Spain's building boom turns to bust

Aug. 12, 2008 at 7:37 AM
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MADRID, Aug. 12 (UPI) -- A building boom in Spain has fizzled, leaving many without jobs and the economy pressed for a comeback.

The unemployment rate paints a picture of Spain's years of boom and bust. In 1993, unemployment was at 25 percent. It fell to 8 percent in 2007 with nearly 20 percent of the country's jobs linked to construction and real estate, The Washington Post reported Tuesday.

But, home sales declined 34 percent in May, unemployment has jumped to 10 percent and credit has tightened, the Post reported.

There is now almost two years worth of unsold housing on the market and brick factories and other businesses allied to construction, which have seen a decade of strong growth, are cutting back.

"We know this isn't going to be easy to bounce back from," Juan del Amo Sevilla, a plant manager at a tile factory, told the Post.

Tighter credit can mean layoffs. With suppliers demanding quicker payments -- shortening grace periods from 120 to 30 days in some cases -- guitar maker Guitarras Manuel Rodriquez and Sons cut back from 40 workers to 33, the Post reported.

"The chain of credit is getting impossible here," Manuel Rodriguez said.

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