half-completed housing estates, Spanish call them ciudades fantasma: ghost towns.

half-completed housing estates, often vast areas of empty flats and foundations and property-developers' hubris. Now they are nearly deserted. The Spanish call them ciudades fantasma: ghost towns.

Anyone who wants to understand the challenges facing Spain – and by implication the rest of the eurozone – should visit one. Take the route I did, to a place called Valdeluz in Guadalajara. It's easy enough: board the fancy high-speed train from central Madrid to Barcelona and get off half an hour later. If my experience is anything to go by, only a handful of passengers will spill out on to what is a nearly new station. And there, beyond the bored security guards and the metal railings is … nothing. Another platform for cheap commuter trains, completed but never used, and then acres of red dust and weeds.

Valdeluz was meant to be a dormitory town, with 9,500 houses for nearly 30,000 residents. But the lead developer hit the rocks a couple of years ago, with only around 1,500 units completed and 700 people moved in.

Joaquín Ormazábal is one of those Valdeluz residents. Forty-four years old and separated from his partner, he bought a three-bed flat in the development four years ago for €240,000 (£211,000). Four years later, it's now worth less than €140,000.

His black Mazda is the only car on the road up to Valdeluz. As we go, he points out the sights we should be seeing but that were never completed.

That side, a parking lot for 2,000 cars (nothing). Over there, a shopping mall (less than a storey completed). A school (with 300 pupils rather than the intended 1,700). Every so often a couple of residents walk by, but the development is so empty they look more like middle-aged squatters.

"We thought the Spanish property market was one giant party, in which prices would always go up and up and up," Ormazábal says. Parking on a hill, we look down at a giant plot of land that is only a quarter built. It's a vast rut from which for the foreseeable future homeowners will not be able to move without losing 40% or 50% of their equity. "Some mornings I feel like such an idiot." As a joke, he mimes sticking a knife into his chest.

And there in a nutshell you have the recent history of the Spanish economy: a giant game of pass-the-parcel in credit and real estate on which the clock was suddenly stopped, and an entire country got caught out. That applies to the government, too: at the start of 2008, even as the great banking disaster loomed, the prime minister, José Luis Rodríguez Zapatero, dismissed nail-biting economists and voice-of-doom rightwingers as "anti-patriotic", and declared that very soon the Spanish economy would leapfrog France.

In some ways, it's a tale that echoes Britain's. Just like the UK, it was not the government that borrowed too much in the good years, but families and businesses. Just like Britain, the social-democratic government asked few questions during the bubble, but just used the artificially high tax revenues to fund a programme of good works and social justice. Now the leftwinger Zapatero is having to push through spending cuts, just as Gordon Brown and Alistair Darling were preparing to do last year. Oh, and policy-makers in both countries like nothing more than to lean back in their chairs and talk airily about a "new growth model" in which the economy is "rebalanced".

Still, two key differences apply. First, the Spanish boom was a lot more straightforward than ours: whereas Britain had rampaging investment bankers and weirdly acronymed toxic assets, Spain had semi-imperialistic property developers often fuelled by loans from cajas, the national equivalent of building societies. In the short term, that could mean that clearing up the aftermath of the bubble is less complicated and eventually cheaper – or so central-bank officials hope. However, set against that is the second big difference: Spain will have to rebuild its broken economy while playing by the rules of the single-currency club.

One of the methods used by the UK to get out of its slump is by engineering a posh version of a peseta crisis. British policy-makers have let the pound fall by around 25% in value against other currencies (we call it "depreciation" rather than the more brutal "devaluation", of course) and have also allowed the economy to down a small shot of inflation (which reduces the real value of our debts). Locked into the 17-member euro area, with an interest rate set in Frankfurt, the Spanish have no such options.