Austerity measures “suicidal” for Spain

UGT chief Candido Mendez and CCOO’s Ignacio Fernandez Toxo with King Juan Carlos
UGT chief Candido Mendez (right) and CCOO’s Ignacio Fernandez Toxo (left) with King Juan Carlos

Amid tax increases and public spending cuts union leaders in Spain have told King Juan Carlos that they are opposed to an international bailout and that the austerity measures introduced by Mariano Rajoy’s government are “suicidal” for the country.

Prime minister Rajoy admitted last week that Spain may have to request further assistance from the ECB but that it would depend on the conditions. Spain has already requested 100 billion euros to prop up the banking sector which is drowning under billions in bad property loans.

Following an hour-long meeting with the monarch on Tuesday, a statement issued by the General Workers Union and the Workers Commission said they are generally opposed to any further financial aid as the conditions would likely push the country further into recession and increase pressure on already struggling Spaniards who are suffering from two years of spending cuts and tax increases as the government attempts to reduce it’s budget deficit.

The statement also said that the public spending cuts and labor reforms already enacted were “suicidal for our country (and) were putting a brake on possible economic recovery and job creation.”

Since Rajoy’s remarks last Friday, pressure on Spain has eased slightly and the 10-year bond yield was at 6.7% on Tuesday.

King Juan Carlos has been in the news himself recently following his expulsion from the World Wildlife Fund last month. He had held the position of Honorary President for 30 years but was voted out after photographs of his hunting trip to Botswana showed the monarch posing, with a shotgun, next to a dead elephant.

No official comment has been made by the royal palace following the meeting.

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Healthcare workers angry over new laws for immigrants

Public health protest in Madrid last month
Health workers protest in Madrid last month

Healthcare employees across Spain are uniting as conscientious objectors in protest at new laws that require them to deny treatment to illegal immigrants.

The new royal decree, to be passed on Friday, removes the right to free health care for illegal immigrants in Spain. The decree comes into effect on September 1st.

As a result of the change any immigrants without a residency card will be denied treatment at public hospitals. Exceptions will be made if the person seeking treatment is under 18, pregnant or requires emergency treatment.

The change is part of Mariano Rajoy’s austerity measures intended to reduce public spending to facilitate meeting the budget deficit target set by Europe.

However, healthcare workers have hit out at the decry saying it is “unethical” and “inhumane” and they are registering their objections.

Across Spain over 800 doctors have already signed forms, distributed by the Society of Family and Community Medicine (Semfyc),  objecting to the law.

The doctors are not alone and the government faces a serious backlash against this decry. The Medical College Association has said the new law “violates the ethical principles of medicine and the code of professional ethics”.

Also against it, the Spanish Association of Neuropsychiatry said the law marked “a regression in human rights” in Spain.

Since the measure was announced in April protests have taken place outside hospitals and health ministries across the country.

A number of Spain’s autonomous regions, heavily indebted and with new budgetary  restrictions, have said they will defy Madrid and continue to provide basic healthcare and medication for anyone that needs it, regardless of their residency status.

Is Spain right to introduce means tests for Britons?

Guest post by Anna Nicholas

In the midst of its economic crisis,Spain has declared that it will now demand ‘proof of income’ from Britons and other European nationals hoping to settle in the country, claiming that as a consequence it will save €1 billion annually.

Many Britons have taken advantage of the Spanish public health system
Many Britons have taken advantage of the Spanish public health system

It’s hard to blame Spain. For years now an increasing number of Europeans have entered the country-Britons being the worst offenders- purely for ‘health tourism’ purposes. Spanish hospitals have a reputation for offering an excellent service, shorter waiting lists, and cheaper treatments and many migrants have availed themselves of the public health system at a huge cost to the country. The Spanish government estimates that at least 700,000 foreigners have moved to Spain just to make use of the healthcare services on offer. Now all that is set to change.

In the 2004 EU directive on free movement member states were permitted to impose their own entry conditions on other EU citizens of member governments and so Spain has finally decided to put that codicil to the test. No longer will anyone be able to pitch up in the country for longer than three months without private means, a job or at least a pension, and private health insurance will be a prerequisite except in the case of pensioners from other EU countries.

With 5.7 million unemployed, a whopping 24.6 percent of the workforce, Spain can no longer support those proving to be a burden on the state. In the near future in-coming European nationals will have to undergo a form of means test in order to prove that they will not be a drain on social services and will be fully able to support themselves financially. In a further move, the government under president Mariano Rajoy will attempt to arrest the number of foreign residents failing to register as living full time in the country and paying the necessary taxation.

By contrast, those Spanish nationals arriving in the UK face no such scrutiny and are not required to have private health insurance leading some to believe that Spain’s initiative will offer the green light to other EU member countries to follow suit.

With the EU dream practically in tatters and the euro teetering on the edge of an abyss, the final nail in the coffin would surely be the end of free movement –without financial strings attached- for the citizens of its member states?  As Spain breaks free of its constraints, it’s only a matter of time before others follow.  If that should happen and even if the euro doesn’t collapse like a soggy soufflé, what real future does it have?

Find out more about Anna Nicholas here or follow her on Twitter @MajorcanPearls.

Article source: My Telegraph

No bailout required for Spanish banks says Rajoy

Rajoy speaking in Chicago
Rajoy speaking in Chicago

Mariano Rajoy has said he does not believe the Spanish banks would need to ask for a bailout from Europe.

“I don’t think so,” the Spanish prime minister said when asked about the current situation in Spain’s banks.

Speaking in Chicago where he attended the two-day Nato summit, Rajoy expressed surprise at comments from new French Permiere Francios Hollande who said he was in favour of a European mechanism to support the recapitalisation of Spain’s banks.

“I don’t really know if Mr Hollande said that, because if he said it must be because Mr Hollande has information that we don’t have,” Rajoy added.

Hollande commented that it would be “desirable” for there to be recapitalisation of Spain’s banks.

These comments come shortly after Moody’s ratings agency cut the ratings of 16 Spanish banks, and Santander UK PLC, by one to three notches due to the effects of Spain’s second recession and the negative outlook on recovery.

Rajoy was keen to point out that his government was taking the necessary steps to ensure a quick recovery.

“In Spain, I think the measures we are taking are the measures that must be taken,” he said.

Rajoy was clear that the cuts he is making are the right ones as are the reforms introduced to the financial system to clean up the banks toxic balance sheets.

“Austerity yes, growth too,” Rajoy said.

“But I would also like a clear, forceful message in defence of the euro project and an affirmation of the sustainability of public debt of all the European countries that are subjected to this talk,” he added.

He also added his support for Greece to remain as a member of the single currency zone saying “I don’t want Greece to leave the euro,”

Indignados take to the streets again

Spain Indignados
Thousands protested over the weekend

A year after Los Indignados first took to the streets across Spain, the group returned over the weekend to protest as Spain sits in a second recession while unemployment approaches 25%.

Thousands of people gathered across Spain united against Mariano Rajoy’s austerity measures which include cuts in social services, education and health, while the government pumps seemingly endless cash into the banks.

Everyone was there from pensioners and the unemployed to teachers protesting at education cuts. Protests began on Saturday and resumed on Sunday afternoon, and some were expected to continue until this morning.

On one of the hottest days of the year so far protesters gathered under banners reading “No to cuts” and “People, not Banks”  as demonstrations filled the squares.

A repeating chant of “They don’t represent us” was aimed at the country’s politicians as drums were beaten and handkerchiefs waved with a carnival atmosphere.

However, it wasn’t all peaceful and protest organisers say up to 20 people were injured during what they say was excessive violence used by the police to clear another demonstration earlier on Sunday.

Javier Bauluz, a photographers from Associated Press, said he was pushed and struck in the face by a police officer “for doing my job”.

“The general attitude was to get us out of the square and prevent us from working, shoving us if necessary,” said another photographer, Gabriel Pecot.

Turnout at the protests seemed to be lower than last year. Police estimate around 100,000 people protested across Spain.

Spain hoping to avoid Greek style bailout

Mariano Rajoy’s conservative government will be meeting today to discuss, and approve, an extra 10 billion euros of spending cuts and increased charges in health and education as part of his austerity drive and an attempt to convince investors that Spain does not need a Greek style bailout.

“The fundamental objective at the moment is to reduce the deficit,” Rajoy said in Madrid this week.

“If we don’t achieve this, the rest won’t matter: we won’t be able to fund our debt, we won’t be able to meet our commitments.”

Rajoy said his government is committed to making cuts and reforms to ensure the Spanish economy becomes stable and  productive. “We need this process of adjustments in order to grow and create jobs,” he said.

Despite a high demand for long-term bonds at auction earlier this week, the country’s economy is still struggling to get moving following the crash of 2007.

With the highest public debt Spain has ever seen and the highest unemployment in Europe, Rajoy’s government have already introduced 50 billion euros of austerity cuts across the country which has resulted in protests from unions and the public.

With many Spaniards already doubting that the country can bounce back Rajoy’s announcement may be seen as a threat to encourage the people of Spain to accept the new cuts as a necessary evil that may be the only choice Spain has left.

“No one can expect such deeply rooted issues to be resolved in a few weeks,” Rajoy said.

General strikes across Spain

General strike in Spain
Protests were held across Spain today

As promised unions across Spain have gone on strike today in protest against labour reforms which Mariano Rajoy’s government hopes will help cut unemployment and revitalise the country’s struggling economy.

The unions have claimed strong support from the transport sector, manufacturing, and even local television stations which are off-air today.

Despite support from the sector, and in accordance with agreements made with the government, transport workers ensured bus and rail services were kept running but at a minimum, while  domestic and European flights were cut to a fraction.

According to reports there were scuffles between protesters and police in Madrid as workers from Spain’s largest unions picketed outside the capital’s bus depot early this morning. A total of 58 people were arrested while nine were injured, the interior ministry said.

The UGT union said that participation in the strike was “massive” and that virtually all workers at Renault, Seat, Volkswagen and Ford car factories around Spain had walked out in support.

Spain has the highest rate of unemployment in Europe, currently at 23%, and has been struggling to bring it’s finances under control, despite billions of euros of austerity measures already implemented.

“The question here is not whether the strike is honoured by many or few, but rather whether we get out of the crisis,” Finance Minister Cristobal Montoro said.

“That is what is at stake, and the government is not going to yield.”

Other struggling eurozone countries are watching events in Spain closely and some see today’s general strike as the start of a Pan European revolt against the self-defeating policies of austerity implemented by the non-elected.

This is the first real test for the conservative Partido Popular (PP) which took office in November, and with a further 40 billion euros of spending cuts expected to be announced in tomorrows budget this could prove to be the week that seals the future for Rajoy’s government.

Recession for Spain in 2012, says EU

The European Commission have said that Spain’s economy will fall into recession once again during 2012, adding that additional austerity measures may worsen the situation.

Following a 0.7% expansion of the economy in 2011 the EU predict a 1% contraction this year. The commission had previously predicted growth of 0.7% for 2012.

“Additional fiscal measures in the forthcoming budget may significantly change the picture,” the commission said.

Spain’s efforts to reduce the deficit gap are being stifled by a fall in growth since the final quarter of 2011 and the International Monetary Fund (IMF) expects Spain’s economy, the fourth-largest in the Euro zone, to contract 1.7% this year. This will be the second official recession in as many years and will make it even harder for Rajoy’s government to meet it’s targets.

Private spending will be “significantly weaker” this year, exacerbated by “persistently high” unemployment across the country, the commission said. However, they also expect exports to be “relatively resilient,” as inflation slows to 1.3%, below the euro-average, and down from 3.1% in 2011.

Mariano Rajoy, in power since election victory in November, has already increased taxes and cut spending in efforts to reduce the deficit by around 15 billion euros. He has been waiting the EU forecasts before drafting the budget next month which is expected to contain further spending cuts and tax increases – all part of the plan to reduce the deficit gap to the EU target of 4.4%, a target Rajoy thinks impossible.

Spanish parliament dissolved 4 months early

Spanish Prime Minister Jose Luis Rodriguez Zapatero has dissolved the Spanish parliament in preparation for a general election in November.

The Prime Minister signed a decree dissolving the parliament and informed King Juan Carlos.

It is thought that the opposition Popular Party will lead a new government following the election which is penned in for November 20th.

Zapatero said in July that he would not run for re-election after eight years in power.

Zapatero’s party lost much of it’s traditional support base due to their unpopular austerity measures and the opposition has gained a record lead, according to opinion polls.

Zapatero told reporters he was confident in future saying “I know that sooner rather than later we will overcome the current difficulties,”