Anybody who has lived here since the Peseta days will have had the impression that things have become much more expensive since the Euro came in – well, it’s not just an impression, because according to a study carried out by the major Spanish bank, BBVA, prices have risen by a stunning 45% since 1999, which was when the Euro came in here.

Apart from draining consumers’ pockets, it has also caused a loss to Spain’s competitiveness within the Eurozone. To give you an idea, Germany experienced only a 15% increase in the same period, whereas France and Italy had price rises of 30%

Professor Xavier Vives, who oversaw the report, pointed out that the this ‘competitiveness deficit’ with respect to other Eurozone members, the present worldwide credit crisis and Spain inability to devalue an independent currency, is playing havoc with the Spanish economy.

His solution is to lower Social Security contributions and then increase the IVA to compensate for the drop in earnings from the S.S.reductions.
Needless to say, it is blindingly obvious that the average salary has not risen even a small part of what the cost of living has in Spain.

(News: Spain)