As Spaniards struggle for footing on a jagged mountain of national debt that leads to a summit of austerity, a surging number of expatriates are fleeing instead, taking their money with them.
For example in July Spaniards withdrew 75 billion euros, or $94 billion, a record amount, from their banks. For context, 75 billion euros is roughly 7 percent of the country’s total economic output, according to a New York Times report.
Meanwhile, the mass exodus of citizens and cash is rocking Spain’s financial system.
Julio Vildosola is one of the many who’ve had enough. The senior executive for a payroll-processing company is cutting professional and financial ties with his country and moving to a village near Cambridge, England. Vildosola has already transferred his funds from Spanish banks to British counterparts.
“The macro situation in Spain is getting worse and worse,” Mr. Vildosola, 38, said last week a few hours before taking a flight to London with his wife and children. “There is just too much risk. Spain is going to be next after Greece, and I just don’t want to end up holding devalued pesetas,” he said.
The Vildosola family is far from being alone in their quest. The hemorrhaging of deposits away from Spanish banks is by far the most serious capital flight problem in the euro zone. According to Nomura, a stark equivalent of 50 percent of gross domestic product has fled the country in just the past three months. The cash dash is largely foreigners unloading stocks and bonds, but increasingly, Spaniards are transferring their savings to foreign banks.
Official statistics indicate 30,000 Spaniards registered to work in Britain in the last year. But analysts say that number would be far higher if workers without documentation were included. Still, the figure represents a 25-percent increase from last year.
Compounding the loss of citizens for Spain is that increasingly, educated and entrepreneurial types frustrated by a lack of jobs and business opportunities have joined the exodus as Spain’s unemployment rate breaches 25 percent.
“No doubt there is a little bit of panic,” said José García Montalvo, an economist at Pompeu Fabra University in Barcelona. “The wealthy people have already taken their money out. Now it’s the professionals and midrange people who are moving their money to Germany and London. The mood is very, very bad.”