Ever since European Central Bank President Mario Draghi announced the ECB’s intention of buying bonds from indebted euro-nations, expectations regarding a Spanish bailout have been growing. Until the situation is resolved the struggling euro-zone will be unable to take many progressive steps towards recovery.
On Friday it seemed that a bailout was in the offing after economy minister Luis de Guindos announced his intention of devising a new round of economic reforms. He has previously argued that: ‘These sacrifices are absolutely unavoidable if we are to correct the difficult economic climate we are experiencing. We are laying the foundations for a recovery.’
Most believe that Spain will soon seek aid; indeed many believe that the country will be unable to remain part of the euro-zone without it, but Spanish Prime Minister Mariano Rajoy remains resistant to act until markets make a bailout a necessity.
Rajoy is insistent that he will not be pressed into making a decision, but with thousands of protestors pushing the issue over the weekend he may find himself unable to stand his ground for much longer.
Madrid has already Okayed a loan for as much as 100 billion euro’s to support the countries damaged banking system and it appears that even more fiscal measures will be put in place by September. This follows July’s decisions to raise sales taxes, cut bonus’s and lower unemployment benefits.
It seems the Spanish population have had enough. In the last couple of days the Spanish capital has been swamped by thousands of public sector protestors. Nurses, fire-fighters and teachers arrived in Madrid in their hundreds, crammed in trade union financed transportation.
Anti-government statements rebounded, banners with slogans like ‘They are sinking the country’ were waved and whistles were blown. Many of the demonstrators were arguing for a referendum on the 65 billion euro austerity package approved by Rajoy. Despite his landslide election victory less than a year ago there was also a significant amount of anger directed at the Prime Minister himself and there is currently little sign of public resentment abating. The Wall Street Journal has forecast ‘an autumn of angry street protests by a recession-weary public’ for Spain.
Similar demonstrations to those seen in Madrid and Barcelona also occurred in Portugal over the weekend following the countries recent spending cuts review. Although the gatherings at Lisbon and Porto were relatively tame tomatoes were thrown at International Monetary Fund officers and several protestors clashed with members of police.
The most shocking incident to occur was in the northern town of Aveiro where one protestor attempted to set himself alight. He was taken to hospital but was relatively unharmed.
With protestors taking the situation so seriously governments will have to consider and take their next steps carefully.
The Pound to Euro exchange rate is currently trading at 1.2368
The Pound to US Dollar exchange rate is currently trading at 1.6226
The Pound to Australian Dollar exchange rate is currently trading at 1.5371
The Euro to US Dollar exchange rate is currently trading at 1.3119
The Euro to Pound exchange rate is currently trading at 0.8084
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