Spain next in the debt dock?
Share
Spain reacted angrily today to criticism of its economy, accusing the EU's economy commissioner of wrongly tarring it with the same brush as debt-ridden Greece. As Spanish stocks slumped today, it is now blaming Brussels for shaking investors' confidence.
Speaking after the European Commission turned the spotlight on Greece's finances yesterday, EU Economy Commissioner Joaquim Almunia expressed concerns that Spain and Portugal had also been suffering from "a continuous decline in competitiveness" since they joined the Eurozone.
Spanish Finance Minister Elena Salgado responded today, accusing Almunia of rashly oversimplifying matters. "Spain’s situation is not like that of Greece, not in terms of public debt nor in terms of economic strength,” Ms. Salgado told radio Cadena Cope.
Nevertheless, the Spanish economy has been struggling to come out of recession, grappling with after effects of the collapse of a decade-long housing boom.
Last week, the government raised its budget deficit forecast for 2009, putting at 11.4% of GDP. This is figure is far in excess of the 3% limit for Eurozone countries and just below Greece's. But Spain is keen to point out that it has a relatively low level of debt relative to GDP and, until the crisis hit, it had a decent reputation for financial management.
