Spain is the last major economy of Europe still mired in recession as its government remained committed to socialist doctrine throughout 2009. Massive deficit spending has only worsened the country’s predicament however, forcing Prime Minister José Luis Rodríguez Zapatero to finally start reining in Spain’s mounting debt.

Last month, Professor Niall Ferguson of Harvard University warned that “the contagion” currently rocking Greece would spread to other eurozone members, Spain foremost among them. The markets had woken up, he announced, realizing that the fiscal policies of countries as Spain had not been “credible”.

In the wake of the economic turndown, the Spanish government maintained a deficit on its budget of so much as 10 percent, refusing to cut on expenditures. The country’s pre-crisis growth has largely been carried by a boom in real estate. When construction came to a standstill, nearly 20 percent of Spanish workers lost their jobs. The country as a whole continues to face an enormous trade deficit on top of that.

The government simply has got to start spending less. According Bob Holderith, CEO of Emerging Global Shares who appeared on the Fox Business Network on Tuesday, “They’re going to have to get their economy under control.”

Holderith’s solution is investment, which is exactly what Prime Minister Zapatero has been hoping for. But with literally millions of people out of a job and millions of homes unoccupied there is little incentive to invest in Spain right now. Holderith admitted that the road to recovery for Spain will be a long one.

There have been some encouraging signs from domestic demand and exports recently and the country’s economy minister is supposed to be working out an austerity package that will bring the deficit down to the European maximum of 3 percent by 2013. Zapatero said that his government is “committed to these projects,” although conservative opposition leader Mariano Rajoy suggested that both the prime minister and his proposals lack credibility.

“It’s not Spain that inspires lack of confidence,” Rajoy told Zapatero in parliament last month, “it’s you and your government’s way of handling the economy.”

The conservatives are especially resistant to a proposed increase in value-added taxes which will only diminish the slight surge in consumer demand, they warn. Household consumption was up by 0.3 percent in the quarter of last year — pretty much the only good news there has been for the Spanish economy in some time now.