Eurozone: Spain downgrade threat follows a familiar trend

29th July 2011

International investors are concerned that Spain, the eurozone's fourth largest economy, hamstrung by anaemic growth rates and high unemployment, will fail to put its fiscal house in order and need a Greek-style bailout, adds the Daily Telegraph.

Mindful Money economist blogger Shaun Richards warned yesterday of problems in an array of Eurozone countries – including the Spanish economy contracting.

He says on today's blog: "Not only does Spain's government not have control over the regions but evidence has been emerging of over-spending by them. For example, Catalunya has a projected budget deficit of twice its target for this year and the new government in Castilla-La Mancha  announced  a month ago that its budget deficit and the  debts it has with suppliers (mainly in the healthcare sector) are much larger than previously assumed. I discussed on here only yesterday that there were signs of slowing economic growth in Europe which of course does not help Spain."

He adds: "Much of the criticism here hits home and it does so for two main reasons. The first is that there are plain weaknesses in Spain's economic structure and a general economic slowdown will pose serious problems for her. The second is that the logical inconsistencies of the latest bail out package are being exposed in what is by now a familiar trend." Read more here.

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