Spain goes from boom to bailout in a decade

A man begs in front of a fruit market in Barcelona, Spain, Friday June 8, 2012. Spain faces rising pressure to find a financial lifeline for its deeply troubled banks ? likely from the eurozone's rescue fund since Madrid's borrowing costs on markets have risen sharply. (AP Photo/Emilio Morenatti)

A man begs in front of a fruit market in Barcelona, Spain, Friday June 8, 2012. Spain faces rising pressure to find a financial lifeline for its deeply troubled banks ? likely from the eurozone's rescue fund since Madrid's borrowing costs on markets have risen sharply. (AP Photo/Emilio Morenatti)

A woman hits a pot and shout slogans against bankers as a man gets money in a ATM machine, left, during a demonstration outside a Caixa bank branch in Barcelona, Spain, Friday June 8, 2012. Spain faces rising pressure to find a financial lifeline for its deeply troubled banks ? likely from the eurozone's rescue fund since Madrid's borrowing costs on markets have risen sharply. (AP Photo/Emilio Morenatti)

Demonstrators shout slogans against bankers during a demonstration outside a Bankia bank branch in Barcelona, Spain, Friday June 8, 2012. Spain faces rising pressure to find a financial lifeline for its deeply troubled banks ? likely from the eurozone's rescue fund since Madrid's borrowing costs on markets have risen sharply. The banner in Spanish reads "No banks dictatorship". (AP Photo/Emilio Morenatti)

Two people hold up their hands as they walk towards civil guards in full riot gear during a confrontation with miners in Aller, Spain Friday June 8, 2012. The civil guard used tear gas and fired rubber bullets against the miners who fired slingshots. Strikes and road blockades continue as mineworkers in northern Spain continue their protests against government action to cut coal subsidies. (AP Photo/Javier Bauluz, Periodismo Humano)

MADRID (AP) ? Spain's economic fortunes have gone from boom to deep financial crisis over the past decade. Here are the main developments:

BIRTH OF THE EURO

?Spain is one of 12 countries that joined the single European currency in 1999. Following the euro's launch in 2002, the euro is now shared by 17 countries. Spain's membership in this powerful bloc gave it access to lower interest rate loans than it would have got on its own.

PROPERTY GOLDRUSH

?Cheap money triggered a real estate boom as property developers and families borrowed heavily. This fueled an unprecedented economic expansion known as the "Spanish fiesta". The country's then-muscular economy, the fourth-largest in the eurozone, rode out the 2008 financial crisis as its main lenders ? and savings banks called cajas ? were widely viewed by investors as sound.

FROM BOOM TO BUST

?Unemployment started rising. The jobless rate, which stood at 8.3 percent in 2007, jumped to 18 percent in 2009. It is now almost 25 percent. The huge numbers of unsold properties in Spain caused prices to plummet.

CAUGHT UP IN EUROZONE'S DEBT CRISIS

?As the eurozone's debt crisis worsened with problems in Greece, Ireland and Portugal, so Spain's problems became more acute. By 2009, the financial sector was sitting on ?445 billion ($553.49 billion) worth of property-related loans. Regional governments also turned out to be deep in debt as income linked to new construction licenses and taxes dried up.

ZAPATERO ACTS

?In 2010, Socialist Prime Minister Jose Luis Zapatero introduced controversial hikes in the retirement age, from 65 to 67, and in sales taxes to get a handle on the size of government debt and appease markets. Zapatero's measures failed to halt the country's slide into recession and he was forced to call early elections in 2011.

CHANGE AT THE TOP

?The conservative Popular Party, led by Mariano Rajoy, took office in December 2011. Rajoy moved quickly on reforms and austerity measures, triggering massive demonstrations by people worried about their future. Many protesters were young ? the jobless rate for those between 16 and 24 has reached 52 percent.

DRAGGED ALONG BY THE TIDE

?Rajoy has had to nationalize eight lenders facing bankruptcy as Spain fell into a double-dip recession. But investors and markets have continued to focus on the financial sector's ?180 billion in toxic real estate assets and the financial health of the wider eurozone. This has sent Spain's borrowing costs on the international debt markets to worryingly high levels.

EATING YOUR WORDS

? Rajoy and his team have been adamant that the Spanish banking sector would not need a bailout. On May 28, he said: "There will be no rescue of the Spanish banking sector." On Saturday, Economy Minister Luis de Guindos said Spain will ask for a bailout after European finance ministers authorized a rescue amount of up to ?100 billion ($125 billion). Asked why Rajoy didn't make the announcement, de Guindos replied that he did because he is the representative to the European Union's group of finance ministers. De Guindos dodged a question on whether Rajoy still planned to head to Poland on Sunday to see Spain take on Italy in the Euro 2012 football competition. But Rajoy's Poland trip had been removed from his official agenda on his presidential website.

Associated Press

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