For the last few months, the European Commission has been warning Spain that it will certainly not comply with its public deficit targets for 2015 and 2016. Many analysts are in agreement with this, while Economy Minister Luis de Guindos rejects it. This is the panorama facing the new Spanish government which, for the moment, King Felipe VI has asked socialist leader Pedro Sanchez to form.
JM Martí Font via Macropolis | Spain is not Portugal, although we cannot completely rule it out. Brussels and Frankfurt want Spain to look like Germany. A grosse coalition will reassure the markets, guarantee the prevalence of budgetary orthodoxy and, on the surface, maintain at least the status quo, something very important to the European institutions, the financial powers and the European political class who doesn’t like changes.
The European Commission estimates Spain’s budget deficit will be 4.5% of gross domestic product in 2015 instead of the required 4.2%. The discrepancy will widen in 2016, with an estimated deficit then of 3.5% of GDP compared with the 2.8% target.
MADRID |The Corner | After a meeting between Mariano Rajoy and Angela Merkel in Santiago de Compostela, the German chancellor gave her support to the candidature of the Spanish Economy Minister, Luis de Guindos, to succeed Jeroen Dijsselbloem as President of the Eurogroup. As Barclays analysts comment, “with Italy’s and France’s leftwing governments and UK in or out of the EU, Spain is now a more attractive partner.” Regarding Germany, Angela Merkel recognised that the crisis in Ukraine is damaging the German economy. Nevertheless, Merkel affirmed that she forecasts a good annual growth if nothing dramatic happens.
MADRID | By The Corner | In its first surveillance report after the Spanish banking sector bailout, the EC believes that entities are stronger and cleaner. Even if NPLs ratio has not stabilized, banks “are shifting towards more stable funding, such as deposits, and are relying less on borrowing from the Eurosystem.” As market access conditions have greatly improved, Brussels Spain’s return to positive economic growth (using February data, when growth estimates for 2014 were 1% instead of 1.1%) and was positive about the labour market slight improvement, although it warned that jobless rate remains very high (26% 2Q13). Brussels considers that unless further austerity measures are adopted the crisis-battered country won’t meet its deficit goals.
MADRID | By Claudi Pérez at El País via Presseurop | After five long years, the economic crisis has left a deep imprint in the EU, increasing mistrust between member states, but also cementing the belief in a common destiny. It’s time to bring renewed political leadership.
MADRID | By JP Marin Arrese | The European Commission has undertaken a thorough review of national budgets following the sweeping powers conferred to it to ensure consistency across the Eurozone. When enacted, this move was heralded as breaking into new territory. Yet the opinions now delivered flatly fail to meet its ambitious goal.
MADRID | By Luis Arroyo | If we are a monetary union, there can be no buts or ifs. Spain needs capital to implement its reforms and restore its economy.
MADRID | By Luis Martí | The German government could also be drawn in as an expropriator of sorts: it is still an issuer of debt at a real yield equally negative for their nationals.
MADRID | By JP Marín Arrese | So long Germany maintains a staunchly depressed environment, Brussels fiscal advices with no plan to boost employment and growth will soon run out of steam.