Thursday

14th Dec 2017

Spanish regions raise doubts on EU budget pledge

  • Seville statues. Grinan: 'We are taking resources away from health care and education to save the banks' (Photo: Lochaven)

An escalating dispute between Madrid and Spain's regional authorities risks undoing its austerity pledge to EU authorities.

The conflict erupted on Tuesday (31 July) when Jose Antonio Grinan, the President of the Andalucia region, walked out of a meeting of Madrid's Council of Fiscal and Financial Policy when it told him to cut another €3 billion from his 2012 budget.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Catalonia boycotted the meeting in the first place, saying it already cannot pay some hospital, child-care and elderly-care centre workers.

Asturias and the Canary Islands voted against the council's demands. The Basque region also raised heckles.

Regional spending was the main reason why Spain last year missed its deficit targets under EU rules: Andalucia and Catalonia between them have a GDP of €346 billion, or 32 percent of the country's total economy.

Andalucia's Grinan renewed his attack on the government on Wednesday.

He said at a press conference in Seville, the Andalucian capital, that he would challenge Madrid's demands in Spain's Constitutional Court if need be.

The Socialist also fired a political broadside against conservative Prime Minister Mariano Rajoy.

"This [the proposed cuts] could close 19 hospitals, all of the Andalucian health service, or get rid of 60,000 public workers, one in four of the local governments workforce," he said at the press event, according to local news agency Europa Press.

"We are taking resources away from health care and education to save the banks, that is intolerable."

The rebellion comes at a sensitive moment for Spain, which is trying to convince markets that it can stick to a debt limit of 3 percent of GDP by 2014 and avoid asking for a full-blown state bailout.

The government is to auction €3 billion of bonds maturing between 2014 and 2022 on Thursday.

The sale is to take place a few hours before a European Central Bank (ECB) meeting in Frankfurt in order to capitalise on pre-meeting optimism.

The ECB is expected to say whether or not it will buy more Spanish bonds in future, but German opposition to the move hinges on lack of faith in southern countries' austerity promises.

Investors in any case are voting with their feet: the Bank of Spain noted capital flight of €41.3 billion in May, compared to €9.2 billion the same month last year.

For their part, ratings agency S&P and US bank Citibank in separate notes published on Wednesday said Spanish regions pose a threat to solvency.

S&P said its outlook will "be influenced by any large and persistent budgetary deviations by the regions ... as these deviations would increase net general government debt."

Citibank said Spain's "recently passed Budgetary Stability Law looks formidable on paper, but has yet to prove effective."

It added: "Political tensions between the centre and the regions may make the application of the Budgetary Stability Law more difficult, particularly in regions with strong regional identities, such as Catalonia."

ECB chief indicates upcoming help for Spain

Markets rallied after European Central Bank chief Mario Draghi on Thursday pledged to do "whatever it takes" to salvage the euro and suggested the bank may buy more government bonds.

Spain in wait-and-see mode as recession worsens

Spanish Prime Minister Mariano Rajoy on Tuesday said his government has not yet taken a decision on asking for European help in refinancing its debt, pending a key meeting of the European Central Bank next week.

Magazine

Catalan separatist looks to crisis with hope

It is often said that on the long and winding road to European union, it takes a crisis to move ahead. Now the same may be true for regional independence. "Independentism has become a cross-cutting movement."

Merkel surprisingly popular in Spain

Half of Spaniards approve of German leader Merkel's leadership in the euro-crisis, while blaming their own politicians for the economic gloom.

Facebook to shift ad revenue away from Ireland

Public pressure about low corporate taxes appear to have pressured Facebook to launch plans to stop routing international ad sales through its Dublin-based headquarters in Ireland.

Facebook to shift ad revenue away from Ireland

Public pressure about low corporate taxes appear to have pressured Facebook to launch plans to stop routing international ad sales through its Dublin-based headquarters in Ireland.

News in Brief

  1. Dutch takes Germany to court over road taxes
  2. Russia sanctions hit Germany hardest
  3. Italy likely to hold national elections on 4 March
  4. ECB expected to continue pumping money into markets
  5. Report: Pro-Kremlin trolls targeted Scottish referendum
  6. MEPs vote to allow phosphate additives in kebabs
  7. Babis government sworn in in Czech Republic
  8. Russia looks to crypto-currencies to evade EU sanctions

Stakeholders' Highlights

  1. European Heart NetworkCommissioner Andriukaitis' Address to EHN on the Occasion of Its 25th Anniversary
  2. ACCACFOs Risk Losing Relevance If They Do Not Embrace Technology
  3. UNICEFMake the Digital World Safer for Children & Increase Access for the Most Disadvantaged
  4. European Jewish CongressWelcomes Recognition of Jerusalem as the Capital of Israel and Calls on EU States to Follow Suit
  5. Mission of China to the EUChina and EU Boost Innovation Cooperation Under Horizon 2020
  6. European Gaming & Betting AssociationJuncker’s "Political" Commission Leaves Gambling Reforms to the Court
  7. AJC Transatlantic InstituteAJC Applauds U.S. Recognition of Jerusalem as Israel’s Capital City
  8. EU2017EEEU Telecom Ministers Reached an Agreement on the 5G Roadmap
  9. European Friends of ArmeniaEU-Armenia Relations in the CEPA Era: What's Next?
  10. Mission of China to the EU16+1 Cooperation Injects New Vigour Into China-EU Ties
  11. EPSUEU Blacklist of Tax Havens Is a Sham
  12. EU2017EERole of Culture in Building Cohesive Societies in Europe

Latest News

  1. Tusk migration note prompts institutional 'hysteria'
  2. Migration looms over summit, as Africa pledges fall short
  3. Brits in EU-27 are uncertain, alone and far from protected
  4. 2018 fishing quotas agreed - but Brexit muddies waters
  5. Medical HQ to spearhead EU military push
  6. Facebook to shift ad revenue away from Ireland
  7. EU renews glyphosate approval, pledges transparency
  8. Romania searching for EU respectability