23rd Mar 2018

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.


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.

Trump keeps EU leaders waiting on tariffs

European leaders postponed their reaction to US announcement that the EU would be exempted from tariffs on steel and aluminium. "The devil is often in the details", said the Belgian PM.

VW dismisses complaints on Dieselgate fix

'I think customers who want to get information (...) are able to receive information if they want," VW management board member Hiltrud Werner told EUobserver. Consumer groups disagree.

News in Brief

  1. EU wants 'Paris' climate strategy within 13 months
  2. Workload of EU court remains high
  3. Spain's supreme court charges Catalan separatist leaders
  4. EU calls for 'permanent' exemption from US tariffs
  5. Summit backs guidelines for future EU-UK talks
  6. Macron support drops as public sector workers go on strike
  7. EU leaders condemn Turkey for illegal actions in Aegean Sea
  8. Parliament must publish 'trilogue' documents, court says

Stakeholders' Highlights

  1. EUobserverStart a Career in EU Media. Apply Now to Become Our Next Sales Associate
  2. EUobserverHiring - Finance Officer With Accounting Degree or Experience - Apply Now!
  3. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  4. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  5. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  6. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  7. Martens CentreEuropean Defence Union: Time to Aim High?
  8. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  9. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  10. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights
  11. ACCAAppropriate Risk Management is Crucial for Effective Strategic Leadership
  12. EPSUWill the Circular Economy be an Economy With no Workers?

Latest News

  1. Europe needs corporate tax reform - a digital tax isn't it
  2. EU data chiefs rally behind UK over Cambridge Analytica
  3. Russian diplomats risk EU expulsions over UK attack
  4. Three presidents should attend Bosnia memorial
  5. Trump keeps EU leaders waiting on tariffs
  6. EU summit takes hard look at Russia
  7. Germany casts doubt on Austrian intelligence sharing
  8. EU leaders set for 'stormy debate' on digital tax at summit