Spain’s economy sinks deeper into recession; financial costs balloon
Spain's economy sank deeper into recession in the second quarter, its central bank said as investors spooked by an undeclared funding crisis in its regions pushed the country ever closer to a full bailout
Economic output shrank by 0.4% in the three months from April to June having slumped by 0.3% in the first quarter, the Bank of Spain said in its monthly report.
Economy Minister Luis de Guindos ruled out a full-scale financial rescue on top of the 100 billion Euros already earmarked for the country's banks, but Spain's sovereign bond yields stayed mired in the danger zone.
In contrast to de Guindos, who told lawmakers there was little else Spain could do to ease the tensions after it approved a 65-billion-Euro austerity package last week, the central bank's deputy governor said more belt-tightening was needed.
”(Current market problems) reflect problems in Spain as well as the Euro zone,“ Fernando Restoy said after a conference in Madrid when asked about market stress.
”We need to continue further along the same line. We need more cuts, more reforms which will restore market confidence and mechanisms which will strengthen the monetary union.”
Earlier, media reports suggested half a dozen regional authorities were ready to follow in the footsteps of Valencia in seeking financial support from Madrid.
Prohibitively high refinancing costs have virtually shut all of the 17 regional governments out of international debt markets, forcing the worst hit to seek loans from the central government to meet bond redemptions.
Spain's sovereign debt yields rose above 7.5% on 10-year paper on Monday, well above the 7% level that triggered the spiral in borrowing costs that led to bailouts for other Euro zone states.
Suggested Stories
-
May 23rd 2013
Europe’s three largest economies call for stricter rules on corporate tax avoidance
-
May 22nd 2013
Quarter of Italians edging the poverty line and most youngsters survive thanks to Mon and Dad
-
May 22nd 2013
Francis criticizes ‘savage capitalism” and the “logic of profit at any cost”
-
May 22nd 2013
PM Cameron warns 10 Overseas Territories on tax issues: ‘get your house in order’
5 comments Feed
Note: Comments do not reflect MercoPress’ opinions. They are the personal view of our users. We wish to keep this as open and unregulated as possible. However, rude or foul language, discriminative comments (based on ethnicity, religion, gender, nationality, sexual orientation or the sort), spamming or any other offensive or inappropriate behaviour will not be tolerated. Please report any inadequate posts to the editor. Comments must be in English. Thank you.
It rose back in the 50s WITHOUT the help of the Marshall Plan so I
don´t see any problem now.
The mayor is Aznar´s wife. Also Ms Aguire is a heavy weight within the
conservative political party. I respect Mrs Thatcher and her leadership
I am not crazy about Mr Cameron he seems to have his hands tight
down. On the colonial issue I would like to see some sort of agreement
that would settle the Gibraltar issue once and for all and would like
The UK and Spain to get on. (for example: during HM jubilee the
Spanish Queen cancelled her assistance because of the visit of her
son to Gibraltar. This I would like stopped.)
In reference to The Falklands/Malvinas nothing should be
negotiated with the present leadership in Argentina.
And I thought we were getting on so well! What Argentine government would you prefer, one more like the PP?
Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!