Wall St. Cheat Sheet

Follow @wallstCS

Spain’s Rajoy Postpones Crucial Cuts, Risking Deficit Miss

January 23 2012 Tweet Email This

Spain may postpone deeper budget cuts until after a regional election in March in a political move that puts the nation at risk of missing its deficit goal for the second year.

Hot Feature: The Greek Debt Crisis: A Deeper Look

The ruling People’s Party, led by Prime Minister Mariano Rajoy, “doesn’t want to get burnt before the Andalusian election,” said Antonio Barroso, an analyst at Eurasia and a former Spanish government pollster. In March, the PP will seek to end 30 years of Socialist rule in the southern region of Andalusia, and “won’t take any kind of measure that would undermine its ratings in the region.”

Since the PP government took over on December 21, Spain’s 10-year bond yields have risen 10 basis points to 5.5 percent, increasing the spread between Spain’s benchmark bonds and German bunds of similar maturity to 359 basis points.

Rajoy must cut the equivalent of 3.6 percent of gross domestic product off the budget deficit this year in order to meet a European Union target just as Spain may be entering its second recession in two years. By postponing steps until after the March 25 election…

Page 1 Page 2

Get Your FREE Special Report: 4 Things You Must Know About the US Economy Now!