Today Barclays makes £500m provision on forex probe (FT)
Eurostoxx50
about the corner

The Corner contextualizes the EU’s economy from Spain with exclusive analysis from market leaders.

Find out more

team

PM-Rajoy

Political instability weighs on Spain’s agenda

In Spain

MADRID | The Spanish government has suddenly disappeared from Europe’s scene. In the midst of a deep recession it crosses fingers hoping the German general elections’ aftermath might break the current deadlock on financial mutualisation and help to reconstitute the Southern front.

New in TheCorner

Are you interested in economic news?

Corruption is bleeding Spain’s mainstream parties as angry voters’ disaffection grows. Political stability is at stake with no alternative at bay. Both the centre-right and the socialists have become entangled in widespread illegal financing cases, coupled with spill over embezzlement scandals, just when citizens are faced with huge unemployment levels, pay cuts and a harsh austerity diet.

Catalonia’s government intention to hold a full split up referendum represents a major challenge for the country as a whole. While Madrid tries in vain to clam down this drive, the socialist party is disintegrating as its local branch has openly defied the national leadership over this issue.

No wonder Germany is becoming increasingly anxious to witness Spain faltering when Italy’s general election has driven that country in utter disarray. Confidential newsletters speculate that Madrid has received a harsh reprimand from Berlin and talks about resignation are on the air.

These troubled waters are drowning any serious initiative freezing Spain’s political agenda. Domestic scandals simply sap any authority to implement further reforms. The blatant overall failure of the labour market reshuffle in addressing the employment discomfiture has also thrown government in sheer bewilderment. Don’t expect any major move in months to come.

The Spanish government has suddenly disappeared from Europe’s scene. In the midst of a deep recession it crosses fingers hoping the German general elections’ aftermath might break the current deadlock on financial mutualisation and help to reconstitute the Southern front. A hopeless dream as France will try to come to save its dire prospects through a closer relation with its big neighbour. Spain risks being left adrift on its own.

2013 will be thrown to the dustbin. Madrid is ready to face the worst as home demand plummets and exports lose steam. The wait and see policy is unlikely to bring any improvement to a appalling situation. Yet, when polls show such a loss of public support it is unlikely government might risk further damage in implementing much needed reforms. It will simply struggle to survive each week till Friday afternoon, the better definition for a minority Cabinet you can find, while problems cumulate on its desk table. Unfortunately years to come might bring about a similar picture.

Help us with a Share

Leave a Reply

*