Exchange rate euros in crisis as the Spanish turn their back on the currency

April 24th, 2013

Exchange rate euros continue to suffer, if it’s not Greece, its Spain causing the euro increasingly difficult survival issues. Millions of Spanish families and British ex-patriots are left battling for financial stability as demands are made for the country to leave the euro and return to their native Spanish currency – the peseta. Some towns are taking matters into their own hands and ignoring government warnings by returning to their former foreign currency.

Spanish inflation is out of control, unemployment is the lowest it has been since the civil war and millions fear the situation will only worsen. Spanish borrowing recorded in mid March 2012 demonstrated an all time high of nearly £270billion – exchange rate euros are taking a huge hit as a result.

Since 2001 when the euro was first introduced and exchange rate euros were at an all time high, essential household goods like washing products, bread and milk have increased by a staggering 43 per cent – this is simply unsustainable for the Spanish people.  Milk has nearly doubled in price and bread has more than doubled. Potatoes have increased by an unbelievable 115 %, making the average family struggle to produce even the most basic meal.

Dining out has increased by 40% which has had a profound effect on Spain’s most lucrative industry – Tourism. The feeling is that the only way to lure holiday makers back is to re-introduce the peseta, which would offer far more favourable foreign exchange rates than the euro. Villamayor de Santiago, a small Spanish town with over a third of its 10,000 population unemployed, reverted back to using the peseta in February 2012. Four other towns have since adopted the same approach.

Just shy of a quarter of all Spanish are currently out of work, half of which are surprisingly the under 25’s, who are leaving the country in search of an improved lifestyle. If and when the economy picks up, this could leave a shortage of young workers, who will be desperately needed to support a re-emerging economy back to health.

If Spain was to leave the eurozone, it is not know exactly how this will affect exchange rate euros but it would likely have a negative impact that would take some time to recover. Best Exchange Rates UK will be reporting on Spain’s position with regard to euro exchange rates as and when they happen, make sure you look out for future articles.