A Long Road Ahead
In Madrid, economic hopes remain low. The Government in Spain has announced that the attempt to help failing banks will cause it to go over the deficit limit of 6.3% GDP(Gross Domestic Product, one of the basic measurements of a country's economy.) Instead, they project a 7.4% deficit. This could anger or worry other European nations, as they agreed with the other members of the EU(European Union) that the deficit would not exceed the cap of 6.3 % GDP. Not only does this action worry members of the EU, but it also pushes the country closer to asking for a bailout from other members of the Union so it can pay its bills. Spanish officials have said they do not miss the agreement if the money used to help banks was not included, and if the recovery of banks because of the spending is a result. Also, the Spanish Prime Minister Mariano Rojoy has said that they will only ask for a bailout if the country 'really needs it', and if the agreement is 'reasonable'. Like other countries around the globe, Spain is still working with huge deficits, low tax income, and general consumer fear due to the housing collapse a few years ago. This has crippled the economy and has put the 4th largest economy in the EU into a long recession. The Spanish government has put in measures such as higher taxes and lower spending, but to the anger of many of Spain's people. Protests have erupted 3 times last week (as of 10-3-12) and citizens protest the government's actions. Like in the U.S., Spanish elections are upcoming, and this will definitely affect whether Mr. Rojoy stays or leaves.
Spain is not the only country in Europe hit with big news this week. Greece, one of the hardest hit countries in the EU, has taken their prediction of GDP shrinking lower than before, to a 3.8 shrinkage. Before, they had said that there would be a zero growth rate, a.k.a having growth go neither up or down. Now, Greece has predicted a negative track again, hurting the EU and the country itself, which is riddled by sky-high unemployment and bankrupt businesses.
Source: The Wall Street Journal