Spain’s financial woes continue as The Economy Ministry’s revealed its budget deficit has increased by 25.5bn euros (around £20bn) for the months between January and April. That’s around 2.4% of GDP, but when you realise that their annual target of budget deficit is 3.5 for the year, you can tell those are pretty serious numbers.
Then throw in the country’s ongoing banking crisis - with stocks of its fourth largest bank, Bankia tumbling today even after its £15bn bailout which happened on Friday - and it’s looking ever more gloomy. The Prime Minister Mariano Rajoy said when Bankia’s been ‘cleaned up’ it will be sold: “….Therefore the state will recover the investment it is making now. The alternative to this would have been doing nothing, that is to go bust, so what we are doing, if you allow the expression, is grabbing the bull by the horns. We cannot allow a financial entity to be in an impossible situation because it affects our country overall."
In addition to Bankia, the credit ratings of 4 more banks were downgraded. 3 banks are now considering a merger. And today we hear that Spain’s retail sales plunged last month, a record drop, down by 9.8% compared to last April’s figures. The country’s central bank has also issued its monthly analysis of the economy and - surprise surprise – that’s not looking good either. It predicted growth would shrink until at least the end of next month. All this news is sure to pile on the pressure for Spain to answer that nagging question from analysts about when (not if) like its Greek cousins – it might be asking for a bailout from the IMF.
Written and presented by Marverine Cole