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Vigilantes Use Ladders, Sticky Letters to Rid England of the Metric System
David Roman
Apr 5, 2011 1:32 pm GMT The Governor of the Bank of Spain Miguel Angel Fernandez Ordonez.

Despite the government’s best efforts, Spain’s economy is only giving signs of a very moderate recovery, and remains hobbled by falling property prices.

A significant rebound would only come with an upward movement in activity in the real estate sector—and chances are there won’t be any for a while.

In a welcome bout of openness, Spain’s central bank governor Miguel Angel Fernandez Ordonez said Tuesday the reform of Spain’s savings banks, saddled with bad property loans like no other, should have been done sooner.

He is right. The hit from Spain’s property bust has left savings banks, which account for close to half of Spain’s banking business, unable to provide credit to the economy. That, combined with soaring unemployment tied to builders being left with nothing to build, has left Spain’s economy as key European underperformer.

According to data released Tuesday, the purchase managers’ index for Spain’s services sector dipped back to negative territory in March, to 48.7, from 50.8 in February, indicating a decline in activity. That compares with a rise in the overall services PMI for the euro zone, to 57.2 from 56.8 in February.

All of this comes as the property sector remains underwater. In the first quarter, Spanish property prices dropped by 5.1% from the same period last year, a faster pace than the 3.4% fall posted in the last quarter of 2010, data compiled by IESE business school shows.

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