SPAIN

With Europe's highest unemployment at over 20%, and youth unemployment more than double that, it was always highly likely that the ruling Socialists would lose yesterday's general election in Spain. They duly did, polling their worst ever result since the return of democracy in 1975. The more interesting question is why, given the economic problems facing the country, the opposition Popular Party under Mariano Rajoy would want to win. Furthermore, by winning an absolute majority in Parliament with 186 seats out of 350, Mr. Rajoy will be on his own when it comes to implementing the necessary and painful reforms.

Spain's biggest problems are the lingering effects of a construction boom that dwarfed those in other countries and has left thousands of unfinished concrete structures; and a rigid labour market that mollycoddles those in full-time employment while condemning the rest (and particularly the young) to at best short-term contracts with no security. Neither will be easy to sort out, not least because reforms will be both expensive and socially divisive. Mr. Rajoy's immediate aim will be to try to make a start without having to go cap in hand to the European Central Bank/IMF for a bailout.

There have now been regime changes in all four of the Euro-area PIGS (Portugal, Ireland, Greece and Spain), plus Italy, Slovakia and some of the German Länder. It is also possible that the French Presidency will change hands next spring. While outside of the Euro area, the same thing has happened in the U.K. and Denmark. Some of the shifts have been from right to left, others from left to right. But everywhere, the message has been the same; vote out the bastards, who got us into this mess.

Walter Blotscher