Brussels, 25/07/2012 (Agence Europe) - On a whirlwind tour of Europe, Spain's economy minister, Luis De Guindos, met his German counterpart in Berlin on Tuesday evening and his French counterpart in Paris on Wednesday 25 July. A joint press release was issued after each meeting stating support for Spain's efforts to reform its budget and economy, the need for speedy action to implement the latest eurozone summit's decisions and the fact that excessively high interest rates are being demanded for Spanish bonds. Given the independence of the ECB, neither press release mentions the option of the European Central Bank buying up large amounts of Spanish bonds in the near future to drive down interest rates, although the Spanish government has requested this on several occasions.
In their press release, De Guindos and the French economy minister, Pierre Moscovici, say that the rapid introduction of the bailout programme for Spanish banks, which was agreed upon by the Eurogroup last Friday (see EUROPE 10660) and approved on Wednesday by the European Commission (in light of EU state aid rules - see article below), will be crucial for restoring confidence. They pledge to rapidly apply the eurozone summit's decisions (see EUROPE 10645) by encouraging a rapid agreement in principle about future EU rules to be unveiled by the European Commission to introduce a single European supervisory body with the involvement of the ECB, as a precondition for direct but conditional recapitalisation of Spanish banks by the eurozone's bailout funds. Madrid and Paris are actively contributing to the drawing up of a roadmap for completion of economic and monetary union with ambitious proposals to ensure solidarity alongside greater political integration.
As in Berlin the day before, the two ministers agree that the current interest rates charged by the money markets for Spanish sovereign debt do not reflect the healthy fundamentals of the Spanish economy, its growth potential or the fact that its debt is affordable. Interest rates went down slightly on Wednesday following statements by the ECB (see related article below). De Guindos and Moscovici say that Spain is crying out structural and budgetary reforms (introducing flexibility on the labour market, for example) in line with the European summit recommendations.
Madrid has received great backing from EU Internal Market Commissioner Michel Barnier, who said that Spain is facing a number of crises - social, bank and budget - and is taking the right decisions to deal with them. Spain does not stand alone, he explained, because that is the European Union's raison d'etre. (MB/transl.fl)