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IT IS a calm before the storm. As Mariano Rajoy, the prime minister, waits for regional elections in Galicia and the Basque country on October 21st, Spain is inching towards asking for a “soft” bail-out. But officials insist no formal request is imminent. Markets are calm, but watchful. Although Standard Poor’s, a rating agency, has downgraded Spain to close to junk, yields on ten-year debt have fallen to a six-month low of under 5.5%. Some say a request for help that unleashes unlimited bond-buying by the European Central Bank (ECB) would cut another 1.5 percentage points, making Spain’s borrowing costs manageable. Indeed, they could fall so low that the bail-out credit line became redundant and the ECB would not even need to buy bonds: officials talk of a “virtual” rescue.

So why not put in a request now? One answer is nervousness about a possible German-led “no”. That, officials say, would destroy the euro overnight; better to wait for a green light from Berlin. But Spanish foot-dragging cannot all be blamed on northern Europeans. The thorniest problems are the deficits and bail-out terms. Last year’s deficit was 8.9% of GDP, way above the 6% target. This year’s target is 6.3% and next year’s is 4.5%, requiring more cuts in the teeth of recession. Yet unemployment is already 25%. Fierce austerity has provoked the first signs of social unrest and is fuelling nationalism in Catalonia, where an election on November 25th could produce a separatist landslide.

Deficit hawks in Germany, Finland and elsewhere will insist on Spain meeting its targets. But it is sure to miss this year’s. And officials admit that the 2013 budget is based on an optimistic assumption of a 0.5% fall in GDP. The IMF, more realistically, predicts GDP shrinkage of 1.3% in 2013.

If Spain’s deficit ends up even close to this year’s target, Madrid will claim to have produced a near miracle. Cutting a deficit that much during such a deep recession would be a rare achievement among big OECD countries, says a senior official. But although the tax take is on target, the social-security system, regional governments and a tax amnesty are all going off course. In mid-December Mr Rajoy must decide whether to index-link pensions, adding some €2.5 billion ($3.3 billion) a year to spending. The deficit was running at an annual rate of 8.4% of GDP in the second quarter, and Spanish deficits normally widen over the second half of the year, according to a study by Michele Boldrin and J. Ignacio Conde-Ruiz of the Fedea think-tank.

Moreover, the tide of opinion against excessive fiscal tightening is turning. The IMF now says that the fiscal multiplier, measuring the impact of deficit cuts on GDP, is higher than it previously thought. That explains why Spain is happy to see the IMF involved in setting conditions for an as yet untried ECB-backed soft bail-out. Madrid holds up Portugal as an example of how rescue programmes can fail by being too harsh (see article). It thinks structural reforms, to which it claims to be firmly committed, matter more than the deficit. Officials believe the message is getting through to Brussels and Frankfurt. Spain’s own 2012 deficit target has shifted from 4.4% to 6.3% in the past 18 months.

Spaniards do not like the idea of being bossed about by outsiders, which explains why Mr Rajoy is keen to wait until after the Galician and Basque elections. There are other advantages to delay. The longer Spain waits, the more the IMF’s view may win support, bringing softer terms. But there are dangers, too. Yields have come down from 7% mainly because markets expect a bail-out. They may tire of delay—and Mr Rajoy may find he is asking for help at a time of panic, not calm.

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