Spain receives support from Germany

Rajoy with German Chancellor Angela Merkel
Rajoy with German Chancellor Merkel

German Chancellor Angela Merkel has praised Spain’s efforts to tackle the deficit problem and pull Spain from the economic crisis.

Merkel described Spain as an ally and acknowledged that the Prime Minister had inherited a “difficult situation”.

Her comments were welcomed by Spain as EU pressure grows for Mariano Rajoy to reveal the details of the planned banking reforms.

EU leaders are keen to read how Rajoy plans to fund the bailout of ailing Bankia which is likely to cost in the region of €19 billion. Officials are also interested to see if any other Spanish banks are going to follow suit and ask for help.

Spanish Deputy Prime Minister Soraya Saenz de Santamaria flew to Washington last week for a meeting with Christine Lagarde, the head of the International Monetary Fund (IMF) fuelling rumours that Spain is asking for a bailout, something that the IMF denied.

“There is no such plan,” said Lagarde.

Saenz de Santamaria said the purpose of the meeting was how to set up a fund to recapitalise European banks.

“The problem is not Spain as a country,” she said, “but our financial system in a given moment has needs just like the other states had at other times.”

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