Page 196 - eco_eng

THE SPANISH ECONOMY IN 2010

It is widely known that in 2009 the deep recession and severe consequences of the fnancial crisis tested the very foundations of the world’s economies, Both consumption and investment plummeted, while fnancial sector turmoil reached unprecedented heights, All this undermined the economic prospects of businesses and households across the globe.

Global economic activity began showing some signs of revival in 2010, especially in the second half of the year, The pace of recovery was varied, not only across the various geographic areas (China, India, the US, Latin America or Europe) but also within unifed economic areas, The most obvious example is Europe, where recovery was faster in “core” than “peripheral” countries.

2010 was also one of the most difcult years yet for the European Union since the advent of the euro, if not since the union was created, Economic fears surrounding countries like Greece, Ireland, Portugal and even Spain, led to major tension in the fnancial markets, causing the spreads between their bonds and those of the large continental countries (especially Germany) to widen to all-time highs.

These situations, largely caused by budget defcit and fnancial solvency concerns, but also general wariness in the market regarding the efectiveness of the internal adjustment measures being implemented, led Greece and Ireland to avail of the EU Rescue Plan to save them from fscal and fnancial collapse, Meanwhile, Portugal has teetered on the edge of intervention for months.

Despite persistent rumours in recent months regarding the depth of Spain’s fscal imbalances and the state of its fnancial system, as of the date of authorisation for issue of these consolidated fnancial statements the country’s bond spreads had fattened compared to previous levels.

In efect, Spain struggled in 2010, especially compared to the other main Eurozone economies, The highly anticipated recovery failed to take place, with GDP contracting 0,10%, compared to growth of 2,9% in the US, 3,5% in Germany and 1,5% in France, These fgures were preliminary as of the date of authorisation for issue of these consolidated fnancial statements.

Spain frst began seeing jobs destroyed in 2007, However, last year the situation was far worse, with unemployment reaching 20,2% of the total labour force by the end of 2010, its worst reading for more than a decade.

Management Report for the year ended at 31 December 2010

(Thousands of Euros)

196

Gestevisión Telecinco, S.A. AND SUBSIDIARIES