Spain And Environment

COUNTRY ANALYSIS REPORT

Spain
In-depth PESTLE Analysis
Publication Date: April 2010

OVERVIEW
Catalyst
This profile analyzes the political, economic, social, technological, legal and environmental structure in Spain. Each of the
PESTLE factors is explored on four parameters: current strengths, current challenges, future prospects and future risks.

Summary
Key findings
Withoutmajority support, the government has struggled to introduce reforms
The Socialist Party (PSOE; Partido Socialista Obrero Español) was voted in for a second term in the 2008 elections,
despite perceived support for the People's Party (PP; Partido Popular). However, the winning party fell short of an absolute
majority by seven seats, which made the government depend on support from Catalan or Basqueregional parties (who are
also fighting for independence) to pass important legislations. This has prevented the government from carrying out
significant reform.
In addition, the continuing growth of regionalism will pose a challenge in preserving the federal structure of the country.
Some regions, such as the Basque area and Catalonia have been fighting for independence, which has led todivisive
internal politics. The federal government failed in its peace talks with the Basque separatist organization, Euskadi Ta
Askatasuna (ETA). At the same time, Catalonia is also backing proposals for independence. The government gave a new
charter to autonomous Catalonia, which has been threatening the existence of the federal structure. Such internal divisions
will not only strengthenseparatist forces, it will also impede the implementation of national policies.
The current economic downslide began in 2007 following a housing market crash, and has worsened in 2009
The country's economic growth lost its momentum and began to decline in the second half of 2007. The Spanish
economy’s excessive dependence on real estate was exacerbated by the impact of global financial turbulence andthe US
sub-prime crisis, as the speculative price rises in the real estate market and the property boom came to an end.

Spain: Country Analysis Report – In-depth PESTLE Analysis
© Datamonitor. This brief is a licensed product and is not to be photocopied

Published 04/2010
Page 1

Overview

The economic crisis deepened following weak domestic demand and rising inflation. Spain’seconomic growth came down
to reach 1.1% in 2008 and it contracted by 3.7% in 2009. Although the government recorded a budget surplus in 2007, the
economic downturn has pushed it into a deficit during 2008 and 2009. The government has announced numerous
packages with the intention of increasing liquidity in the system. In addition, the global financial crisis has made access to
credit tighter, whichis expected to slowdown the process of economic recovery. However, unless these packages are
implemented well it is feared that the recessionary affect will continue in 2010.
An aging population and unemployment pose a challenge to Spain's social security system
Despite making good progress in social security measures, the country is faced with the challenges of an increase in both
the agingpopulation and unemployment, which are common problems for many European nations. The country's
“Agreement for improvement and development of the social security system” pact laid the foundation for security reforms,
particularly in terms of overhauling the pension system and encouraging people to work beyond the age of 65. The Toledo
Pact, which was signed by the government and trade unions in1994, has worked toward consolidation and rationalization
of the public social security system. However, Spanish society is facing the challenge of an increase in the number of aged
people, which has not been balanced by a proportionate increase in birth rate. Indeed, the birth rate has been declining
continuously and there are fewer people entering the work force. Moreover, the sluggish...