Spain's nearly 36 million voters were in a morose mood as they went to the polls on Sunday resigned to the fact that the country has to adopt severe austerity measures if it is to keep its head above water.

The Conservative PP or Popular Party is expected get a thumping majority and polls suggest that with a 17-point lead over the Socialists, they may get as many as 198 seats in the 350-member Lower House. This will end almost eight years of Socialist rule led by outgoing Prime Minister Jose Luis Roderiguez Zapatero.

Mr. Zapatero introduced tough austerity measures in 2010, including a five per cent salary cut for public servants, a pension freeze and a rise in the retirement age from 65 to 67 years.

This has been a season of funerals in Spain and healthcare, education, transport, public services have all been declared dead, given symbolic burials by grim faced citizens, so deep have been the cuts in public spending. And a resigned population now awaits the axe to fall again.

Once hailed as one of Europe's success stories both economically, politically and socially, Spain is facing problems of large deficits, 21 per cent unemployment (5 million are out of work with youth unemployment at 48 per cent), no growth and a generalised malaise. The Spanish socialists who spearheaded bold reforms such as gay marriage, legislation against domestic violence or the re-examination of Spain's fascist past, lost on the economic front.

Spain has been laid low by the sub-prime crisis, a construction boom gone bust, successive austerity plans and aggressive attacks by speculators.

Last Wednesday, its statistical institute revealed that the country had registered zero growth in the last quarter and the overall rate of growth for 2011 was expected to be just 0.8 per cent, considerably short of the 1.3 per cent predicted.

This has led to fresh market tensions with the government having to pay over 7 per cent for its public borrowing — a threshold generally believed to be untenable.

“Although official unemployment rates in the country are placed as high as 21 per cent, there is a thriving black economy not reflected in official statistics. However, youth unemployment is a serious problem that has to be tackled urgently. With an absolute majority in Parliament, the PP will have to establish a national dialogue on questions such as labour laws, pensions, health care, regional autonomy, security and the austerity measures needed in order to set the economy right.

Spain is experiencing woes similar to those of the rest of Europe. But the problem is not so much Spain as it is Europe itself,” Antonio Garrigues who owns the biggest law firm in continental Europe and is a member of the Spain-India Foundation, told The Hindu in an interview.

Some of what he said echoed the resentment felt by smaller countries against France and Germany, the two European locomotives who are imposing their views on weaker economies, forcing out elected governments to be replaced by technocrats tasked with administering the bitter medicine of budget cuts, wage freezes and redundancies.

“The Germans are trying to educate the rest of us but they need to educate themselves first! France and Germany cannot isolate themselves. They cannot continue to play games. We need technical institutions like the Federal Reserve — the ECB can become the banker of last resort. Germany says such a provision is not in the European Constitution. But I can tell you as a lawyer, that in legal terms everything can be discussed. The German attitude can change if they change their mind-set,” Mr. Garrigues said.

According to economist Manuel Gago who is also the Chairman of the Directors' Association (CEDE) the new government will have to engage in a delicate balancing act between budget cuts and growth stimulation.

“There have to be Public-Private Partnerships in order to harness profits [both public and private] for job creation. Youth unemployment is a very serious problem which must be immediately addressed,” Mr. Gago toldThe Hinduin an interview.

“Right now there is a terrible credit crunch and investment has stopped completely. We must resolve the credit crisis, reform labour laws by taking the unions into confidence, give back the competitive edge to our industries while balancing the budget. This will not be easy and we will have to make hard compromises. So a dual message has to go out — firstly to Germany and to the markets that Spain is prepared to make the necessary sacrifices to return to financial stability and secondly to Spanish society that we must all pitch in and do our bit,” Mr Gago said.

The protests in city centres have petered out, as if the message has finally reached home that a tough road lies ahead, says Mr. Garrigues.

Confidence in the political establishment is so low that one of the main hurdles the PP faces is restoring its moral authority.

“People see the politicians as a source of worry, not a source of solutions. The PP will have to build bridges with other political parties to create an atmosphere of confidence which will allow us to move ahead,” he said.

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