Author: Megan A. Lloyd
According to the Bank of Spain, the country’s debt crisis could end up borrowing more expensive. This warning was released in the last economic bulletin for the month of October; he warned that maintaining the current deficit situation “could eventually lead to increased bank funding costs.”
In fact it was only last Friday when 10-year bond differences Spanish with German shot nearly 200 points as a result of doubts about the Irish economy is affected by extension the rest of the countries with high deficits, including Spanish.
Bank of Spain has highlighted that the risk premium to be paid by public bodies such as banks and banks to obtain permanent financing at a higher level than in the previous phase in the initial state debt that began in May.
For this reason there is the element of pressure on the cost of capturing people who have committed war to attract deposits with attractive remuneration which can eventually move into lending rates.
Either way, the study of the central bank believes that the return required for investment in Spanish bonds have been weakened from the highest in June because of the positive effects of the adjustment plan of the Government and structural measures taken.
However, the cost of resources that attract financial institutions remains high. Economics Ministry sources admitted that Spain is not immune to attacks that affect the debt of Ireland and other European countries. In any case stressed that the increase in Spanish bonds are no worse than others.
In turn, the report noted that Spain’s economy has stagnated in the third quarter of this year and has been a “weakening of the temporary activity,” Changes in GDP is affected by the decline in private consumption due to the loss of various stimuli such as, for example, 2000E plan for the purchase of vehicles and increase VAT on past July.
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