The recession in Spain is worse than predicted. The economy shrank by 1.3% in the second quarter of 2012.
There may be a sight surge in spending as Spaniards try to beat the 3% hike in VAT which comes into force 1st September but overall consumer and company spending has been slashed in response to austerity measures. Government spending has dropped and exports from the country have slowed down.
The expectation is that unemployment, currently at 24.8%, will rise during the second half of this year especially when the next round of austerity measures are brought in.
Even if the country gets support from the European Central Bank, things will not get better anytime soon.