Spain’s political leaders are in cheerful mood at the moment. According to the country’s Economy Minister Luis de Guindos, the Spanish economy will return to growth in the second half of 2013. “The perception of the Spanish economy has improved and will continue to do so over the coming weeks and months,” he told his audience at the World Economic Forum in Davos. Earth-shattering it will not be, but grow it will, he insisted. Perhaps, he suggested, the economy will be stationary in the third quarter, with very slight growth in the fourth. And quite possibly he is right. The core of the problem is whether any faltering growth emerging in the last three months of the year will be sustained … [Read more...] about Has Spain’s economic contraction become self-perpetuating?
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The next Spain
There’s an overwhelming consensus all across Spain that “we can’t go on like this”. Yet there’s an equally determined belief within the Rajoy government that we can, and in fact will, go on like this until it somehow gets better. Which means that someone – either the government with its faith that everything will come out well, or the entire population of the country, who believe that it won’t – has got it wrong. In this article I will take it as an assumption that the existing state of Spain will not be able to survive long enough to hold general elections again in 2015, and that therefore Rajoy’s Partido Popular government will be the last of the 1978-model Kingdom of Spain. How will … [Read more...] about The next Spain
Mariano Rajoy
To his supporters he’s calm, considered, strategic and resilient. But to his critics – whose ranks have swelled this year – Spain’s prime minister is hesitant, rigid, poorly advised and uncharismatic. Whatever your view, few will argue that even his previous experience as a government minister and eight years in opposition can have prepared Mariano Rajoy adequately for the torrid 12 months he has just had. Having made few electoral promises other than to fix the economy, his fortunes were always going to mirror those of the country’s credit risk premium and its jobless queue. Both hit dangerously high levels in 2012, belying Rajoy’s apparent belief on taking office that a change of … [Read more...] about Mariano Rajoy
EU praise can’t hide Rajoy’s bailout jitters
Much was made of the apparent chemistry between Mariano Rajoy and Angela Merkel when the two leaders met in Madrid last week. The German Chancellor’s comment that she was “impressed with Spain’s reforms” was indeed music to the ears of the Spanish prime minister. Similar praise from European Monetary Affairs Commissioner Olli Rehn over the weekend, along with IMF managing director Christine Lagarde’s statement that measures taken by Italy and Spain were “adequate in and of themselves” was also welcome from Rajoy’s point of view. The Spanish leader is closely gauging these appraisals of his reform program because, as he almost certainly prepares to request some form of bailout from the … [Read more...] about EU praise can’t hide Rajoy’s bailout jitters
Euro gains in spite of Spain’s bailout
Here is my latest update of the euro exchange rate, covering the 8th to 15th June 1012. This is intended as a brief guide to what’s affected the exchange rate this past week, to help you decide if now’s the best time for you to change currencies. Exchange rates: GBPEUR: 1.2264 (-1.54%) USDEUR 0.7973 (-1.36%) You can’t have missed it, but the big news this week was Spain’s acceptance of a €100bn bailout for its banks from the EU, and the ensuing doubt about whether this would be enough to solve Spain’s problems. But in spite of there being every chance that the crisis will continue, the euro gained against both the pound and US dollar this week, as crisis fatigue set in. Why has … [Read more...] about Euro gains in spite of Spain’s bailout
“Our forgotten Spanish reality…”
It’s not often that I’d applaud the broad array of opinions published in El Mundo newspaper. During the government of José Luis Rodríguez Zapatero, its op-eds ranged, utterly predictably, from anti-Zapatero to rabidly anti-Zapatero. But with a Partido Popular government, things seem to be getting more interesting, especially given that while El Mundo has supported the cause of Spain’s conservatives, it has not been a consistent cheerleader for Mariano Rajoy himself. So it was fascinating to see just a couple of the opinions published by the paper in the wake of the announcement of Spain’s financial bailout. The general consensus in Spain is that Rajoy committed a major error by not … [Read more...] about “Our forgotten Spanish reality…”
Profile: Luis de Guindos, the man behind Spain’s bank bailout
The story goes that right up to the day Prime Minister Mariano Rajoy appointed him economy minister, Luis de Guindos was unaware that he was to be landed with the job of repeating for six months that Spain didn’t need a bailout before eventually taking part in the “victory”— as described by Prime Minister Mariano Rajoy — of accepting the European Union’s offer of up to €100 billion to keep Spain’s banks afloat for a little longer. Until last December, the 52-year-old De Guindos led a quiet life, mainly employed as the director of the PwC Centre for Finance at Madrid’s IE Business School, while enjoying the benefits of sitting on the boards of several companies, among them Endesa … [Read more...] about Profile: Luis de Guindos, the man behind Spain’s bank bailout
Truth is the casualty as Spain’s campaign heats up
The last few days haven’t been good ones for truth and accuracy on Spain’s political scene. In fact, for those who follow the news closely, it’s been downright confusing. Popular Party (PP) spokesman Esteban González Pons should shoulder at least some of the blame, after sheepishly backtracking on a pledge, made on September 7, that his party would create 3.5 million jobs over the next four years if it wins the November 20 general election. It was a target that meant slashing Spain’s unemployment rate by 70 percent. 3.5 million? Of course not, González Pons said the next day, after PP apparatchiks were left scrambling to make sense of his boast. What he meant to say, he explained, was … [Read more...] about Truth is the casualty as Spain’s campaign heats up
Spain: Too big to fail?
The European Union’s three victims-so-far of the global financial meltdown have, not incorrectly, been described as the economic bloc’s periphery. Their economies are relatively small and, though at times worries about their debts have undermined the euro currency, their problems – even taken in combination – are hardly likely to bring the bloc to its knees. Individually, they were sick from a debilitating cocktail of similar problems: bed-ridden with debt and weak from a bad diet of profligate government spending and loan-happy banks. Nothing, it seemed, that a dose of bailout money from the EU and IMF could not cure with a trip to the emergency ward. Spain is showing similar symptoms. … [Read more...] about Spain: Too big to fail?
Bailout beckons as Portugal’s Sócrates resigns
Try, try again… then quit. Portuguese Prime Minister José Sócrates stepped down late on Wednesday saying “today, I am convinced the country is lost,” after a last-ditch effort to push through new austerity measures and avoid a Greek-style bailout failed to win support in the Lisbon parliament. The resignation of Sócrates and his minority centre-left government effectively pushes Portugal into the arms of the European Union and the IMF, with many analysts now saying that the debt-laden Iberian state can do little to avoid following in the footsteps of Greece and Ireland, both of which were bailed out last year when their bond yields reached unsustainable levels. At around 7.8 percent, … [Read more...] about Bailout beckons as Portugal’s Sócrates resigns