Spain is digging in its heels against further austerity as protests sweep the country and mounting tensions with Catalan nationalists threaten to split the country.
Finance minister Luis de Guindos ruled out further fiscal cuts needed to qualify for a eurozone rescue, leaving it unclear whether the European Central Bank can activate Europe’s grand plan to stabilise markets.
Mr de Guindos said over the weekend that Madrid’s €100bn (£81bn) austerity measures are “sufficient” to meet a deficit ceiling of 6.3pc of GDP this year, although it is an open secret that Spain will miss its target.
Germany’s parliament is unlikely to approve any rescue without deeper cuts, but further austerity risks pushing Spain into civil conflict.
Tens of thousands marched in Madrid at the weekend to protest against drastic cuts, including a 7pc cut in public wages.
A man set fire to himself in Portugal, where clashes turned violent. The protests followed a traumatic week in Catalonia, where 1.5m took to the streets amid a wave of secessionist demands.
Catalan leader Artur Mas has been swept by events into open confrontation with Madrid. Mr de Guindos pleaded for time, insisting that the reforms would lay the foundations for recovery.
“These sacrifices are absolutely unavoidable.”
His claims were badly undercut by Nobel economist Joe Stiglitz, who told a Spanish forum that German austerity medicine is “utterly misguided” and will push Spain deeper into a downward spiral.
It would be “suicidal” for Spain to accept a rescue if it involved more fiscal tightening, he said.Spain’s attempt to resist a rescue until forced by markets leaves the eurozone in an impasse.
The ECB cannot purchase Spanish bonds until Spain formally requests help from the bail-out fund and signs a “memorandum” ceding fiscal sovereignty.
Mr de Guindos called on the eurozone to fulfil its pledge to recapitalise the Spanish lenders directly with ESM funds to take the burden off the Spanish state, but this too is in limbo.
Eurozone finance ministers were deeply at odds on Saturday over plans for a banking supervisor, with little chance of a deal ahead.
Germany will not let the ESM recapitalise banks until the supervisor is in place.
telegraph.co.uk
Finance minister Luis de Guindos ruled out further fiscal cuts needed to qualify for a eurozone rescue, leaving it unclear whether the European Central Bank can activate Europe’s grand plan to stabilise markets.
Mr de Guindos said over the weekend that Madrid’s €100bn (£81bn) austerity measures are “sufficient” to meet a deficit ceiling of 6.3pc of GDP this year, although it is an open secret that Spain will miss its target.
Germany’s parliament is unlikely to approve any rescue without deeper cuts, but further austerity risks pushing Spain into civil conflict.
Tens of thousands marched in Madrid at the weekend to protest against drastic cuts, including a 7pc cut in public wages.
A man set fire to himself in Portugal, where clashes turned violent. The protests followed a traumatic week in Catalonia, where 1.5m took to the streets amid a wave of secessionist demands.
Catalan leader Artur Mas has been swept by events into open confrontation with Madrid. Mr de Guindos pleaded for time, insisting that the reforms would lay the foundations for recovery.
“These sacrifices are absolutely unavoidable.”
His claims were badly undercut by Nobel economist Joe Stiglitz, who told a Spanish forum that German austerity medicine is “utterly misguided” and will push Spain deeper into a downward spiral.
It would be “suicidal” for Spain to accept a rescue if it involved more fiscal tightening, he said.Spain’s attempt to resist a rescue until forced by markets leaves the eurozone in an impasse.
The ECB cannot purchase Spanish bonds until Spain formally requests help from the bail-out fund and signs a “memorandum” ceding fiscal sovereignty.
Mr de Guindos called on the eurozone to fulfil its pledge to recapitalise the Spanish lenders directly with ESM funds to take the burden off the Spanish state, but this too is in limbo.
Eurozone finance ministers were deeply at odds on Saturday over plans for a banking supervisor, with little chance of a deal ahead.
Germany will not let the ESM recapitalise banks until the supervisor is in place.
telegraph.co.uk
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