Talking about FT.com / Comment / Opinion – Spain braces itself for a crisis made in Germany

 

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FT.com / Comment / Opinion – Spain braces itself for a crisis made in Germany – FT video – On May 9, when European Union leaders approved the rescue package embodied in the European financial stability facility, Spain saw the light at the end of the tunnel. Six months later, it is looking like it belongs to an incoming train. Seeing how the story unfolded in Greece and Ireland and watching the crisis heading for Portugal, it is no wonder that the dominant sentiment in Spain is concern. But more than that, the prevailing feeling is one of frustration with Germany. With the May agreement in its pocket, the Spanish government went home and put together a reform package that had everything required to get Spain out of its collision course: government expenditure reductions, labour market reforms, public sector pay cuts, pension freezes, an extension of the retirement age and a rise in value added tax. Subsequently, the government, with the aid of the central bank, decided to rein in regional and local government deficits, forced regional saving banks to merge and made public its bank stress tests. Most of the measures are now in place. Spain’s current problems start not at home but rather abroad – in Germany, to be precise.

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