Spain’s Prime Minister has been forced to deny a financial market rumour that his country was about to ask for 280 billion euros in aid from Europe.
Jose Luis Rodriguez Zapatero said that idea was “complete madness” and he insisted Spain is strongly solvent.
At a news conference in Brussels, where he was questioned about Greece’s problems, Zapatero said: “Any speculation about other parts of the euro zone is completely unfounded and irresponsible”
Some economists have speculated Spain’s poor economic prospects could eventually lead it to suffer Greek-style financing problems.
But euronews business reporter Constantino de Miguel said: “Spain’s situation is indeed difficult. There was a big slump in the housing sector which dramatically increased private debt. There is massive unemployment at 20%, a budget deficit of over 11%. However Spain, unlike Greece, has good and clear economic figures and the Spanish economy is more diverse than Greece. It makes up 12% of the euro zone economy. So considering that maybe investors have over reacted, but if Madrid were to confirm it needed help from the IMF there’d be dramatic consequences for Europe as a whole.”
The aid rumour was one factor driving down shares on the Madrid stock exchange on Tuesday. Zapatero said his country’s policy would not be dictated to by the markets. He added: “The economic outlook is on the side of growth.”