Pressure On Spain To Cut More

Frightened by the uncertainty about the economic impact of the announced austerity programme, the European Commission now wants the Spanish government to cut budgets even more, and implement reforms in the labor market. Back in Brussels the EU Commission, the Council and the Parliament is fighting over who is the real government of EU.

“You can’t meet four times a year and play government.”

Guy Verhofstadt


The latest financial developments in Spain has only increased the uncertainty about the economic impact of the announced austerity programmes. So, the EU Commission have now asked Spain to cut another 8 billion euro, and implement labor market and pension reforms, as a new question arise in Brussels; who are really in charge of the Union?

The European Commission now wants the Spanish government to cut another 8 billion euro, in addition to the 11 billion budget cuts that are already decided.

Of those, €5bn will comes from the central state, and another €3bn from the regions.

Brussels wants the Zapatero government to achieve the total structural adjustment of 1.75% next year, El Pais reports.

The goal is to reduce the deficit to 6% in 2011.

According to El Pais, the 11 billion specified so far, over half come from the central government through the reduction in wages, while the rest came from the region which are already raising taxes.

The European Commission have also asked Spain to implement labor market and pension reforms.

The paper quotes finance minister Elena Salgado as saying the purpose was to regain the confidence of the markets, but it seems that the austerity programmes are the one of the main reasons that the markets have lost the confidence in the whole thing.

We Are The Government…Aren’t We?

Meanwhile, back in Brussels, the European Union is firing up for another inter-institutional fight.

The EU Commission and the EU Parliament ganged up on the EU council yesterday, and rejected the claim that the council would be the economic government.

Jose Manuel Barroso says the Commission had been empowered by the Treaties to be the economic government, and that The Council does not have the instruments to do the job.

With a permanent secretariat, that is indeed the case.

In the parliament, a cross-party coalition of conservatives, liberals, socialists and Greens have joined the protests against what they see an illegitimate power grab by the European Council.

Guy Verhofstadt made the point that “you can’t meet four times a year and play government.”

The parliament will make its representation of its position to the European Council tomorrow.

If rejected, the parliament threatens a policy of non-co-operation, blocking existing legislation.

The show must go on. (At any cost, it seems).

Related by the Econotwist:

EU Officials Fears Second Depression And War

EU Prepares For Spanish Bailout, Newspaper Says

EU Deficit Increased By14 Billion Euro In First Quarter Of 2010

Fitch Gives EU Bailout Tripel-A Rating

Warns Against Euro Zone “Elite”

Europe’s Bailout: From Bad To Worse

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