Canarian Weekly
24-08-2012, 12:20
Spain’s Prime Minister Mariano Rajoy is considering pension cuts worth 115 billion euros in order to meet the demands for future aid and intervention by the European Central Bank (ECB).
It comes on the back of a damning report by leading Spanish economists in the Financial Times, criticising Rajoy as being too hesitant and unable to enact effective reforms. At a Ministers meeting on August 24th, a reform of unemployment benefits will also be discussed.
Cutting pensions is the ultimate taboo in this country that is already crippled by the debt crisis. Other options being considered by the Spanish government are to cut deductions on the purchase of property and insurance plans.
Finance Minister Luis De Guindos recently asked for intervention from the ECB ‘without limits or duration’, in light of a surge in interest on debt which could bring Spain below the deficit levels agreed with Brussels of 6.3 and 4.5 next year and spark a new freeze.
Contrary to rumours in the German press about the design of a cap on interest, the ECB has urged governments not ‘to speculate on the nature of a future European Central Bank intervention’ inSpain. The warning was enough to cancel declines and send the Madrid Stock Exchange into negative by more than one point.
According to Spanish newspaper El Pais, Mr Rajoy’s best weapon may well be to cut pensions, or better still to ‘freeze’ them.
Further tax rises may also be in the pipeline in Rajoy’s administration’s battle to bring the deficit down by the end of the year.
As Luis de Guindos stated, the Spanish government believes, “the Eurogroup will define the procedures for a bailout in the second week of September.” And before that happens, the government wants to ensure that it is able to meet its deficit targets, given that a rescue would be conditioned by a request for continuous information about public spending and revenue.
“With the cuts that we’ve made, we more or less know where we are in terms of spending,” says one government source. “But we don’t know how revenues are going to go.”
Meanwhile, some of the cuts that have already been introduced will begin to take effect on September 1st, when around 150,000 immigrants who are inSpain but do not have their residency status in order will no longer qualify for free healthcare. Five regions, theCanary Islands,Andalusia,Asturias, the Basque Country, andCatalonia have said that they will ignore the new rules from the central government and will continue to treat all patients
More... (http://www.canarianweekly.com/cuts-pensions-next/)
It comes on the back of a damning report by leading Spanish economists in the Financial Times, criticising Rajoy as being too hesitant and unable to enact effective reforms. At a Ministers meeting on August 24th, a reform of unemployment benefits will also be discussed.
Cutting pensions is the ultimate taboo in this country that is already crippled by the debt crisis. Other options being considered by the Spanish government are to cut deductions on the purchase of property and insurance plans.
Finance Minister Luis De Guindos recently asked for intervention from the ECB ‘without limits or duration’, in light of a surge in interest on debt which could bring Spain below the deficit levels agreed with Brussels of 6.3 and 4.5 next year and spark a new freeze.
Contrary to rumours in the German press about the design of a cap on interest, the ECB has urged governments not ‘to speculate on the nature of a future European Central Bank intervention’ inSpain. The warning was enough to cancel declines and send the Madrid Stock Exchange into negative by more than one point.
According to Spanish newspaper El Pais, Mr Rajoy’s best weapon may well be to cut pensions, or better still to ‘freeze’ them.
Further tax rises may also be in the pipeline in Rajoy’s administration’s battle to bring the deficit down by the end of the year.
As Luis de Guindos stated, the Spanish government believes, “the Eurogroup will define the procedures for a bailout in the second week of September.” And before that happens, the government wants to ensure that it is able to meet its deficit targets, given that a rescue would be conditioned by a request for continuous information about public spending and revenue.
“With the cuts that we’ve made, we more or less know where we are in terms of spending,” says one government source. “But we don’t know how revenues are going to go.”
Meanwhile, some of the cuts that have already been introduced will begin to take effect on September 1st, when around 150,000 immigrants who are inSpain but do not have their residency status in order will no longer qualify for free healthcare. Five regions, theCanary Islands,Andalusia,Asturias, the Basque Country, andCatalonia have said that they will ignore the new rules from the central government and will continue to treat all patients
More... (http://www.canarianweekly.com/cuts-pensions-next/)