Rajoy Says Spain Future at Stake as Debt Crisis Persists
11 April 2012, by Emma Ross-Thomas (Bloomberg)
http://www.bloomberg.com/news/2012-04-10/rajoy-says-spain-future-at-stake-as-debt-crisis-persists.htmlExcerpt:Prime Minister Mariano Rajoy said Spain’s future is on the line in its battle to tame surging bond yields, as the head of the nation’s second-largest region proposed handing back powers to the government to cut costs.
With Spanish bonds trading closer to levels that prompted Greece, Ireland and Portugal to seek European bailouts, Rajoy will address lawmakers of his People’s Party today to explain the deepest budget cuts in three decades.
The prime minister will speak at 1 p.m. in Madrid.
“Without a doubt, a good part of Spain’s future is at stake,” Rajoy told senators yesterday, as he urged regional governments to contribute to spending cuts.
“The problem is that the markets can lend or decide not to lend.”
Rajoy has stepped up his rhetoric in the past week as he seeks to persuade Spaniards to accept spending reductions and tax increases as a less painful alternative to a bailout.
His three-month-old government is struggling to convince investors it can reduce the deficit by a third this year and crack down on overspending by regional administrations.
As Spain’s regions suffer from a slump in tax revenue while most are locked out of capital markets, Esperanza Aguirre, the president of the Madrid region, yesterday proposed handing back responsibilities such as health and education to the central government.
Aguirre, once a potential rival to Rajoy for the PP leadership, said the move would save 48 billion euros ($63 billion) by avoiding overlap.
Bailout Level The 10-year bond yield rose as high as 6.02 percent today, the most since December, before easing to 5.84 percent as of 11:50 a.m. in Madrid.
That compares with the 7% level that pushed Greece, Ireland and Portugal to seek bailouts.
Yields fell after European Central Bank Executive Board member Benoit Coeure signalled the bank could revive its program of sovereign bond purchases for Spain.
