How the Spanish government responded to the global economic, banking and fiscal crisis

Abstract

The way Spain responded to the global crisis differed from the general Western European pattern. First, it was not the global banking crisis that caused the economic crisis in Spain, but the other way around. Second, the Spanish banking sector was bailed-out by the ‘Troika’: the EU, ECB and IMF. Third, the fiscal austerity plan that the Zapatero government announced in 2010 and the newlyelected Rajoy government stepped up in 2012, were conceived under strong external pressure from the EU. Spain’s main fiscal challenge was to lower its soaring bond rates.