The stabilisation plan

• technocrats devised a new economic plan.
• The Stabilisation Plan of 1959


  reflected the belief that greater economic freedom would resolve Spain's financial crisis. It proposed breaking up corporatism and ending autarky
• Following measures:

  • the peseta was devalued and import and export restrictions were lifted in order to encourage international trade
  • there was reductions in public spending
  • wage rates were frozen
  • credit was restricted
  • the gov abandoned its control over prices
• The plan was designed to address Spain's currency problems and control levels of inflation. Opened up Spain's economy to other countries. In the long-term, trade and foreign investment provided the basis for considerable economic growth.
• Short-term:

  ending the price controls led to further inflation. the price of goods (tobacco and transportation services) was allowed to rise to a point set by the demand within the market.
• Cuts in government funding led to rising unemployment from 1959-61. Unemployment nearly reached 35% in 1959-60. Unemployment levels were highest in rural areas. Malaga: unemployment went from 23,000 in 1960 to 27,000 in 1961. As unemployment rose, pay dropped.
• Strikes declined as workers were on such low pay and unemployment was such a problem that they could not afford to refuse work.
• As the economy grew and employment became more secure, workers felt able to risk protest and 1962 saw strikes once again