Galgary Herald: Spain's economy hits the wall - by Andrew Hay

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Spain's economy hits the wall - by Andrew Hay

"The Spanish economy is in for a ferocious fall," said economics professor Antoni Espasa at Madrid's Carlos III University. "It's going to suffer more than Europe and take longer to recover." Europe will feel the impact, economists say: Spain drove as much economic growth as Germany or France last year, according to Madrid's AFI consultancy, and created over a third of European Union jobs between 2004 and 2007. Big banks and construction firms like Santander and Acciona long ago diversified beyond domestic housing and today make much of their income abroad. But smaller banks and firms stayed at home, and Spain's socialist government continued to forecast high growth until after its March election victory. Up to last year, Spain financed and built more homes than Germany, Italy and the United Kingdom combined, making it more dependent on housing than any western country bar Ireland. Sprawled across the plains 65 kilometres south of Madrid, La Sagra's brickworks and builders are going bust as credit-starved banks cut off lending and Spaniards stop buying homes.