Speaking in Warsaw on Thursday, his first press conference in two weeks, Prime Minister Mariano Rajoy finally uttered the word “bailout,” but only to deny that Spain would require one.
“There is no sense in talking of a bailout,” Rajoy said with his Polish counterpart Donald Tusk at his side. “Spain is not going to be rescued; it does not need to be. We don’t want to create unjustified alarm. We ask for prudence.”
With Spain being verbally assailed by both France and Italy in recent days, the markets continue to turn the screw on Thursday as the country’s risk premium remained above 400 basis points. Neither did Rajoy’s confidence resound among his European partners: a delegation from Brussels arrived in Madrid Thursday to pore over the country’s accounts. It will present its findings to the Union’s economy ministers, who will decide at a meeting on June 22 if Spain is doing enough to tackle public and private debt. If it finds that it is not, sanctions could follow.
The visit, the second of its kind in a month, was made because Spain was identified in February as having excessive imbalances. Eleven other EU countries featured on the list but Spain, alongside Cyprus, brought up the rear in six of Brussels’ 10 indicators.
On the home front, the government admitted its attempt to ensure fiscal viability in the regions still faces challenges, with Finance Minister Cristóbal Montoro pointing to a “black hole” in Andalusia’s books. The regional PP said that the governing Socialists “had not sold one euro” of its planned public debt issuances.
In Madrid, the Budget Stability Law was passed in Congress with support from the CiU and UPyD, but without a pact with the Socialists that might have emitted a message of unity to a nervously observant continent.