9.  Economic Crisis and Political Transition (1973–1985)

The 1973–1974 oil crisis exploded against a background of inflationary trends across developed economies and a growth deceleration after many years of exceptional growth rates. It put an abrupt end to the Golden Age. In Spain this happened simultaneously to the end of the Franco era and the difficult transition to a new democratic regime. Weak political foundations explained weak economic policy reactions—notably high inflation—for a number of years, until the new regime was well established. For this to be completed, major social pacts were necessary, including the commitment to build a real Welfare State. But the industrial and banking crisis, added to the second oil crisis, caused mass unemployment. Structural policies and institutional change to overcome both were slow to be implemented. Only entering the European Economic Community could be a real solution.