Spanish Prime Minister Mariano Rajoy (Efe).
J. Luis Martín* 08/07/2012 (06:00 AM CET)
According to the latest Centro de Investigaciones Sociológicas (CIS) poll, Spanish Prime Minister Mariano Rajoy’s popularity has sunk to the point where 77.9% of the country’s electorate has little or no confidence in him. The survey still shows Rajoy’s conservative Popular Party (PP) ahead of the Socialist Party, however, by 6.7 per cent – eight percentage points down from the PP’s historic election win eight months ago.
A distant leader’s broken promises
Ironically, during his entire his political campaign, and during his time as leader of the opposition, Rajoy’s fundamental message was that the country needed “a shot of confidence” to overcome its economic woes. Rajoy’s promises to implement swift and credible policies that would restore confidence in Spain were pivotal to his landslide electoral victory last November.
However, the complete U-turn his Administration begun only days after taking office has left many feeling betrayed. Broken promises aside, his distant and elusive manners have only added to the detriment of his public image.
Investors also lose confidence
Capital flight from Spain is reaching dangerous levels, as over €163bn left Spain during the first half of the year. As investors dump domestic assets and depositors move their money away, the equivalent to nearly one quarter of the national GDP has exited the country over the past eleven months.
Spain’s contracting economy and uncertainty over the euro zone’s integrity seem to further scare money away from a country facing tremendous financing needs over the next few months.
A “hot autumn” ahead
Social tensions add to the drama encompassing the EU’s fourth-largest economy. As the government’s latest round of tax hikes and budget cuts continue to infuriate public opinion, labor unions appear to be mobilizing for what may expect to be a “hot autumn.” Such is the seriousness of the situation that Spanish King Juan Carlos is to meet with leaders of the country’s two largest labor unions today.
According to the CIS poll, Spaniards continue to consider their political class to be the third most pressing problem with their country (unemployment and the economy take the first two places in the poll). In addition, 39.2 per cent say they do not identify with any of the available political parties.
Urgency to act
A steadfast implementation of the country’s financial sector reform would help ease tensions and restore some of the lost confidence abroad. In addition, Rajoy needs to act upon the ECB’s “invitation” to request assistance from the EFSF to dissipate doubts about the country’s immediate financial future.
Much remains to be done, however, for Rajoy to rally the country behind him and restore the confidence lost at home and abroad.
*J. Luis Martín is director of trumanfactor.com
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