Yesterday’s retail  sales figure, which shows the most dramatic fall in Spanish spending since the series started in 2003,raises the question of how deep the current crisis is actually going to be.

The IMF ‘s latest projection is that Spanish GDP will decline by 1.8% this year and will be practically flat next year (+0.1%). But if sales plummeted by 9.8% year-on-year in April, seasonally and calendar-adjusted, and by 5.4% in the first four months of the year, GDP is likely to decline this year by much more than the IMF expects.

It is possible that consumers reacted with unusually sharp spending cuts in April, as Spain became the eye of the eurozone storm and Spaniards began to ask themselves for the first time whether their country would leave the euro. The market panic could have caused frightened Spaniards to curtail normal spending during the Holy Week holiday. If this is what is showing up in the figures, it could be a one-time effect that will diminish once the fear dissipates.

But if this trend consolidates, Spain is in for a much deeper recession than forecast by the IMF or the government. Declines of this magnitude in consumer spending, if extended throughout the year, would bring the decline in GDP into the 3-5% range even before accounting for the effects of fiscal austerity. With government spending cuts included, the recession would be even more profound, and the 2013 recovery would be unlikely. The effects of a recession of this magnitude on jobs would be devastating.

The retail sales figure is a warning sign for Europe to sit up and take notice of the ravages of deleveraging and austerity. Spain can do little to combat this situation. The ball is in the court of the eurozone, or the ECB. If they continue to be indecisive and stress rules over unity and solidarity, they could witness an economic cataclysm in Spain.

John Maynard Keynes warned us that in the long run, we’re all dead. Can we wait for the long run?