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Spaniards' Hopes For Economic Relief Dashed

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After months of punishing austerity measures, some Spaniards want a break and maybe even some stimulus from Europe. But that didn't happen at Thursday's meeting of the governing board of the European Central Bank.

The location of the ECB summit in Barcelona was kept secret, which may indicate how well officials thought they'd be received in the Spanish port city. Thousands of demonstrators flooded the city's streets, as did police, some in plainclothes and masks, with helicopters overhead.

One in four Spaniards is jobless, and the rate is more than 50 percent for youth.

"Many people who are here, their parents haven't got job for many years," says 18-year-old demonstrator Angel Juan. "Maybe their neighbors aren't living in their houses because the bank has taken them out. Maybe I will talk to him [ECB President Mario Draghi], and I will tell them to stop this madness."

But the ECB offered no new help. The central bank kept interest rates unchanged, saying it's the job of individual governments to boost growth and alleviate the pain of austerity.

Draghi even applauded Spain, saying, "It's now time to look with a certain degree of accomplishment — but not complacency — to what has been done."

What has been done is what some call draconian: $35 billion slashed from the budget in a single year. Health and education fees are up, and labor changes make it easier for companies to fire workers. So unemployment has risen, too.

Draghi said such structural overhaul is necessary for eventual growth. But some Spaniards fear the medicine may be killing the patient.

The problem is there may be no other option, says economist Pedro Videla at IESE Business School. "People are suffering, but the issue is, OK, we don't want more recession. So what should we do? Can we spend more money? No, we don't have money."

Calls are mounting across Europe for more growth and fewer budget cuts. This weekend, France may elect a socialist president who wants to renegotiate the EU fiscal treaty to allow for more spending in order to boost growth.

But Videla says that may not work everywhere. After all, overspending is what got Spaniards into this mess in the first place.

"Everybody wants to grow," Videla says. "No government would want to say, 'I don't want growth.' It's silly to think that the solution for countries like Spain is to spend more. Because then the market will punish the bonds of Spain — increasing the spread, increasing the debt service, increasing the debt of Spain."

As it stands, there's no chance of growth in Spain. The country's economy is forecast to shrink this year, though the ECB forecasts a very slight recovery in Europe overall.

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