Spain’s economy minister Luis de Guindos has frustrated the markets once again after denying that his country needs a bailout.
At a speech in London de Guindos insisted that the Spain ‘does not need a bail-out at all’, his comments come despite all the signs suggesting otherwise. His speech was interrupted by a group of anti-austerity protestors who waved placards saying ‘Spain for sale’. Rumours have been circulating that the embattled country will formally request a bailout as soon as this weekend. The markets have been growing increasingly impatient with the country as uncertainty has grown.
Confusingly de Guindos’s comments were contradicted by the governor of the Bank of Spain, Luis Maria Linde. He claimed that Madrid’s official forecasts are out of step with the rest of the world hinting that the Spanish government is trying to cover up the true extent of the countries troubles He said that Spain had to impose more austerity measures on top of the huge cuts already announced if it is to meet its deficit target of 4.5% for next year.
“The information now available for the state up to August indicates there are risks of slippage on the goal fixed for this year,” he told a parliamentary committee. “This outlook…is certainly optimistic in comparison with the outlook shared by the majority of international organisations and analysts.”
Economists are worried that Spain is holding out on requesting aid in case a bailout would bring harsh measures with it, such as the one imposed on Greece and Portugal. Spanish Prime Minister Marianjo Rajoy has been reluctant to commit to such a deal as he fears that it would damage Spain’s already tarnished reputation.
Unemployment is at a staggering 25% with youth unemployment over 50%. Fears that the country could break apart have also increased with calls for independence getting louder from regions such as Catalonia and Andalusia.
Christine Lagarde, head of the International Monetary Fund, repeated her offer of assistance. She told a French newspaper: “If Spain wants it, we could help in diverse ways, for example by simply auditing and monitoring reforms negotiated with its European partners without the IMF participating in financing. But we could also play a role in financing.”
Of course we have seen this stance before from the Spanish. Previously they had denied that they would request a bailout for their struggling banking system. Two days after the denial low and behold the bailout was announced by the ECB. There’s a good chance history could repeat it itself.
The Pound to Euro exchange rate is currently trading at 1.2444
The Pound to US Dollar exchange rate is currently trading at 1.6179
The Pound to Australian Dollar exchange rate is currently trading at 1.5790
The Euro to US Dollar exchange rate is currently trading at 1.3003
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