As Spain’s credit rating falls, tensions will rise says Freddy Barker.
The world’s attention is focussed on Spain, as S&P has just downgraded the debt-riddled country to triple B plus.
But, for me, the most dramatic figures are youth unemployment. 50% of under 25s are out of work and that’s the stuff of revolutions.
Take the Arab Spring. Sure there were many motivating factors behind the depositions of Gaddafi, Ben Ali and Mubarak, but the fact that Middle Eastern youth unemployment stands at around a quarter added numbers, energy and a marketing edge to the protests.
Spain is clearly vulnerable. The government has already rescued banks caught in the rubble of the construction boom, and there’s cause for concern that those who survived will be hit by an aftershock of loan defaults.
This will hit the young. When times are tough, firms consolidate before recruiting new faces, and even when the economy picks up, under 25s are caught in the catch 22 of not being able to find work as they haven’t the CVs to prove their worth.
While this is a tale of individuals, it hurts Spain overall. Increased benefit payouts, lost tax revenues and spare capacity all hit the economy directly, while emigration and crime are sinister spin-offs.
What’s worrying is that this isn’t specific to the Iberian Peninsula. The average Eurozone youth unemployment rate is 21.6% and with social media turning sparks into flames, we should all keep an eye cocked on our own back yards.