The eurozone's fourth-largest economy is set to see rising unemployment and zero growth in 2012 – and the UK is following the same austerity route
Expats on the run. Not a pretty sight, you might say. Unfortunately, and especially for them, running is something they are likely to do more of if they live in Spain, France, Italy, or anywhere else in the sunnier half of the eurozone. Running away that is.
The biggest contingent of expats continues to live in Spain and they face the worst prospects of all. Most expats on the Costas are not looking for a job, but if they were, Tuesday's unemployment figures tell them there is no chance of landing one any time soon. Registered unemployment in Spain, where almost half of young people are out of work, rose for a fifth month in December to 4.42 million.
Expats like to see happy thriving communities around them, even if they don't participate that much. But thriving is not a word that resonates when forecasting for 2012. Fitch, the credit ratings agency, has cut its Spanish growth forecast for this year to zero from 0.5%. This follows a contraction in the final months of 2011.
For the euro area's fourth-largest economy, a long period of no growth will only send property prices lower and undermine the finances of local banks. These are banks that have survived until now, and continued lending, under a cloak of government sponsored obfuscation and denial.
Adding to the misery for the expat is the low pound. With pensions or rental incomes from property owned in Britain paid in sterling, they have suffered a huge fall in living standards.
With falling property prices, no growth, rising unemployment and devalued incomes from Britain, it is no wonder surveys regularly find three-quarters of expats want to come home.
The lure of free healthcare, free bus passes and pensions rising in line with inflation (5.2% when benefits were set) only adds to the UK's attractiveness.
They should think again. The UK economy, which is the most indebted in the world (in relation to GDP) once private debts are included will be in recession soon. Many social security benefits treasured by the elderly are on the chopping block, and care for the elderly is suffering some of the worst of Andrew Lansley's healthcare cuts.
Britain has little reason to be smug when it sees poor Spain suffer. The situation for Madrid may be worse inside the euro, with a high-value currency and conservative central bank, but both countries are following the doomed austerity route to growth. Neither will have an enjoyable 2012.