Spain’s prime minister has made the bold call that his nation’s debt crisis is over, and austerity measures are well on track according to the WSJ:
“I believe that the debt crisis affecting Spain, and the euro zone in general, has passed,” Mr. Zapatero said in an interview with The Wall Street Journal on Tuesday.
Mr. Zapatero reiterated his government’s commitment to economic reform and fiscal austerity, including plans to cut the country’s budget gap to 6% next year and to 3% in 2011. The gap is forecast to be 9.3% in 2010.
His statement is part of a PR effort to shore up investor confidence in Spain, and it’s easy to think he’s jumping the gun here. This could be his ‘Mission Accomplished’.
Yet Spanish bond yields, at just 4.12% are in fact well below where they were during June and July, which shows much improved confidence in the nation’s creditworthiness. Which means Mr. Zapatero’s comments have some substance to back them.
In contrast, yields for Greece, Portugal, and Ireland are near peak levels as shown below. So Spain is a different animal, and is no longer part of the old ‘PIIGS’ characterization. For Spain the debt crisis may indeed be over, while for other European nations it continues.