Friday

28th Apr 2017

Spain in wait-and-see mode as recession worsens

  • Spain's PM Mariano Rajoy claims deficit-cutting measures will convince the markets (Photo: Partido Popular de Cantabria)

Spanish Prime Minister Mariano Rajoy on Tuesday (28 August) 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.

Speaking alongside EU council chief Herman Van Rompuy, who interrupted his vacation in Spain to meet the Prime Minister, Rajoy re-stated his commitment to "take all necessary measures" to get the country out of the worsening crisis.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

"We've already taken complicated, painful decisions, but they were required in this situation. We have to lower our public deficit, we can no longer continue in this situation where refinancing is so difficult," he said.

Fresh data published on Tuesday by the country's statistics office showed that recession is now at 1.3 percent of GDP, compared to previous estimates that suggested the economy would contract by one percent.

On the same day, the country's most economically important region, Catalonia, said it would need a €5 billion bailout from the central government to refinance its debt.

Rajoy brushed off questions about the sustainability of the country's public finances and said Catalonia was not the first region to be bailed out.

Yet the worsening data and the soaring borrowing costs for both the central and the regional governments have fuelled speculation that Spain will need a bigger bailout, on top of the €100bn earmarked for its troubled banks.

Rajoy said there were "no negotiations, because we have not submitted any request". But he also said that "it is the government's duty to serve the interests of Spanish citizens and this is the basis for all our decisions."

EU officials in Brussels do not expect any request to be made before a key ECB meeting on 6 September. ECB chief Mario Draghi earlier this month announced that the bank may purchase bonds of countries who face "unacceptably" high borrowing costs, but only if those countries first make a formal request with the eurozone bailout fund (EFSF), which is authorised to draw up a reform programme.

An internal review within the ECB is due by 6 September on the practicalities of how this linkage can be made between a central bank - supposedly strictly independent from politics and governments - and a governments' bailout fund using taxpayers' money.

For his part, Van Rompuy also stressed it is up to the Spanish government to take a decision and formulate a request.

"If the financial markets' defiance persists and if Spanish authorities think it is useful, EU institutions, including the ECB, have expressed readiness to take appropriate action," he said.

The Belgian politician said he was convinced that "if and when used," the ECB tools will be "very effective."

Germany gets its way on ECB bond-buying

The ECB has said it "may" buy Spanish and Italian bonds, but only if governments first sign reform pledges with the eurozone's bailout fund - a German demand.

Catalan region renews call for independence

One and a half million people gathered in Barcelona on Tuesday demanding independence from Spain. It was the biggest self-rule rally ever in Catalonia.

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.

New anti-trust complaint looms over Microsoft

At least three security software companies “met several times” with the European Commission to complain about Microsoft’s alleged abuse of its market position. A formal case could follow.

Investigation

MEPs oppose EU agency to prevent Dieselgate II

The European Parliament said on Tuesday that there should be more EU oversight on how cars are approved, but stopped short of calling for an independent EU agency.

News in Brief

  1. EU has no evidence of NGO-smuggler collusion in Libya
  2. Poland gets 'final warning' on logging in ancient forest
  3. Commission gives Italy final warning on air pollution
  4. Romania and Slovenia taken to court over environment policies
  5. Report: EU parliament says FN jobs cost €5mn
  6. Turkey suspends 9,000 police officers
  7. May hosts Juncker at Brexit dinner
  8. 700,000 people granted EU asylum

Stakeholders' Highlights

  1. ECR GroupSyed Kamall: We Need a New, More Honest Relationship With Turkey
  2. Counter BalanceParliament Sends Strong Signal to the EIB: Time to Act
  3. ACCARisks and Opportunities of Blockchain and Shared Ledgers Technologies in Financial Services
  4. UNICEFRace Against Time to Save Millions of Lives in Yemen
  5. Nordic Council of MinistersDeveloping Independent Russian-Language Media in the Baltic Countries
  6. Swedish EnterprisesReform of the European Electricity Market: Lessons from the Nordics, Brussels 2 May
  7. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  8. Counter BalanceCall for EU Commission to Withdraw Support of Trans-Adriatic Pipeline
  9. ACCAEconomic Confidence at Highest Since 2015
  10. European Federation of Allergy and Airways60%-90% of Your Life Is Spent Indoors. How Does Poor Indoor Air Quality Affect You?
  11. European Gaming and Betting AssociationCJEU Confirms Obligation for a Transparent Licensing Process
  12. Nordic Council of MinistersNordic Region and the US: A Time of Warlike Rhetoric and Militarisation?

Latest News

  1. EPP group frustrated with Orban
  2. Verdacht gegen Russland bezüglich Macronhacking
  3. 'Serene' EU warns UK against Brexit 'illusions'
  4. EU telecom watchdog plan dead on arrival
  5. Russische Fake-News überschwemmen die sozialen Medien Frankreichs
  6. EU agency stuck with London rent bill
  7. EU anti-fraud office ditches Martin Schulz probe
  8. Commission launches bid to make Europe social