Spanish officials are battling to kill off unflattering comparisons to the embattled Greek economy.
Unfortunately, while some of Spain looks better than Greece in many respects, it still has substantial problems — notably 20% unemployment and a budget deficit at 11.4% of GDP. (With union challenges to spending cuts just like in Greece)
Moreover, fighting to change market perception doesn’t say much about their confidence. If your debt is truly secure then you don’t need to jawbone, thus this just makes us more worried:
Spanish officials argue they are better off in several respects. National debt as a proportion of GDP — 66 per cent this year and peaking at 74 per cent in 2012 — is well below the EU average and far under Greece’s 113.4 per cent for 2009.
Spain’s Socialist government rejects suggestions that the eurozone’s fourth-largest economy, which had posted budget surpluses and robust growth as recently as 2007 but has suffered dearly following the collapse of a real estate bubble, has a debt mess similar to Greece’s, which has driven down the euro and shaken the European Union.
But Spain did see fit to dispatch a team led by Finance Minister Elena Salgado to London and Paris last week to meet with ratings agencies and investors in an effort to explain Spain’s deficit-reduction plans and restore its credibility.
And at times the government has looked on the defensive.
Last week it sent Brussels a document that raised the possibility of lowering most Spaniards’ retirement pensions by changing the way it measures their working life. Amid a furious outcry from unions, hours later the government literally erased that paragraph from the document, saying it was not a firm proposal but rather an accounting simulation.
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