An election in Spain with unsurprising results failed to give the market a boost on Monday morning.
After a negative opening, the main indices in Frankfurt, Paris and London all extended losses, probably due to the warning from Moodys agency that France may lose its AAA credit rating.
In Madrid, stocks also lost ground.
Spain’s borrowing costs continue to rise, with the gap between its rate and Germany’s getting larger.
According to analyst and business professor Jose Ramon Pin, tackling the deficit and reviving the economy will not be easy. “Reducing the public deficit – as the EU and markets are demanding of us – is relatively easy to do,” he said. In this case, you have to cut spending and increases taxes. But stimulating the Spanish economy at the same time as reducing the deficit is much more complicated.”
There are tough times ahead for Spain as the new government aims to cut the deficit to three per cent of GDP by 2013, down from nine per cent last year.
The country is already heading towards its second recession in just four years.