On 20 July, Euro area finance ministers formally approved a financial assistance programme in order to recapitalize the Spanish banking system. The loan will cover financing needs of up to EUR 100 billion, although the specific amount will not be determined until a comprehensive assessment of individual banks is finalized in September. The aid will be provided by the European Financial Stability Fund (EFSF) until the European Stability Mechanism (ESM) becomes available; it will then be transferred to the ESM without gaining seniority status. However, under the agreement reached at the EU summit on 28-29 June, the ESM will only become operational when a single EU banking supervisory authority is established, which is not expected to take place before 2013. In return for the financial assistance, Spain will have to restructure its financial sector and improve banking regulation. The aid will be channelled through Spain's state-run bailout fund (FROB, Fondo de Reestructuracion Ordenada Bancaria), and then redirected to the financial institutions, once their restructuring plans are approved. Contrary to previous statements, in which European authorities declared that the bailout package intended to break the vicious cycle between banks and sovereigns, according to the document, the Spanish government will retain the full responsibility of the financial assistance. As a result, the announcement failed to calm investors, and yields on Spanish bonds skyrocketed to new highs, reaching 7.6% on 24 July, with the spread against German Bunds soaring to 638 basis points. Yields above 7% are generally considered unsustainable and mark the level where Ireland and Portugal were forced to seek protection. High financing costs combined with Spain's mounting fiscal woes are causing an increasing number of analysts to speculate that Spain will be forced to ask for a full bailout in the near future.
Eurogroup approves Spain bailout
July 24, 2012
Looking for forecasts related to Other in Spain? Download a sample report now.
Spain Economic News
October 7, 2016
In August, industrial production expanded 4.0% from the same month last year in working-day adjusted terms.
October 5, 2016
The Markit Purchasing Managers’ Index (PMI) Composite Output Index came in at 54.1 in September, which was slightly below August’s 54.8 reading.
September 30, 2016
Spain’s current account balance incurred a surplus of EUR 3.0 billion in July, which was above the EUR 2.7 billion surplus recorded in the same month of last year and marked the highest reading since December 2014.
September 29, 2016
In August, retail sales rose 4.9% over the same month last year as the discount season drew to an end.
September 29, 2016
In July, the Spanish Board of Architects (Colegio de Arquitectos Técnicos) granted 6,267 new construction permits, according to data published by the Ministry of Public Works (Ministerio de Fomento).