It's been a bumpy week for Spain. Only hours after a humiliating loss to Chile in the Fifa World Cup, Spain witnessed the swearing in of a new monarch, Felipe VI, as head of state amid hopes that the economy would soon turn a corner allowing for the creation of new jobs for an army of young unemployed.

Felipe, who took over from King Juan Carlos who abdicated after a 39-year-long reign, did not have a turbo-charged inauguration. Austerity was the name of the game, with the new king promising to conduct the monarchy with “integrity, honesty, transparency”. King Felipe won’t have an easy time.

The economy may be picking up again after years of crisis but growth rates are still low and unemployment remains high. More and more young Spanish people are leaving the country in search of jobs and a better life abroad. Spain’s most prosperous region, Catalonia, appears hell bent on autonomy, with a referendum planned in November this year. Many Spaniards also want an end to the monarchy and the establishment of a republic.

All of this may sound dire. Spain, however, is not an ordinary European country. It is resilient and ever-changing. Ready to take on new and old challenges. Having watched Spain at close quarters for almost three decades, I know the country never fails to surprise and fascinate.

A former military dictatorship, Spain is a now a robust, modern democracy and a vibrant member of the European Union. Spain’s return to democracy in the late 1970s, following the death of Francisco Franco, was an impressive affair. King Juan Carlos, appointed as successor by Franco, played a crucial role in bringing democracy to Spain while also restoring the monarchy.

In 1981, as we watched it all on TV, the young king swiftly squashed an attempted coup. For years after that, he was admired by friend and foe.Year after year under his watch, Spain changed, evolved, modernised. Religion retreated from daily life. Women emerged from the shadows, taking their rightful place in society, politics and business.In quick succession, the country accepted homosexuality, divorce, abortion and contraception. The art scene exploded, we danced to the rhythm of Spanish rock bands and Spanish food everywhere.

We all fell in love with Spain — and Spain fell in love with us. Millions of Europeans make their way to Costa del Sol and Costa Brava every year in search of sun and sea and much-needed rest and recreation. It was the continent’s miracle economy, with soaring growth rates, investments in Latin America and home to a talented young and dynamic population ready to work, work, work.

But then the hard times hit hard. The last six years have been tough for Spain as the economy touched rock bottom and jobs became scarce. Voicing their discontent with the ruling centre-right Popular Party government and the Socialist Party opposition, Spaniards recently voted in huge numbers for a new political option: the “Podemos” party led by a young man called Pablo Iglesias whose slogan is “we can”.

The truth is that Spain can’t — at least it can’t on its own even though the economy, the fourth-biggest among the 18 nations that share the euro, has been expanding for almost a year. Many Spaniards have yet to feel any benefit, however. About 5.9 million people, or 25 per cent of the active population, are still unemployed, and the unemployment rate for young people is 54pc.

At his no-frills coronation last week, Felipe said: “We have to send a message of hope, particularly to the youngest, that solving their problems, and especially finding work is a priority for society and for the state.” Juan Carlos’s surprise decision to abdicate follows a period of ill health and a string of embarrassments and scandals that had started turning Spanish public opinion against the monarchy.

Recent public opinion polls show that a clear majority of Spaniards aged 18-34 want to see Spain’s constitutional monarchy abolished in favour of a republic. There are hopes that Felipe, who is a fluent Catalan speaker, could help to defuse Catalonia’s drive for independence. The Catalan government has called a referendum on independence in November despite strong objections from the central government.

The new King’s challenge will be to try and convince the Catalans to stay with Spain rather than risk a damaging constitutional crisis. Spain will be watching the new King to see if he means what he says at his coronation.

—The writer is Dawn’s correspondent in Brussels.

Published in Dawn, June 21st, 2014