As finance ministers from the euro zone countries struggle with the seemingly endless task of bailing out Greece, they can take some comfort from one fact: that Spain was once in similar dire straits but has now the continent's best-performing economy.
Unsurprisingly, therefore, Spain is now touted by European politicians as proof that, given patience and good governance, the policies of austerity, market liberalisation and financial prudence do produce the required results.
The International Monetary Fund is putting Spain's economic growth at 3.1 per cent this year and forecasts 2.5 per cent for next year, roughly double the average for the 19 euro zone countries.
Spain's unemployment rate is still a stubbornly high 22 per cent of the labour force, but no fewer than a million jobs were created since the beginning of last year, and the process is accelerating, with more than 400,000 people being hired in the second quarter of this year, which ended in June.
Such good labour figures were last experienced in Spain a decade ago, when the country was booming. "Seeing what is happening to other (nations) right now, one has to say: It was worth it," Prime Minister Mariano Rajoy, whose centre-right government takes most of the credit for the turnaround, said recently.
With general elections due by the end of this year, Mr Rajoy has an evident interest in spreading some economic joy.
A small tax cut was announced last month, and although the national Budget for next year currently being debated by Parliament still envisages a reduction in the public deficit by around €15 billion (S$23 billion), Mr Rajoy has rewarded civil servants with a 1 per cent increase in salaries, and boosted state pensions by 0.25 per cent, the first such spending hikes since the financial crisis struck in 2009. "The Budget will set recovery on an even stronger basis," he told Parliament.
To be sure, economists point out that Spain's crisis was always very different from that of Greece. While in Greece the trouble stemmed from state finances which went out of control and sovereign debt which ballooned beyond sustainable levels, the problem in Spain was a housing bubble which, when it burst, threatened to melt down the country's entire banking system, necessitating a €41.3 billion recapitalisation loan from fellow European Union member-states.
So, although very painful, the job of restoring Spain's finances was always more manageable than Greece's. Luck also played a part. Global oil and natural gas prices tumbled, a huge boon for the Spanish economy which imports half of its energy needs. The political crisis in Greece and security concerns in other Mediterranean countries such as Tunisia, both of which compete with Spain in tourism, also helped: tourist numbers are up 4.3 per cent, hotel occupancy rates are reaching full capacity, and spending by tourists has injected a massive €28.3 billion into the Spanish economy in the first half of this year alone.
Prime Minister Rajoy's critics claim that the recovery remains fragile. Most of the newly created jobs are on the basis of temporary, rather than permanent, contracts. Even the public sector no longer offers job security: 174,000 teachers were laid off last year during the school holidays, only to be rehired when children returned to the classrooms. Furthermore, one in eight Spanish workers now earns only the minimum wage; before the crisis struck, the number of workers bringing home such low pay stood at just one in 12.
And then, there are looming political problems. Regional elections in Catalonia, one of Spain's most separatist-minded regions, are scheduled for the end of next month, and may be won by parties demanding full independence, something which could throw Spain into turmoil.
And although the ruling party is predicted to emerge as the largest parliamentary block at the general elections which have to take place by December, a populist movement which opposes all economic austerity could well capture 15 per cent of the vote, depriving Mr Rajoy of the chance of a second term in office.
Still, the fact that a European government has managed to reform rigid labour markets, tightened spending and implemented banking reforms all at the same time and has lived long enough to reap the rewards is remarkable.