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EU needs fiscal, bank integration: Spanish PM

Last Updated: Wednesday, June 6, 2012 - 10:45

Madrid: The European Union should move toward fiscal and banking integration, said Spanish Prime Minister Mariano Rajoy.

Rajoy also said that the EU should make clear that the euro is an irreversible undertaking, that ditching the euro is not being considered and it should support member countries that are going through financial difficulties.

The prime minister said that Europe has a deposit guarantee fund and says clearly where it is going to provide security, during an appearance before the Senate, the upper house of Spain's Parliament.

Rajoy spoke during a session at which the Spanish Socialist Workers Party, or PSOE, the main opposition party, asked him for an evaluation of the economic situation as it has evolved since last Nov 20, when the center-right Popular Party, or PP, won the general elections.

Rajoy defended himself against the criticism of Socialist Sen. Marcelino Iglesias,who said that when the PP won the elections the Spanish economic situation was not good, but now it finds itself in a situation of "permanent emergency".

The prime minister recalled that in the state's outlook for 2012 it is predicted that the economy will decline by 1.7 percent and that already-high unemployment will grow, and that is the reason why it had been announced that it will be a bad year for the economy.

This is also a difficult period because the deficit is "unsustainable" and because the necessary reforms have not been made, but the situation can change because the PP has done so before, Rajoy said.

Last week, Spain suffered a severe downturn in the markets that raised the country-risk premium to record levels, something that makes it more expensive to get the country out of the crisis.

This week, the pressure has lightened up a bit and Tuesday the risk premium - the extra return investors demand on Spanish government bonds compared to safe-haven German debt - has fallen to 509 basis points.


First Published: Wednesday, June 6, 2012 - 10:45
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