Spanish woes.....

The Eurozone woes are set to resume this year, that is what a lot of investment managers think, particularly those in the bond sector.

I have always said that this problem has only been ‘parked’’ for a while with the fundamental weaknesses in the Euro structure inadequately addressed.

We have also seen a deepening of the Spanish recession with a contraction of 0.7% in Q4 2012, more than expected.  Asset managers UBS expect more Spanish GDP falls throughout 2013.

Above: Spanish quarterly GDP changes. Compared to the UK it almost makes us look as if we are in a boom!!

Already youth unemployment in Spain is at a horrifying 60%.

At some point it will sink home to the Euro-obsessed Spanish government that their main problem is a lack of competitiveness as a result of being in the Euro.  A de-coupling from the Euro and then a de-valuation is their best hope of restoring competitiveness to their economy and getting back to growth.  Of course, they will still have their deficit to deal with but decoupling will help massively with that.