What is ‘Sprexit’

BREAKING DOWN ‘Sprexit’

The possibility of a Sprexit first arose six years ago when Spain pulled back from a debt abyss. Although the country, as of 2018, was achieving strong growth – more than 3 percent – nobody knows what will happen in Spanish politics.

At the time of the debt crisis in 2012, it was thought that Spain was too big to rescue because they were perceived to have no political hang-ups about rupturing their relations with the European Union. The country was already fed up with austerity, and there was a bigger Spanish-speaking world for them to grow into. There were few good reasons for the country to stay in the euro, and there were few signs it had the will to endure the sacrifices the currency would demand of them. There were many fears that the banking system was on the edge of a full-scale bank run.

The Future of Sprexit

Due to bailouts by the European Union and IMF, following the financial crisis of 2008, PIIGS nations, which had a large amount of sovereign debt, were forced to cut government spending and undertake Austerity Measures in order to service the bailouts. Largely unpopular, the austerity measures failed to bring about a recovery in these nations, and in 2015, the Greek people voted in a referendum to reject further European Union bailout terms after defaulting on an IMF loan. If the Greeks ever do exit, Spain would likely next, as it also has underwent largely unpopular austerity measures without seeing much of an economic recovery.

In the first quarter of 2018, Spanish unemployment stood at 16.74 percent, although it was down from a year earlier, when it was more than 18 percent. If unemployment in Spain rises again, the chances for political trouble increase. If Spain leaves the euro, the trend of a euro exit is likely to spread to the rest of the remaining PIIGS and perhaps beyond, which could possibly usher the beginning of the end for the Eurozone.

The post Sprexit appeared first on NewsWorld.