"Spain’s financial situation is deteriorating rapidly, with debt reaching an historic high of 68.5 percent of GDP during the last quarter of 2011. It has now entered its second recession since 2009.
“Spain seems to be the main risk in the near future for Europe,” said UBS AG chief European economist Stephane Deo.
Madrid is supposed to stick to targets agreed two years ago with the European Commission, the European Central Bank and International Monetary Fund to cut the deficit from 9.2 percent of GDP in 2010, to 4.4 percent this year and 3.0 percent by 2013. Last month, Prime Minister Mariano Rajoy declared the country would not be able to meet the 4.4 percent target and had “unilaterally” decided to change it to 5.8 percent. The European Commission agreed a revision was necessary, but insisted the target had to be 5.3 percent.
This means Spain will have to come up with more than €35 billion in savings to meet the new target on top of the €15 billion worth of tax rises and spending cuts already announced in December. Economy Minister Luis De Guindos has suggested that VAT may be raised next year and Finance Minister Cristobal Montoro, has estimated that to meet the new 5.3 percent goal the central government will have to reduce spending from 5.1 percent to 3.5 percent.
On top of this, forecasts predict that the Spanish economic output will fall by 1.7 percent this year. Exports decreased 1.6 percent from the previous three months, and consumer spending declined by an annual rate of 1.1 percent.
The real estate sector, upon which Spain has depended heavily over the past decade, continues to slump. The fourth quarter of 2011 saw the price of an average new home fall 8.5 percent compared to the previous year, while the price of used properties was down 13.7 percent..."
at http://www.wsws.org/articles/2012/mar2012/spai-m22.shtml
“Spain seems to be the main risk in the near future for Europe,” said UBS AG chief European economist Stephane Deo.
Madrid is supposed to stick to targets agreed two years ago with the European Commission, the European Central Bank and International Monetary Fund to cut the deficit from 9.2 percent of GDP in 2010, to 4.4 percent this year and 3.0 percent by 2013. Last month, Prime Minister Mariano Rajoy declared the country would not be able to meet the 4.4 percent target and had “unilaterally” decided to change it to 5.8 percent. The European Commission agreed a revision was necessary, but insisted the target had to be 5.3 percent.
This means Spain will have to come up with more than €35 billion in savings to meet the new target on top of the €15 billion worth of tax rises and spending cuts already announced in December. Economy Minister Luis De Guindos has suggested that VAT may be raised next year and Finance Minister Cristobal Montoro, has estimated that to meet the new 5.3 percent goal the central government will have to reduce spending from 5.1 percent to 3.5 percent.
On top of this, forecasts predict that the Spanish economic output will fall by 1.7 percent this year. Exports decreased 1.6 percent from the previous three months, and consumer spending declined by an annual rate of 1.1 percent.
The real estate sector, upon which Spain has depended heavily over the past decade, continues to slump. The fourth quarter of 2011 saw the price of an average new home fall 8.5 percent compared to the previous year, while the price of used properties was down 13.7 percent..."
at http://www.wsws.org/articles/2012/mar2012/spai-m22.shtml
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