Virus exposes Spain’s failings again

After the euro-zone crisis, Spain emerged as a sort of model for how the monetary union’s more fragile nations might prosper. The economy expanded steadily as tight labour laws were loosened, and investors flocked to Madrid, pushing its government bond yields well below Italy’s.
Subsequently, Spain strengthened its political clout in the European Union, challenging Italy’s position as the third-most influential member state after France and Germany. As Rome’s fortunes waned, Madrid’s waxed.
The Covid-19 crisis risks undermining much of this progress. Alongside Italy and the UK, Spain was
one of Europe’s epicenters for the first wave of the pandemic, and it’s now struggling more than its neighbors with a summer resurgence.
The country is also having a terrible time of things economically. In the first half of this year, Spain’s gross domestic product shrunk by nearly a quarter when compared with the end of 2019. That’s much worse than Italy and France. Among the larger countries in Europe, only Britain came close.
This setback reflects structural problems in Spain’s institutions and economy. The pandemic exposed severe shortcomings in the public-health system, as emphasized in a report from the Real Instituto
Elcano think tank.
There have been conflicts between the central government and the powerful, sometimes secessionist
regions.
In March, Madrid clashed with Catalonia over the latter’s decision to tighten restrictions beyond what had been decided nationally.
As with Italy, there was also an element of bad luck. Spain too faced the first wave of Covid-19 before other countries and hence had less time to prepare.
That doesn’t, however, absolve Prime Minister Pedro Sanchez’s coalition government of blame. In the spring, Spain allowed mass gatherings such as
political rallies and football matches to take place unchecked even though hundreds of cases had already emerged, and Italy was showing how destructive the pandemic could get.

—Bloomberg