The Global Financial Crisis and its Budget Impacts in OECD Nations
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The Global Financial Crisis and its Budget Impacts in OECD Nations

Fiscal Responses and Future Challenges

Edited by John Wanna, Evert A. Lindquist and Jouke de Vries

The global financial crisis of 2007–09 constituted the biggest shock to the economies of the OECD nations since the Second World War and caused most of their governments to move into intense crisis mode. They made significant adjustments to their fiscal policy regimes, including massive interventions to stabilize markets and economies. But how they reacted to the crisis, and what measures they took to deal with it, still underpin their economic and budgetary positions. This singular shock provides the editors and authors of this book with an intriguing opportunity to examine how different OECD budgetary systems performed. Chapters cover the EU, North America and Asia, assessing how governments responded to the challenge and how their budget systems evolved in the aftermath.
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Chapter 8: Spain facing the global financial crisis: cutting public spending and struggling with structural reforms

Eduardo Zapico-Goñi


The impact of the global financial crisis (GFC) in Spain was far stronger and more prolonged than ever anticipated. The risk of public debt default still imposes immense pressures for fiscal consolidation on the national budget and for the immediate adoption of structural reforms to Spain’s economic, financial and fiscal systems. As with the reaction of most European Union (EU) countries to the crisis, the then Spanish Socialist government first applied an expansive fiscal intervention to avoid financial and economic collapse, and then undertook a series of medium-term fiscal consolidation plans to tackle the quick deterioration of public finances. By 2010 Spain had imposed one of the largest austerity packages in absolute terms of any Organisation for Economic Co-operation and Development (OECD) country. Yet, recovery remained slow and highly uncertain. Since 20 November 2011, the new Popular Party (PP) right-wing government has declared its full commitment to comply with EU fiscal stability targets. And indeed it has started to take further austerity measures and to prepare fiscal legislative reforms as required by the recently amended Article 135 of the Spanish Constitution.

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