MADRID/LISBON: Spanish Prime Minister Mariano Rajoy could learn some lessons about communication from neighbouring Portugal as he struggles to restore confidence in Madrid's public finances and avoid an international bailout.
Spain's borrowing costs have soared, bringing the country dangerously close to being shut out of the bond markets even after euro zone partners promised aid for its ailing banks and Rajoy announced a new austerity plan last week.
Much smaller Portugal has already been rescued, to the tune of 78 b illion euros, and is slowly winning back some investor confidence, slashing its budget and privatising state companies under close monitoring by a troika of the European Central Bank, the European Commission and the International Monetary Fund.
Both countries are ruled by centre-right governments that enjoy strong majorities in parliament after voters fed up with economic crisis threw out the previous Socialist governments. But there the similarity ends.
Portuguese Prime Minister Pedro Passos Coelho and his ministers have adopted a tough neo-liberal mantra while Rajoy began by striking a defiant, nationalist tone and sending mixed messages to markets about how he would tackle problems in Spain's banks, budget deficit and overspending regions.
Rajoy dragged his feet in taking some early measures, denied any need for outside assistance for the banks until the last minute, then left ministers to make the unpopular announcements.
"Mariano Rajoy has done good things. If you look at the substance, it goes pretty far but it is true that the communication has not always been a success," said Gilles Moec, an economist at Deutsche Bank.
"A kind of bubble of uncertainty was created, around the regions, the banks, and it has consequences on the markets."
indiatimes.com
Spain's borrowing costs have soared, bringing the country dangerously close to being shut out of the bond markets even after euro zone partners promised aid for its ailing banks and Rajoy announced a new austerity plan last week.
Much smaller Portugal has already been rescued, to the tune of 78 b illion euros, and is slowly winning back some investor confidence, slashing its budget and privatising state companies under close monitoring by a troika of the European Central Bank, the European Commission and the International Monetary Fund.
Both countries are ruled by centre-right governments that enjoy strong majorities in parliament after voters fed up with economic crisis threw out the previous Socialist governments. But there the similarity ends.
Portuguese Prime Minister Pedro Passos Coelho and his ministers have adopted a tough neo-liberal mantra while Rajoy began by striking a defiant, nationalist tone and sending mixed messages to markets about how he would tackle problems in Spain's banks, budget deficit and overspending regions.
Rajoy dragged his feet in taking some early measures, denied any need for outside assistance for the banks until the last minute, then left ministers to make the unpopular announcements.
"Mariano Rajoy has done good things. If you look at the substance, it goes pretty far but it is true that the communication has not always been a success," said Gilles Moec, an economist at Deutsche Bank.
"A kind of bubble of uncertainty was created, around the regions, the banks, and it has consequences on the markets."
indiatimes.com
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