deep cuts in many federal ministry projects, such as the alternative-energy initiative, the government has raised the income tax and put strict limits on regional budgets that are expected in coming months to affect funding for schools and health care.
“We want to convince markets that we are fully committed to policies that will make Spain sustainable,” a top ministry official said. “The imbalances in this economy are very deep.”
Pockets of success
Some parts of the Spanish economy are doing well. A pair of major Spanish banks have spun profits out of the boom in Latin America, despite hard times in Europe. Transport firms are winning bids in the United States and elsewhere. Exports have been a bright spot.
Pharmaceutical companies, for instance, have turned domestic research into international sales. Eduardo Sanchiz, chief executive of Barcelona-based Almirall, said his firm’s laboratories are continuing to expand, churning out such products as a new treatment for chronic obstructive pulmonary disease that is under review by regulators in Europe and the U.S.
But in Alburquerque, in the land of conquistadors such as Pizarro and de Soto, there is a sense of shrinking opportunities as decisions in Madrid and Brussels, the seat of European government, trickle down and hopes for reviving the beleaguered local economy vanish.
“It is a chain reaction,” said Jose Lopez-Montenegro, owner of the local Horpebi cement plant, set among the oak trees, sheep pastures and orchards that surround this hilltop village of 5,700. Puffing on a cigarette near the yellow mixing tower, he said he’ll be fortunate if he can avoid cutting his workforce, which has already shrunk from 18 to 12 because of a sharp downturn in Spanish construction.
Local officials here, 200 miles from Madrid near the border with Portugal, say the proposed project by the NaturEner solar company was expected to create a total of about 1,000 construction jobs over the next two years.
The local slate business remains depressed because of the downturn in construction.
Hog farming, an important local industry, has also crashed with the rise of more productive farms in other parts of the country. And fewer hogs means less feed to sell.
That makes for a double blow for Jose Luis Rasero Perez, owner of a combined feed and fencing store. He had hoped to install the fences that would ring the fields of solar panels planned for the Alburquerque countryside. This project would have created 20 jobs for two years, he said.