March 4 - Positive numbers keep coming out of Spain, as unemployment fell again in February, and the manufacturing sector expanded for the third month in a row. Joanna Partridge asks what obstacles remain on Spain's road to recovery.
In the depths of winter, February turned out to be a brighter month for Spain. Unemployment fell slightly - and it wasn't due to seasonal jobs. The fall was less than 1% but it was the first February drop since Spain's financial crisis began in 2007. Add to that data showing the manufacturing sector expanded in February for the third month in a row - and at its strongest pace in almost 4 years - and there's reason for optimism. Prime Minister Mariano Rajoy has made bringing down one of Europe's highest jobless rates his top priority. He expects the economy to grow by 1% in 2014 thanks to increased domestic demand and improved investment. Spain's already benefitting from near-record low borrowing costs and a jump in exports. But challenges remain, says Michael Ingram from BGC Partners. SOUNDBITE: Michael Ingram, Market analyst, BGC Partners, saying (English): "The key concern is that Spain is never going to be able to generate the sort of growth to bring down its budget deficit and ultimately to control its public debt, and stablise its debt-GDP ratios. Now Spain is supposed to bring its budget deficit down to 3% of GDP by the end of 2016, the EC's own forecasts are about 6 and half percent. What does Spain do? Does it introduce even more austerity, that's going to impact the economy." Few Spaniards are in favour of more austerity. Protests against cuts still draw a large crowd. A recent demonstration saw over 10,000 take to the streets against government austerity, and new laws against spontaneous protests and rallies. There's also growing anger about a controversial abortion bill. Halfway through his four-year term, Rajoy may be pleased the economy seems to have turned a corner, but it doesn't appear to have increased the government's popularity. A 1% fall in unemployment may not do much to end social unrest when 26% remain out of work.