Spain's economy plunged further into recession as housing prices posted their biggest decline in over 22 years in the second quarter. Prices fell at a 6.5% annual rate in the first quarter to an even worse 8.2% in the second. In 2006, strong immigration and low interest rates the spurred 800,000 houses to be started in Spain, more than Germany, France, and Italy combined.

The turn around in the housing market began in 2007 after prices exceeded three times their 1997 levels. Higher borrowing costs, the global financial crisis and overbuilding have all led to the 22-year fall to rock bottom housing prices. House price falls are eroding Spanish household wealth and will continue to keep the country in deep recession.

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