Wednesday

14th Apr 2021

Spanish bailout deal to be sealed amid protests

  • Mass protests erupted again in Spain after €65bn more cuts were announced (Photo: César Astudillo)

Eurozone finance ministers on Friday (20 July) are set to iron out the final details of bailout of up to €100bn for the Spanish banking sector, just as tens of thousands Spaniards took to the streets in protest against fresh spending cuts.

In a conference call set to start at 12.00 Brussels time, the 17 ministers are expected to sign off a memorandum of understanding with Spain, spelling out the conditions of the loan capped at €100 billion.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The final amount still to be determined after a comprehensive audit of 14 Spanish banks, making up 90 percent of its banking sector, is carried out in September. A first tranche of up to €30 billion will be made available by the end of July to reassure markets that these are not empty promises.

A draft agreement that emerged ahead of a vote in the German Bundestag on Thursday approving the deal caused a bit of an uproar in Spain, with El Pais newspaper accusing the government of "hiding" the documents from public scrutiny.

The 70-page long document is expected to be broadly adopted as is on Friday and then signed by the Spanish government. It mostly relates to how banks sitting on bad loans will be assessed, recapitalised and possibly wound down, how the national banking supervisors have to be strengthened and transparency of banks balance sheets increased.

But it also refers to "regular and closely" monitoring of other economic reforms aimed at reducing the budget deficit to 3 percent of GDP by 2014.

Tax policies are also to be monitored, along with labour market reforms, with member states set to "review on a regular basis the economic policies implemented by Spain," in line with binding recommendations by the EU commission.

The government last week announced fresh public sector wage cuts and VAT hikes amounting to €65 billion, which on Thursday saw tens of thousand of people take to the streets all across the country. Riot police fired rubber bullets on protesters in Madrid, who set garbage bins on fire and threw explosive cocktails as tensions rose.

Unemployment is at 24 percent in Spain, while more than half of the country's youngsters are out of a job.

Prime Minister Mariano Rajoy defended the cuts as part of the bailout deal needed to rescue the bleeding banks. But markets seem unimpressed. At a debt auction on Thursday, Spain managed to borrow almost €3 billion from the markets, but at borrowing costs above seven percent - a threshold considered bailout territory.

According to the draft memorandum, in money that is unused for the banking rescue could be re-allocated to another bailout programme - for instance buying Spanish bonds. But for that to happen, a new deal would have to be approved by all eurozone countries and with likely even stricter conditions attached.

"The up to €100 billion, which the eurozone has undertaken to provide to Spanish banks is to do just that, it is only for that purpose and not for any other," an EU commission spokesman said Thursday.

Eurozone crisis worsens as Germany warned on top rating

The euro-crisis is accelerating as Spanish borrowing costs continue rising and Germany, the Netherlands and Luxembourg on Monday were warned they may lose their triple A rating due to "rising uncertainty."

News in Brief

  1. EU states make progress on Covid-19 'travel certificates'
  2. Michel pledges to protect von der Leyen's 'dignity' in future
  3. Libya frees UN-sanctioned human trafficker
  4. European court: jailed Turkish writer's rights violated
  5. EU set to miss 1m electric charging points by 2025 target
  6. Lavrov expects Iran nuclear deal to be saved
  7. France suspends flights from Brazil due to Covid variant
  8. Johnson & Johnson delays roll-out of vaccine in EU

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  2. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  3. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  4. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance
  5. UNESDAEU Code of Conduct can showcase PPPs delivering healthier more sustainable society
  6. Nordic Council of MinistersWomen benefit in the digitalised labour market

Latest News

  1. Nato and US urge Russia to back off on Ukraine
  2. Future EU platform seeks to 'stay clean' of hate speech
  3. Denmark threatens Syria deportations amid EU concerns
  4. MEPs raise concerns on vaccine 'travel certificates'
  5. Will Romania be EU's Green Deal laggard?
  6. Muslims, Ramadan, and myths facing 'European civilisation'
  7. Europe & Africa - rebuilding the future
  8. How the pandemic became an EU goldmine for crime

Join EUobserver

Support quality EU news

Join us