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Dublin: 7 °C Tuesday 18 June, 2013

Catalonia increases Spanish debt fears

Spain’s largest region seeks €5 billion rescue as Spanish government insists it does not need a bailout. Heard that one before?

 Gaudi's Sagrada Familia church in Barcelona, Catolonia in Spain.
Gaudi's Sagrada Familia church in Barcelona, Catolonia in Spain.
Image: Manu Fernandez/AP/Press Association Images

SPAIN’S LARGEST REGION has announced that it needs a €5 billion bailout from the government in Madrid, piling more pressure on prime Minister Mariano Rajoy as he fights off suggestions that Spain needs a bailout.

Catalonia, which has debts of €42 billion, announced that it can no longer get loans on international markets that it needs to support its debt. It will become the third of Spain’s 17 autonomous regions to formally request aid from the government’s €18 billion rescue fund.

Madrid “can’t ignore” the regions’ dire straits, Prime Minister  Rajoy said on Tuesday. Several of Spain’s regions have been locked out of financial markets, forcing Madrid to pledge that it will raid the national lottery fund to fund them.

However, some of the regions suspect that the government in Madrid may use their troubles to centralise more power in the nation’s capital. A spokesman for the region’s government in Barcelona, the capital, said that it would not accept political conditions over budgetary measures “because the money is Catalan money”. Catalonia is a net contributor to the Spanish exchequer, with 8.5 per cent of its annual GDP financing services in other parts of Spain.

The request comes as data from the European Central Bank showed that outflows from Spanish commercial banks reached €74 billion in July, double the previous record. Deposits at Spanish banks fell 4.7 per cent to €1.51 trillion in July.

Spain has not made a formal request for help itself, beyond what it agreed on to recapitalise its banks.

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Comments (11 Comments)

  • mattoid 29/08/12 #

    Another card removed from the base of the house of cards?

    Reply
  • Your picture indeed is very misleading. Catalonia is the region that has always taken the lead against bull fighting in Spain, they see it as not part of their Catalan culture and instead associate the ‘sport’ with Spain. For an article about Catalonia to have a picture of a bullfight is very strange.

    Spain has huge problems. The Madrid vs. the other Spanish regions divide is worsening by the week. The government might not only have economic problems to deal with if the increasing regionalism and us vs. them (Madrid) continues to grow.

    Reply
  • and Ironically Catalonia is the economic powerhouse of Spain, always running a surplus but it bails out Madrid, and no has to ask for some of its money back to make up that shortfall.

    If it gets too bad in Spain then Catalonia will walk away from being part of a country that many there never felt it belonged to. Overnight their would be a new strong economy in Europe and the rest of Spain would fall apart.

    Whatever way you look at it, Spain is the new Greece. Hard to see how the EU can bail it out when they have such trouble over a minnow like Greece.

    Reply
  • Mr Clarke, why don’t you wear a Mexican hat on your picture to make it even more misleading? Bullfighting is forbidden in Catalonia because of its cruelty and because it’s an Spanish Symbol. To watch other Spanish traditions write “Toro de la Vega” in youtube.
    Basically the situation is as follows:
    1. Spanish Government collects €Xbn in Catalonia
    2. From that amount there are between 16 and 22bn that do not come back to Catalonia, that’s what I would call a free bailout.
    3. Catalonia needs 5bn to pay its debts, just a 25% of taxes racketed by Spain.
    4. Spain lends Catalonia the money that it has previously racketed + interest.
    5. Did you think that Ireland was being ripped off by the the EU / IMF?
    Next September the 11th, Catalonia’s National Day, there will be a massive rally for independence as Catalans have had enough being stolen the money and moreover being insulted.
    By the way, Spain is a State, not a nation.

    Reply
  • Doesn’t look good. Where will it all end, I ask.
    BTW, Your picture is misleading. Catalonia has banned bullfighting.Their last bullfight was on 26th September last year.
    This is the link to the Guardian’s report
    http://m.guardian.co.uk/world/2011/sep/25/last-bullfight-in-barcelona?cat=world&type=article

    Reply
  • The people of “Spain” are calling for everybody to go to madrid on 25th september to OCCUPY the congress until the government resign..the mainstream EU media reporting of this is non-existant.

    “Spain: Occupy Congress on September 25 – 25S/2012 – #SpanishRevolution #OcupaelCongreso http://www.occuworld.org/news/70392
    Madrid, around the House of Representatives on September 25. Calling to citizen: Warning: this may be the next and final mobilization of citizens from which to start the process of change that is left behind the current system and lay the foundations for real democracy. The action is loud and clear: On 25 September, we are going to Madrid will massively from everywhere of Spain, in order to surround the Congress of Deputies and stay there indefinitely, until the dissolution of the courts and the opening of a constitutional process to drafting a new constitution, this time, of a real democratic state. All citizens are invited to participate, either individually or through assemblies, civic platforms, etc.. Change is necessary and will be led by the people. manifiesto: We, ordinary people are sick of suffering the consequences of a crisis that we have created, we came together to write this manifesto and invite to everyone to join the claims that we claim. We believe that the situation has gone beyond all tolerable limits and that we are victims of an unprecedented attack, that using the crisis as a pretext, is ruining our lives, and whose culprits are those who have configured as an untouchable oligarchy, with the complicity of all the political forces represented in parliament, manipulating all the powers of the state to maintain their privileges and excessive and illegal enrichment. There is no way to hide that we live in a gigantic social fraud, with governments that..”

    Reply
  • Why have a horrific picture of animal cruelty illustrating this article?

    Reply

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