Spanish unions tell king bailout would be suicidal
Spain's King Juan Carlos speaks in Moscow's Kremlin after he was awarded with a Russian State Award for humanitarian activism in 2010, on Thursday, July 19, 2012. (AP Photo/RIA Novosti Kremlin, Mikhail Klimentyev, Presidential Press Service)
Published Tuesday, August 7, 2012 9:34AM EDT
Last Updated Tuesday, August 7, 2012 12:05PM EDT
MADRID -- Union leaders told King Juan Carlos on Tuesday they opposed an international bailout for Spain and said government austerity measures to reduce the bloated deficit are suicidal for the country.
Conservative Prime Minister Mariano Rajoy last week admitted that Spain might ask for outside help but said he first wanted to know what its European partners and the European Central Bank would demand in return. The government has already admitted it needs help by asking for a loan from its eurozone partners of up to (EURO)100 billion ($124 billion) for a handful of its banks burdened by toxic assets following the collapse of the a real estate bubble in 2008.
Spain's borrowing costs have been soaring in recent months as investors expressed a loss of faith in the government's ability to manage its finances. The situation drove the interest rate for the benchmark 10-year bond above 7 percent. Such a rate is deemed untenable over the long term and pushed countries such as Greece and Ireland and Portugal to seek full rescue packages.
In a statement issued after a near hour-long meeting with the king on Tuesday, the General Workers Union and Workers Commissions said they are opposed to another rescue package because its conditions would likely throw the country further into recession and increase the hardship for Spaniards already suffering from austerity measure and reforms take over the past two years.
The statement said that the recent public sector cutbacks and the labor and financial reforms ""were suicidal for our country (and) were putting a brake on possible economic recovery and job creation."
Juan Carlos is Spain's head of state and, although he regularly holds talks with the government, he has no direct role in the running of the country. The royal palace made no comment following the meeting.
Market pressure on Spain has eased a little since Rajoy's remarks last Friday and the 10-year bond yield Tuesday was at 6.7 percent.
A full bailout for Spain's economy, the fourth largest in the eurozone, could seriously test the EU's finances and the euro currency.