Sep
1
Spanish Prime Minister Mariano Rajoy
said the country is unable to fund itself at the current cost of
borrowing and needs sacrifices such as higher taxes to restore
its national standing.
“If we do this we will start to recover confidence as a
serious country that does what it says,” Rajoy said today in a
speech to members of his People’s Party at Soutomaior Castle in
Galicia. “At the moment we can’t finance ourselves at the
prices of the market.”
Rajoy was addressing supporters in his home region on the
same day that increases to value-added tax take effect. Spanish
households already are squeezed by unemployment at close to 25
percent and austerity measures that will be equal to 15 percent
of gross domestic product by 2014.
“This is a sacrifice that comes at a very difficult time
for very many Spaniards,” said Rajoy, referring to the sales
tax. “If there had been any other alternative, does anyone
think that I would not have been the first one to adopt it?”
Rajoy said the main problem facing Europe was the
difference in financing costs between countries.
“This is the battle we are fighting and it’s the greatest
challenge that Europe has ahead of it,” said Rajoy.
Ten-year Spanish bond yields climbed yesterday to 6.83
percent while the spread over German debt with a similar
maturity surged to 552 basis points from 527 basis points on
Aug. 30. Standard Poor’s yesterday cut Catalonia’s credit
rating to junk status after Spain’s most indebted region said it
would need to tap a government rescue fund.
To contact the reporter on this story:
Charles Penty in Madrid at
cpenty@bloomberg.net
To contact the editor responsible for this story:
Frank Connelly at
fconnelly@bloomberg.net
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